Dennis Troyanos: We’re delighted to be here talking to David Paragamian, the president of Apothecom, a Huntsworth Health company. David is a recognized leader in the healthcare world. He’s a graduate of Hamilton College and completed the executive development program at the Wharton business school. Starting his career at Johnson & Johnson as a product director, Dave moved into the healthcare agency side of the business as COO of GSW Advertising. He then became president of Euro RSCG Life and CEO of Latin America and Asia-Pacific for Euro. As I said, currently Dave is the president of Apothecom. Dave, welcome to Game Changers Live.
Dave Paragamian: Thank you, it’s nice to be here.
DT: Let’s start off by talking about what the Apothecom brand stands for, and give us a sense of what the firm does.
DP: Sure. Apothecom is the oldest and largest agency in the Huntsworth Health family of company. Huntsworth Health is a holding company of boutique specialty agencies and Apothecom is the oldest and largest piece. We had our roots in classic Medcom, and today the agency has evolved and grown so that we are truly a global brand, with agencies here on the East Coast as well as on the West Coast in San Francisco and agencies in London, Singapore, and in New Zealand in our Asia-Pacific footprint. We’re a global healthcare communications agency serving the pharma industry.
Norman Sherman: So the world of healthcare communications agencies is dominated by these massive conglomerates and you’re a much smaller organization. How does that advantage you versus the bigger agencies and how does it affect how you go to market?
DP: Huntsworth Health is, on a numeric ranking with the WPP holding company as the largest, we’re probably sixth or seventh in that ordinal ranking. So we are competing with the large holding companies and serving the same basket of clients, but we are a step-size smaller. I think that it’s a competitive advantage for us; I think that the large holding companies – having been an alum of large holding companies – are formidable competitors and have their place. I think with the landscape changing the way that it is it uniquely benefits the marketer to be dealing with boutique agencies inside of the holding company model that somebody like we would offer.
NS: Why is that? What advantages might you bring that the bigger conglomerate really couldn’t?
DP: I think it gets back to what we’re seeing in the industry right now, and what we’re seeing is change. We’ve all heard over the years about Generation X, Generation Y, and now I think we’re in Generation Flux. We are all in a moment of a tremendous change. The marketers inside the pharma company, the bio-tech company, the device company, they clearly are leading this life of flux and change. Fewer molecular entities being approved, their career paths themselves changing and evolving as the pharma companies – with major blockbusters coming off patents – are asking their brand managers to do more with less and spend longer time and tenure on brands than they previously had been expecting. I think the pharma companies have adapted and are in the process of adapting. My proof point on that would be: If you think about the organization of the classic pharma company as a pyramid with the CEO at the top the largest part of that pyramid has always been the base of that pyramid, that being the field organization that goes out and contacts the customer. We know, over the last three to five years, that virtually every major pharma company, every diagnostic, every biotech company, has made significant restructuring and cuts to the base of that pyramid, the field sales jobs. Everybody’s looking to do business differently. Different types of selling structures, like medical science liaisons and other approaches to getting the message to the customer, as opposed to the classic primary-care model with the big broad base touching the customer. You parallel that to what is going on inside the agency world. I would argue that the biggest, broadest part of the agency pyramid is all those executors down at the bottom of the agency. All those junior graphic artists and junior copywriters, all built to deliver the classic two-page journal ad spread that we’ve been carrying to the clients’ offices for years. The change that’s going on inside the pharma company… I’m not sure that every agency is going through that commensurate look at their model and their structure in terms of the value that they’re bringing and the investments they’re making and who’s having that strategic contact with the brand team and adding that value.
DT: You started your life, early on, on the client side. Having now had the advantage of working on the consulting and agency side of the world, help us understand: If you were king of the world for the biggest pharma company on the planet, knowing what you know now, how would you capture the high ground on customer communications, patient communications, physician communications in a way that clients may not be focused on right now?
