For Pharmas, Painful Truths in Advertising

How to Sharpen Grant Writing Skills

Dreams of the VCs: Quick Trip From Eureka to the Bank

Tax Time Tips

Corrections or additions?

These articles were prepared for the March 22, 2006 issue of U.S. 1

Newspaper. All rights reserved.

Survival Guide

Top Of Page
For Pharmas, Painful Truths in Advertising

The creative agencies that produce marketing materials for

pharmaceutical companies must stick to the truth, the whole truth, and

nothing but the truth. "We can never say things like `it’s the best’ –

things you see all the time in consumer advertising," says Gregory

Gross, copy supervisor at DDB Rx, a New York advertising firm that

serves the healthcare industry. "Our claims must be supported by hard

data."

To ensure that everything said is a "defensible true claim," the

marketing process for the pharmaceutical industry is elongated,

requiring that materials jump through several hoops before entering

the marketplace. This means precision during the creative process,

with artists and writers sticking to the facts, as well as submitting

to multiple reviews – informal and formal.

Gross speaks on "Pharm Fresh: Producing Great Creative in a Regulated

Industry" at the third annual Thinking Creatively conference, a

two-day event beginning on Friday, March 24, at 9:30 a.m. at the

University Center of Kean University. The conference is co-sponsored

by Kean University’s Office of University Relations and Design Center

and by the Art Directors’ Club of New Jersey. Cost: $150. For full

details visit www.adcnj.org.

The tight control of pharmaceutical marketing materials is part of the

general regulation of the pharmaceutical industry. Although regulation

contributes to the cost of medications and lengthens the time to

market, most consumers wouldn’t have it any other way. Yet for most of

modern history, the public did not have an agency and laws to protect

it from tainted food, destructive drugs, and poorly designed medical

devices. Regulation of drugs and drug marketing came only in the wake

of three medical catastrophes.

First, in the 19th century, companies were marketing morphine as a

"soothing syrup" for teething babies and for people with persistent

coughs and other ailments. The result was widespread addiction to

cocaine and morphine. Not until the beginning of the 20th century was

there a wave of reform efforts to control these "secret-recipe" patent

medicines – medicines that could be extraordinarily dangerous. The

American Medical Association led the forces of reform, pressuring drug

makers to abide by the AMA’s "rules for ethical medicines" in drug

marketing. Eventually the Pure Food and Drug Act of 1906 codified some

of these regulations.

A second disaster occurred in 1937 when sulfanilamide, a drug whose

powder and tablet formulations had been successfully used to treat

streptococcal infections, came out in elixir form. An untested

ingredient in the solution was diethylene glycol, a chemical normally

used as antifreeze. This deadly poison killed over 100 people in 15

states, most of whom were children, and the chemist who formulated it

committed suicide. The consequence of this second tragedy was the

passage of the 1938 Food, Drug, and Cosmetic Act, which gave the Food

and Drug Administration authority over product safety.

The most recent tragedy, at its worst in the late 1950s and early

1960s, struck children whose mothers had taken thalidomide during

pregnancy to relieve morning sickness and to induce sleep. A number of

these women gave birth to children with birth defects, including

malformed or missing limbs as well as internal deformities that led to

early deaths. Gross says that the crisis was worst in Germany, where

the drug was invented, and where there were about 10,000 victims, only

half of whom survived.

At about the same time, says Gross, growing public concern with drug

companies as "profiteers" had led to an effort to tighten

restrictions. But as Senator Estes Kefauver of Tennessee pressed for

reform in the late 1950s, his efforts were considered "antibusiness,"

and he got little support. "But as soon as thalidomide hit, the

opposition evaporated," says Gross, and the Kefauver-Harrison

amendment of 1964 was supported by President Kennedy and passed

unanimously by both houses of Congress. This established FDA control

over pharmaceutical advertising and gave the FDA the responsibility to

judge the truthfulness and scientific accuracy of all promotional drug

messages.

