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In the history-making alliance that would meld two of the world’s largest ad holding companies, Omnicom Group’s takeover of Interpublic Group (IPG) brings under one roof more than 50 medical marketing agencies.
Discussing the multibillion-dollar deal, Omnicom CEO John Wren singled out the healthcare marketing category as a potential major growth driver for the combined entities.
“If I was a pharmaceutical company, I’d pause and look at what the combined portfolio of this company will have in six or nine months,” Wren said Monday during an investors call with IPG CEO Philippe Krakowsky.
Data backs up his bullishness on the segment—overall ad spending in healthcare and pharma is expected to top $30 billion in the U.S. in 2024, a 5% year-over-year increase, per eMarketer. Americans spent $574 billion on medicine in 2023, according to Grand View Research, with that number anticipated to climb 5% annually through 2030.
The combined Omnicom-IPG would house medical marketing firms with specialties across creative, communications, media, patient advocacy, clinical trials, data intelligence, and more. Among the holding companies’ lengthy agency roster are Biolumina, Patients & Purpose, McCann Health, Area 23, Rise & Run, Wildtype, FCB Health, and Humancare.
Reducing costs through scale
Whether all the agencies will survive and how their leadership teams will be structured are open questions. Layoffs and consolidation loom as Wren and Krakowsky have said they plan to trim $750 million in costs within the first 24 months of the deal closing. Add to that the challenge of intertwining two ad behemoths with competing brands in a segment like healthcare that’s especially sensitive about its trade secrets.
The healthcare category would be among the biggest revenue drivers for the new entity. Both holding companies currently work with major players in the field: IPG’s Mediabrands handles media planning and buying for direct-to-consumer brands under the Bristol Myers Squibb banner, while Omnicom’s OMD has ties to pharmaceutical giant Boehringer Ingelheim.