DP: Another way to look at the question that you’re asking is with the benefit of some longitude in the industry and some hindsight. I think that the investment that these companies are making in their marketing and their advertising is significant. However, there is not, sometimes, the deployment of senior resources against that expenditure. Let me be very specific: I can’t tell you how many times I’ve been in presentations where the senior most marketer isn’t there to evaluate, to review, to discuss, to see what the agency is bringing. Personally, that’s a disappointment. If I had the benefit of hindsight and I could climb that mountain and be the king of the world in the industry, I certainly would counsel that if we’re going to make an investment as big as we are, if we’re going to set a positioning, create a message hierarchy, create a piece of advertising – and I want to use that term very broadly, because it’s not all about a piece of advertising – If we’re going to create a big important communication, I don’t think we want to delegate that down, and down, and down. I think we want to have the most senior minds involved in the process to make sure that we are driving this in a collaborative way and in a way that everybody feels good about.
NS: Back in the day, agencies used to have access to more senior levels in the client organization. Advertising was one of the most important arrows in the armament that the CEO had, and very often the CEO would get involved. I think it was more true in the consumer area than the pharma area, but still true in both. The more senior people have become more distant over time. Why do you think that is? They should be involved, but they seem to be getting farther away from it.
DP: Like anything, there’s always a confluence of reasons. I’m sure part of it is the lives that these vice presidents and chief marketing officers are being asked to lead. They’re being asked to do a lot of things inside their companies, so they’re pulled in a lot of directions, and I empathize. Part of the reason that they may be taking a step away and not as hands-on participatory as you and I recall may fall on the agencies. If the agency is invested only in “Here’s the execution,” then maybe it’s not worth that CMO’s time to be in the room. Again, that’s what benefits a holding company in that mid-tier. We’re large enough to compete with the largest of the holding companies, but we’re small enough that I find myself – and my direct reports find themselves – in the room and in the conversation with a senior client when strategy is being delivered and positioning is being delivered.
NS: Are you finding that these clients are receptive to it and are looking for that from their agencies?
DP: Over the last ten years of my career on the agency side at three holding companies, now: two large holding companies and Huntsworth, this mid-size holding company, if I think about agency scorecards and agency review, invariably, even in the best reviews and the best of circumstances, there was always an opportunity for growth identified for the agency in strategic contributions. That is the validation across a wide swath of clients that that’s what they’re asking for. Bring me the senior-level thinkers from the agency side to provide thoughts and recommendations about my business and engage me that way. I think if you can do that, a CMO wants to make time for that conversation.
DT: What are the mosaic of skills that you see as becoming the most important and the most in-demand from pharma today from their agencies? What cross-pollination of skills do they need to bring to that brand manager that’s going to be really valuable?
DP: It gets back to the model and how the pharma company and is the agency’s model changing. There are many agencies that would offer to the client that they are, essentially Macy’s. The greatest store on earth, they’ve got everything, all nine floors, whatever you need, I’ve got it.
NS: Gimbel’s used to say that as well, didn’t they?
DP: Who? Point made, point taken. One of the things that I love about the chair I sit in now is that at the Huntsworth Health holding company we really think about ourselves as a collection of specialty boutiques. We are not trying to be Macy’s. We offer a best-in-class shopping experience: there’s a Tiffany’s for jewelry, there’s a Louis Vuitton for leather goods, there’s a Burberry’s for scarves and gloves. That approach allows for – to the point you’re making, Dennis – the fact that we can have a very high-level conversation about a specific thing, whether it’s about advertising, PR, pre-launch market shaping for a brand, as opposed to trying to position one’s self as the ultimate generalist. I’m not sure I’ve met him yet.
DT: David, where are some of these skills that are increasingly in demand being developed today, in your opinion? Are they from the client side, the consulting side, the agency side? All of the above?
DP: There was a time that the best career progression was a very linear step-wise career progression. Today, I know in my own personal background, I draw upon the fact that I spent half my career on the client side – in pharma and device companies in marketing and sales management positions – and that I spent the other half in the agency world in leadership positions inside these holding companies. That’s part of my personal branding and what I believe I can offer in front of a client in trying to help them with their marketing challenges. As we look for people inside our organization, there is no one cookie-cutter, an exact aperture that I always need. Rather, the diversity of experiences that someone has strengthens them as long as, at the core, they’re a marketer and they love solving marketing puzzles and they love engaging around the marketing challenge with a client.