Gross, previously an English professor at Roosevelt University in

Chicago, had started to think about changing careers because of the

improbability of finding a tenure-track position in a city where he

might want to live.

He managed to parlay a summer job experience in advertising and his

expertise in writing and language – he knows Latin, French, and German

– into an entry-level job with an advertising agency in Chicago, where

he grew up. He worked there on employee recruitment campaigns for

corporations. "It was a remarkably good fit," he says. "A lot of the

skills I developed in academia transferred nicely into my work in

advertising."

Finding himself unemployed after massive layoffs in Chicago’s

advertising sector during the 2001 recession, he spent the summer

looking for work. Then came 9/11 and things got worse. "I was on the

cusp of getting hired," he says. "Then there was a new hiring freeze

because of the uncertainty, and it seemed that pharmaceuticals was the

one area in advertising still growing and unaffected by the

recession."

Following a lead in New York, he got a job with Cline, Davis, and Mann

in November, 2001. Just a year ago DDB Rx was spun off from Cline "to

better serve the needs of a growing client." Both companies are held

by Omnicom.

At Cline and DDB Rx Gross has done pharmaceutical marketing and

advertising, which is similar to standard product marketing, but which

differs in the review process. "What you learn when you join this

industry is that you have to have a long development timeline, with a

round of internal and external reviews," he says.

Gross describes the extended process that his materials – including

direct-to-professional materials, ads in journals, and a battery of

sales materials – undergo from creation through review:

Concepting the campaign. "The creative side is not much different from

the rest of the advertising world," says Gross. They look at product

features and benefits, consider the audience, and do the same kind of

conceptual brainstorming, "but with the caveat that it has to be a

defendable true claim." For Femara, a breast cancer drug, his team

developed a campaign that "married" hope from the patient’s

perspective and good science from the doctor’s perspective.

One central image is a woman wearing a "ribbon" – with the shape of

the familiar pink ribbon for breast cancer, but with writing on it

from a landmark cancer study in a prestigious medical journal. "For

doctors, what’s motivating is the data," he says. "What we think of in

our neck of the woods as a sexy message includes a percentage and a

study end point."

Creating the ad. The ad is the centerpiece from which all of the

marketing pieces are derived. These materials must legally have what

is termed "fair balance." Gross explains: "Whenever you make a claim

about what the drug does, you have to balance it with statements about

what it doesn’t do, so well or any adverse side effects. The materials

must include all pertinent safety information."’

Creating corollary materials. Concurrently with the ad, the creative

team must develop the primary sales tool that sales reps will take

into a doctor’s office – an 8-to-10-page booklet that tells the

complete story of the drug, including the clinical trial design and

all the data about efficacy, safety, and tolerability. "These are all

designed to work as a set," says Gross. "We want them all to be

consistent for maximum recognition."

Testing the materials with doctors. During market testing of the

materials, the creative teams goes through several iterations of

graphics and copy until they develop the most compelling message

possible. A key test is how doctors react.

Running it by the client. Pharmaceutical companies have their own

review committees, consisting of a lawyer, a medical expert, and a

regulatory expert. Each must review and revise every piece of

marketing for legality, medical accuracy, and regulatory adherence.

Submitting ads to the FDA. During this last step, the FDA "goes

through the materials with a fine-tooth comb," says Gross, and sends

out a formal letter with mandates for revision if necessary.

Despite Gross’s long detour into academe, he suggests that

pharmaceutical marketing may have always been his destiny.

"For a while I thought I wanted to go to art school," he says, "then I

decided I wanted a classic liberal arts education." He says he didn’t

have sufficient confidence in his artistic talents, even though he

"loved doing art." He ended up studying English, "because it was less

intimidating." He earned a bachelor’s degree in English from Tulane

University in 1986 and a Ph.D. in English from Brown University, with

a dissertation on 14th-century literature.

But when he was a kid and people asked him what he wanted to be, Gross

says his answer was "either a poet or an artist or a chemist."

