Grey and Ogilvy & Mather are preparing to battle for their &£25m SmithKline Beecham (SB) consumer health care accounts as speculation grows that many brands will be sold off after SB merges with Glaxo Wellcome.
The newly merged company will be called Glaxo SmithKline, and have sales of about &£15bn and a market value of some &£107bn. But most observers believe that some of SB’s consumer products are likely to be sold off as they do not fit in with the merged group’s core pharmaceutical business.
Agency sources believe that such a sell-off will take place in the medium term and this will lead to new agencies being appointed to the brands. The affected brands include beverage Horlicks, which spends &£1m on advertising; toothpaste brands Aquafresh and Macleans, which spend &£9m; and the &£5m Ribena range, all handled by Grey. Lucozade, which spends &£7m through Ogilvy & Mather, is also thought to be affected.
But Peter Glynn-Jones, SB’s managing director of strategic development, denies the brands are likely to be sold. “We are not selling them off, they are highly profitable brands with the best growth rates in the business.”
Glaxo Wellcome does not have similar consumer products. It uses McCann-Erickson on the &£40m Western Europe and Australasia account for three over-the-counter brands, Zovirax coldsore cream, Zantac 75 indigestion remedy and Beconase hayfever treatment. The merger is not expected to affect this account.