NS: When you add up all of those individuals with those diverse skills, you generally create a culture at an organization, right? How would you define the culture of Apothecom? Is it what you want it to be or are there places you’re trying to take it?
DP: I think we’re very fortunate at Apothecom as part of Huntsworth Health that our CEO for the network at Huntsworth Health is Neil Matheson, who is the original founder of Apothecom. Like so many folks in this business, he graduated from running a sole agency to a leadership position in the network. Neil is someone who, very early on, put a value statement together to talk about the core principles of what we as a company believe in and the things that we want all of our employees to hold topmost: putting the client first, acting with integrity, having a passion for the business, wanting to be in a leadership position, and above all operating with integrity. Being good people. That value statement is still part of who we are. When I joined the company five months ago, the first thing that I did was get it made poster-sized. I had everybody in the company sign it. Just like the fifty-three men and women that signed the Declaration of Independence, I wanted everybody’s name on the value statement so that it would be the first thing in our lobby when guests and clients came to see us. That makes, for me personally, a very exciting environment to come to work in every day, knowing that it is a very diverse group of men and women. But at the core, we’re passionate about the business, we’re passionate about the client, we’re going to operate in a meritocracy where we take off the stripes on our sleeves at the door. As we sit around the table to solve a problem it’s about who’s got the right idea to solve the problem, what’s in the best interest of the client’s brand, and not about who’s the senior most person sitting at whatever spot around the table.
DT: You talked about having folks at the very outset sign onto those core principles that sit at the foundation of Huntsworth and Apothecom. We meet lots of agency leaders and it’s an intriguing science to us. I want to understand a little bit about your leadership style. If we were sitting at a restaurant talking to some of the folks that work for you, and we asked them off the record, what would we hear about David’s management style, the good, the bad, and the rest?
DP: I think that among the things that people would say would be that I lead from the front, in the sense that I never would ask someone to do something that I’m not prepared to do myself. If we’re involved in a new business presentation and we’re working on a Saturday, not only am I in the office but I’m the person that brought the donuts. I do believe that clients want senior agency leaders that are engaged in their business, and I think the people that are inside the agency want to know that you’re engaged in the business, that you’re not managing a spreadsheet or a P&L, that you care about the people and the client’s brand. I’m leading from the front, not at some command post that’s removed. You’d also hear that I’m a very people-centric person. I enjoy the people. Over the course of the stops that I’ve made in my career, both on the client side – at places like Johnson & Johnson and I spent many years at Roche – and now on the agency side. I have sort of a string of pearls of all of the friends and colleagues of those years. I enjoy those people; I have on occasion hired and brought people along with me who have come with me into different organizations. I always want to make sure that I take the time to understand the people that I’m working with on a human level. It allows me not only to advance their careers but to match talent to task of who’s got the right personalities to engage on different clients and different businesses?
DT: How does that turn into a unique experience for the client as that client engages with you, your team, Apothecom, and the Huntsworth organization in general?
DP: First and foremost, clients’ experience with me and with our team is that I’m not a face on an organizational chart in a pitch. I’m really somebody who is engaged in their business, not just on pitch day but on the 364 days after that so that they can count on my continued participation in the business and continued leadership in the business. I’m there for the good days and I’m there for the bad days. When they occasionally say “we need to talk about a different mix of talent,” on a business or any of the sort of things that we do over time to make a team malleable, to adapt to changing conditions at the client. I think that’s what role I play on an ongoing basis in front of the client.
NS: I’d like to bring this back specifically to what Apothecom does for a moment. You said it has its roots in a classic medical education kind of agency. What’s the role of medical education today in the marketing mix? Is it changing? What value do you see that you can bring to the clients to help them in this conundrum that they’re facing going forward?