Perhaps, then, being a copywriter in healthcare marketing combines

these two aspects of his childhood aspirations. As Gross concludes,

"So maybe it does make sense that I am doing pharmaceutical

advertising."

– Michele Alperin

Top Of Page
How to Sharpen Grant Writing Skills

There is a reason why many nonprofit organizations hire grant writers

and that is because grant writing – like tax preparation or auto

repair – can be tough, nerve-racking work. But according to Joan

Hollendonner, vice president of programs at Princeton Area Community

Foundation (PACF), organizations can successfully untangle the sticky

web of grant applications by taking a do-it-yourself, step-by-step

approach into the process.

"We value the nonprofit organizations in the area and we know that the

resources they need to operate with are scarce," says Hollendonner.

"That’s why we do our best to help people along with the application

process." She heads a free 90-minute grant information session on

Tuesday, March 28, at 9 a.m. at Princeton Area Community Foundation at

15 Princess Road. Call 609-219-1800 for more information, or visit

www.pacf.org.

Created in 1991, PACF is a public nonprofit community foundation that

seeks to raise the level of giving in the central New Jersey area by

connecting individuals, corporations, and nonprofits to each other and

to common causes and issues. This is accomplished by managing

charitable funds, providing discretionary grants, creating

partnerships, and serving as a catalyst to help solve community

problems. "We offer grants twice a year, in the spring and fall," says

Hollendonner. The next grant application deadline is Tuesday, April

11, with awards being made in July.

Prior to coming to PACF in 2004, Hollendonner worked as a

communications and management consultant providing services to

foundation, nonprofit, and government clients. Before that she worked

with the Robert Wood Johnson Foundation in Princeton for 15 years as a

senior communications officer and program officer.

This year PACF is expected to award more than $700,000 in grants, but

competition for the money can be fierce. Last year about 40 percent of

the grant applications received funding, so it is important for an

organization to put its best grant-application foot forward. In order

to make the grant information more user-friendly, the centerpiece of

the session is a walk-through of guidelines for obtaining a grant.

In order to be eligible, organizations must have tax exempt, 501 (c) 3

status and be registered as a New Jersey charity. "We want to be there

for the entire non-profit community, so we get proposals from large

organizations with multimillion dollar budgets and a staff of hundreds

as well as from small organizations that don’t even have a $100,000-a-

year budget and have a staff of two," says Hollendonner.

All attendees to the session receive grant guidelines, application

forms, and the ever-important budget forms. Typically the sessions

attract about 20 people from a variety of organizations with a wide

range of grant-writing experience, ranging from the novice to the

seasoned professional. At the start of each session Hollendonner polls

the room and tailors the presentation to the level of experience she

finds. "It is not unusual to have nonprofit executive directors and

board members seated next to volunteers," she says, adding that the

sessions are free-flowing and everyone is encouraged to ask questions

at any time in order to ensure that each person attending gets as much

information as he or she needs.

This is followed by a review of some of the many resources available

to nonprofits in the area, such as the Foundation Center, a national

organization with a gigantic database of foundations. There is a

branch located in the state library in Trenton. "It’s a great resource

where people can learn a lot about where they can go for funding,"

says Hollendonner. "The thing is that not a lot of people know about

it." Other largely unknown resources are the many websites that offer

discounts to nonprofits for technology information and computer

software.

A formal question and answer session is held just before the session

wraps up, after which a number of people inevitably stay behind to

have a one-on-one consultation or to network with the other nonprofit

attendees in the room. Hollendonner says that this is a particularly

valuable part of the session. "Sometimes people are not aware of what

some of their colleagues are doing and this allows them to connect

with each other," she says. "At our last grant information session

there was a woman who had worked at Princeton University before giving

birth to her child. She came to the session simply because she just

wanted to volunteer. A number of people stayed afterward and spoke

with her."

There are three different categories of funding under the Greater

Mercer Grants program.

