Pharma ad budgets to dip in 2016, but J&J, Pfizer, Roche and Novartis should still top $2B

Flat news is good news. Pharma spending on advertising and promotional expenses will dip by just 1.7% next year, according to Schonfeld & Associates' annual Advertising Ratios & Budgets. That means a total of more than $21 billion in ad spending and just a bit healthier than last year's decline of 2%.

Johnson & Johnson ($JNJ) is expected to lead competitors with an ad spend bump of 4.6%, followed by Pfizer ($PFE), Roche ($RHHBY) and then Novartis ($NVS), with each spending more than $2 billion, said Carol Greenhut, president at Schonfeld. Most of the companies at the top, other than J&J, will decrease or flatten ad spending next year. One up-and-coming spender she noted is AbbVie ($ABBV), which is projected to spend $881 million, an increase of 15% over 2015.

Across all industries--5,000 companies in 320 industries studied--ad spending is expected to increase by 4.2%, led by the auto industry ($44 billion), food companies ($30.7 billion) and wireless communications ($23 billion). In the pharma-related industries of biotech and electromedical apparatus, Schonfeld predicts growth in ad spending of 10% or more.

The annual survey also looks at advertising-to-sales ratio, or the amount spent on advertising as a proportion of revenue. For 2015, that ratio for pharma was 3.8%, which is higher than the overall average of 2.5%. But it trails consumer goods, which showed an average of 6.7% of revenue spent on advertising.

"Like the rest of the economy, pharma saw a big slowdown and is now gradually picking up," Greenhut said. "It's a very healthy industry in terms of advertising and especially in all the new channels including social media. As we go forward, that will grow even more."

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