DP: It starts with nomenclature; when people hear med-ed or med-comm they think, from ten years ago, that it was about a CME grant to get a doctor at a symposium. As we know, that could not be further from the truth about the way I would define med-comm today. The vast majority of our clients are folks with whom we have an agency-of-record type relationship. The vast majority tend to be those folks that are in a pre-launch environment or launching a new indication. So we come on board because of our roots in med-comm and our ability to work at a very scientific level gathering the data, working with key opinion leaders, to create the target product profile, the pre-launch positioning, the message hierarchy, unbranded disease state education, all those things leading up to launch. Long before the marketing starts, the marketing starts. We’re typically engaged in that value chain; that’s our sweet spot. It’s back to our position as a collection of specialty boutiques. We don’t describe ourselves as specifically an advertising agency but a medical communications agency. I think of us as essentially a pre-launch agency. Whether it’s a launch of a new brand, a new indication, we are uniquely scripted and skilled – because of the folks that we have and the skill sets that we have – to be a good partner and walk folks through that time period.
NS: There’s a wonderful expression that goes something like: “A principle isn’t a principle until it costs you something.” Let’s say that you are the pre-launch agency for a new brand that’s about to be introduced. You’ve got a terrific relationship with them. Would you want to handle the brand post-launch? Would you try to move it to another part of Huntsworth, or would you say “We love you, we want to continue to work on pre-launch opportunities with other products that you’re developing?”
DP: Since this is an election year, I’m going to give you an answer that any of the candidates running for President could give you, which is that I haven’t been tested on that principle, Norm. I’m five months in the leadership role inside of Huntsworth and at Apothecom, but I can look you in the eye today and the right answer is that you have to stay true who you are. You can’t pretend to be something else. I can’t differentiate myself from Macy’s if I try to become Macy’s. We have a great, talented group across all those Apothecom agencies I articulated around the world. We’re great at what we do. We know that space; we know it extremely well. Our work has earned us long-term client engagements. As a network, we do have sister agencies inside of Huntsworth Health that are great at what they do, and we do have folks who would – to your example – potentially pick up once we had somebody at the gate for launch and be able to carry forward. We’d certainly make those introductions. We’d also, and we currently do, cohabitate and play very nicely in a sandbox with large client brands where we have a role to play and another agency from another holding company has a role to play. Our job, then, is to collaborate with that WPP shop, Omnicom shop, whatever it is, and to collaborate and share appropriately because it is in the client’s interest to do so, so we do.
DT: Assuming the current health laws get the blessing of the Supreme Court, how do you see the agency-client interaction changing? How do you see the relationship between the patient and healthcare providers changing at Apothecom?
DP: If any of us knew that answer with great clarity and precision, we’d probably be king of the world, or at least we’d be winning straw polls in Midwest states by greater than a handful of votes. It’s a complicated question, but what most of us can see as we try and part the fog is: clearly there will be, at some point, increased access, increased patients, more lives being covered, more people in primary-care offices or NPPA offices getting healthcare. That number – depending on whose statistics you look at – that 30-40% of people living uncovered lives, some grand majority of them are going to become covered lives in some sort of a health plan. I think that’s not only good public policy but I also think that’s great in our industry as an opportunity to impact those lives and to treat them effectively with different therapies. For us, great opportunity. For our clients, great opportunity. It also comes with great scrutiny, so there will be a greater need for payer expertise. I don’t know whether Macy’s has a great payer department or not; I don’t know whether it’s better to go get your payer expertise in the boutique world, but understanding that is going to be one of the hallmarks of what we need to do.
DT: I want to move into the area of social media. You talked about Generation Flux. I get the sense from most people we talk to is that it’s a “hang on and go for this ride” era in the communications business, especially the healthcare business. How has social media figured into your equation? Is there a place for social media in the healthcare world, and if so, how does it play out in your organization?
DP: That’s another one of the great unknown questions. We’re waiting for guidance, and we continue to wait from the US Government. For much of the client base that I currently have where we’re working pre-launch, it’s not an issue because we don’t have a product on the market to have communication about. What’s social in that world is opinion leaders, whether they’re in the US or globally, who are connected in networks that we help facilitate for them to evaluate the clinical data and the promise of a drug. There are places to do that appropriately in a pre-launch world. From a marketed product standpoint, everybody’s dabbling, everybody’s experimenting and, candidly, some people are dabbling and experimenting better than others and some people are watching it happen.