The first is what Hollendonner calls the tried-and-true community

foundation role. "If you want us to support up to $15,000 for a grant

for a safety project, meals-on-wheels, or youth development, we will

do that under this category."

The second category – with grants of up to $20,000 – is aimed at

community organizing in low-income neighborhoods. "The focus is really

on community building," says Hollendonner. "This allows groups of

residents to organize and apply for a grant. Many people come in talk

about how they remember growing up in neighborhoods in which kids

couldn’t get away with anything because neighbors were watching and

would not hesitate to call parents if they did anything they weren’t

supposed to do. We have lost that and that this category is trying to

rectify this."

The third category does the same thing, though on a wider level,

within entire municipalities or across municipalities, with grants of

up to $50,000.

With 60 percent of grant applications denied funding last year, it is

important for nonprofit organizations to present the best application

they possibly can. Hollendonner offers these tips to help tip the

scales favorably:

Make sure you meet basic criteria. Pay attention to directions. The

Greater Mercer Grants require that organizations fit into local

geographic boundaries. "An example would be that someone who wants to

do a project at the Jersey shore will not receive funding," says

Hollendonner.

Include all important details. While the competition pool for grant

proposals varies from season-to-season and year-to-year, it pays to

make sure the quality of the application package is up to snuff.

Submit the application on time, include all the required information,

and write clearly. "It doesn’t have to be written in beautiful prose,

but we need to fully understand what it is you are asking support

for," says Hollendonner.

Use common sense. Before submitting your grant proposal, ask yourself

whether the program you want to do is logical. What is the potential

of your organization? Do you have the staff in place to do the job?

How many people will your project serve and for how long? Is the

budget reasonable? How will you assess success or failure, and what

will you do with the results?

"If someone tells you that your program was awful, what will you do

with that information?" asks Hollendonner. "Organizations need to

think of all these things in advance in order to increase the

likelihood of receiving funding."

Look around. "Sometimes in this area we will have a new organization

that doesn’t realize that there is already an organization doing what

they want to do right next door," says Hollendonner. "If a need is

being met, we usually don’t need more."

On the other hand, Hollendonner says that it is possible to do what

other organizations are doing if you are going to do it better. "If

you have a summer camp that offers a program Monday, Wednesday, and

Friday for two hours, and another camp that starts when parents have

to go to work and continues until mom or dad get back, it is easy to

see which one you are going to put your money into."

Don’t ever give up. Even if you fail, you still succeed. If not this

year, then maybe the next. One of the hot phrases for the new

millennium is "social capital," and, according to Hollendonner, the

lack of it affects individuals and organizations in similar ways.

"It has been documented that the number of connections people make

these days is declining," she says. "When you connect with others you

are in touch with shared resources and can be more successful at

taking advantage of opportunities. Connections can make a difference."

– Jack Florek

Top Of Page
Dreams of the VCs: Quick Trip From Eureka to the Bank

When entrepreneurs dream, they dream of money. So do the venture

capitalists who partner up and fund them. The money dreams of

entrepreneurs tend to center on receiving a funding check. The best

dollar-sign dream for a venture capitalist involves what the investors

fondly term a "liquid event." In these dreams, the plucky

entrepreneurs in whose untried ideas they have invested sell the

entire new company, selling off a production license, or, by taking

the company public, bring in billions of dollars (think Google).

Yet only one in five firms survives its first three years, let alone

becomes strong enough to make itself an attractive buy-out target. To

help entrepreneurs and venture capitalists understand the joint effort

needed to produce a gusher of a liquid event, the New Jersey

Technology Council presents "Liquidity: Everyone’s Goal" on Wednesday,

March 29, at 8:15 a.m. at the Garden State Exhibit Center in Somerset.

Cost: $50. Call 856-787-9700 or visit www.njtc.org.

Susan Roos of Pricewaterhouse Coopers moderates. Panels include

attorney Jeffery Nicholas of Fox Rothschild, based on Lenox Drive and

in Bucks County; and Nick Baughan, managing member of Marks, Baughan &

Co. in Conshohocken, Pennsylvania.

