Pharma Cos. Seek Specialized Meetings Vendors

Pharmaceutical companies increasingly are seeking specialized vendors for meetings services, consultants said, and putting vendors through rigorous approval processes to comply with procurement and regulatory requirements. Buyers said consolidating business with fewer third-party management companies helps to control data and mitigate risk.

The shift to specialized vendors has had a leveling effect on the competitive market, vendors said. Mega agencies can be perceived as too broadly focused, and midsize and small agencies are stepping up to fill the need by offering full-service pharmaceutical event planning. However, pharma customers have extensive demands and service needs, consultants said.

Judy Benaroche Johnson, president and CEO of Dallas-based Rx Worldwide Meetings Inc., which serves corporate pharma, medical and biotech companies, said vendor approval processes are lengthy, often with 80-page online questionnaires followed by company visits and even more paperwork.

Preferred vendor relationships are especially key for the pharma industry, she said. "Over the past five to seven years, they've really honed in on what they're looking for. The pharma codes are all still voluntary but the bigger companies observe them keenly," Johnson said.

The Pharmaceutical Research and Manufacturers of America in 2002 issued voluntary but strict guidelines on entertainment, gifts and dinners offered to healthcare professionals. Fears of public perception of excessive spending still keep pharma companies from booking at resorts and spas, Johnson said, but properties now are beginning to change their marketing approach to medical meetings and downplaying luxury.

Many Rx Worldwide clients have relied on the company for help in navigating the regulatory environment, she said. "Most of the time, we're educating them, which is really interesting to me. Not the bigger companies, but we let the smaller ones know what's going on and what other people are doing," Johnson said.

Pharma meetings planned by the full-service company range in size from 50 to 500 attendees, with an average size of 200 attendees, she said. This year, about one-third of business will be international.

"Pharma companies are using preferred vendors, and they really do their homework," said Frank McVeigh, president and CEO of McVeigh Associates, a meeting and incentive management company that represents a number of major pharmaceutical companies. "If you can't meet their qualifications, you are quickly eliminated."

The growing need for vendors with pharma expertise has benefited the company, McVeigh, especially this year as mega agencies reorganize and focus on the broader corporate travel market. "It's really leveled the playing field. We're a midsize company and we compete very effectively with the big guys. We have a specialty and a sort of fire in our belly for these types of businesses. The big Amexes are dealing with every major industry while 90 percent of our business is pharmaceuticals."

Dick Zeller, vice president of consolidation solutions for Maritz Travel Co., said during the past five years he has seen pharmaceutical clients consolidating more of their meetings business with fewer vendors. Subsidiary Maritz McGettigan focuses on the pharmaceutical and medical meetings industry.

"Given the high level of scrutiny and regulation that the industry is experiencing now, most pharma companies are trying to establish certain standard operating procedures in terms of how their meetings are executed," Zeller said. "The smaller the vendor pool they're dealing with, the easier it is for them to apply and get consistent application to those standards."

The optimal number of preferred partners depends on the size of the buyer, Zeller said, but most companies do best with between three and seven domestic vendors.

Vendor requests for proposals are lengthy because pharma companies need to make sure their partner is secure enough to handle their business, he said. "Historically, the relationships with logistics vendors may be based literally on relationships," Zeller said. "They may be great at what they do and very knowledgeable, but do they really have the kinds of financial wherewithal that a major pharma company needs?"

New York-based Pfizer Inc. is in the process of consolidating its numerous third-party meetings management vendors in Europe into a preferred vendor list, said Sue Shillam, director of European meetings and travel for the company. Shillam discovered that in some European markets, Pfizer was using as many as 20 meeting management companies.

To pare down the list, the company has used a request-for-proposals process to establish preferred vendors.

"We're trying to reduce the number of agencies. Already in the U.K., we've reduced it from multiple conference agencies to three. In Spain, they're reducing it from multiple to two, and that project is rolling through," Shillam said.

This year, the company also has required third-party management companies to book all travel through Pfizer's transient agency. "All of these conference agencies would book the travel that went with the meeting, which meant I couldn't see any of that spend when I did my regional airline deals," Shillam said.

The popularity of specialized vendors has developed during the past five or six years, Johnson said.

"I really wouldn't have believed that it mattered a few years ago, but now it really does. They're asking: 'Tell me your specialty; do you do medical writing?' I think it comes down to branding. When you have an understanding of what they're trying to do and their objectives, then you can deliver on those. That's why they're asking those questions now," Johnson said. "We try to be proactive."

Pharma companies in particular look for long-term relationships with meeting vendors, McVeigh said. They don't want to constantly educate vendors on the specifics of their programs or needs.

"Most of our clients have gone through a procurement process of selecting preferred vendors, and most of the big pharmas want to give business to fewer companies, but to companies that are more specialized in this area," McVeigh said. "I see that with every major new client we have. They contract for two-, three- or four-year periods for quite a bit of programs. They want to have consistent teams."

In addition to finding a niche for specialty services, technology can help smaller vendors compete effectively. Size does not necessarily equal capability, McVeigh said. "Sometimes when you create a niche, you get advantages in the competitive field," McVeigh said. "If you have good technology and are able to hire really good staff, you can compete. The world is definitely getting flat."

Boehringer Ingelheim Pharmaceuticals Inc., based in Ridgefield, Conn., used to outsource nearly its entire meetings management program, said manager of travel and meeting services Susan Owens. In 2004, the company began to revaluate its use of external providers and Owens has worked to establish preferred relationships with hotel, air and other meeting services vendors.

"It's one of my goals to have standard contracts with my preferred hotel vendors," Owens said.

Owens, with the aid of the company's legal department, drafted a standard hotel contract addendum. "Once we had the addendum, we realized to that we needed two addenda: one for small meetings of less than 100 room nights, and one for over 100 room nights," Owens said.

The addenda are focused on ensuring the company planners are consistent when negotiating with hotels, Owens said, and all ask for the same concessions.

However, some pharma companies have foregone establishing preferred vendors in favor of bidding out meetings volume piece by piece, especially with international meetings. Abbott Park, Ill.-based pharmaceutical company Abbott Laboratories chooses to go with local vendors when holding events overseas, said Lilian Brozek, manager of event marketing for Abbott's international division.

"When you're dealing with different countries, many times local vendors can get far better rates than a national sales representative and seasonal rates can be much lower than what you sign on a contract," said Brozek, during a Webconference sponsored by Santa Clara, Calif.-based meetings technology firm OnVantage.

"Personally, we've hesitated on preferred supplier contracts. We've tried to keep our suppliers competitive. We don't really want to be stuck with something, if something better could possibly come along."