This event immediately precedes the New Jersey Technology Council’s

Venture Conference, at which 50 early/mid-stage companies will make

formal presentations. Visit www.njtc.org for registration.

Nicholas is heir apparent to the ultimate entrepreneurial path. His

father was an attorney/businessman who was kept sane by the farmer’s

daughter he met and married at Northwestern University.

"Dad was forever starting all sorts of crazy businesses," says

Nicholas. "He imported Irish wolfhounds from Ireland, and even began

his own venture fund." Not all of these efforts proved quite crazy.

Like the time he bought several baby food formulas from Squibb, took

out the salt and sugar, and renamed his new product Beechnut.

Nicholas attended Williams College, graduating with a B.A. in religion

in l977. Then, following in the family footsteps, he came back to

Chicago’s Northwestern University and took his law degree. For the

last nine years, Nicholas has directed Fox Rothschild’s technology and

venture finance group.

"Somewhere on a three, five, or seven-year schedule, new companies

should plan for some sort of liquidity event," says Nicholas. "Simply,

an entrepreneur shouldn’t take capital if he doesn’t foresee

liquidity." Of course, the best way to make it a good event is to aim

for it from the outset.

VC schemes. Venture capitalists are just investors playing for bigger

stakes. As compared with the common stock shareholder, the VC is

placing an all-or-nothing gamble – with cash he cannot pull out – in

the face of those five-to-one survival odds. He naturally hopes for

bigger rewards.

At that initial stage when venture capitalist and entrepreneur are

circling around each other cautiously, the former hands the latter a

spreadsheet. When the numbers are crunched, the venture capitalist

hopes to find a high comfort zone: an early sales growth spurt of 25

percent, followed by sustained sales climbs thereafter. A picture of

profit-taking potential going from X to 6X in a five year period makes

the potential investor increasingly comfortable.

If both the entrepreneur and investor like what they see, then comes

the inevitable question: What is the value of this company before I

put my money in? Here comes the fun part. In determining this

pre-money value figure, the venture capitalist is trying to determine

just how much he will have to put in to get what percent of the

company – and reap his expected return level. So obviously he tries to

boost the power of his investment by keeping the pre-money value

figure low.

Meanwhile, the entrepreneur shoots for a high estimate of his sweat

equity, and the value of the firm as it already stands. His response

is not only emotional, but fiscal. The higher he can raise the

pre-money value, the less this investor’s percentage is worth, and the

more likely he will be to pony up a larger sum. Sometimes attorneys

help in this wrangling. Sometimes they don’t.

VC dreams. The sensible venture capitalist invests in a lot more than

numbers and an enticing product line. The world’s best invention is

not necessarily destined to be the world’s best selling one. "The

venture capitalist is investing in management and people, as much as

product," says Nicholas. "Success depends on wisdom, contacts, and

skills, and they all have to be there for an investor to come on

board."

Conversely, the entrepreneur often wants more than funds from an

investor. He seeks a capitalist who can contribute contacts, synergy,

and access to other funding markets. To satisfy both, the venture

capitalist often takes a seat on the board or has an associate – or a

hand-picked contact – take on a senior management post.

When such appointments occur, entrepreneurs often shiver, feeling they

might be shut out in the cold from the very firm they launched. VCs on

the other hand, know that their cash is stranded in this company until

liquidity, and think that they should at least have a chance to guide

it toward a good buy out. To some extent, contractual agreements can

be drawn up to prevent anyone from giving away the store. Yet in the

end it is a sense of trust that works best. If the venture capitalist

can see the entrepreneur as a vital asset to the company and its

future success, while the entrepreneur sees the VC as a seasoned

businessman and the avenue to new capital markets, each will have the

incentive to work well together.

Seductive targets. Not every firm that is bought out has a stellar

track record with sales exploding off the charts. Of course having a

company in a nice niche in an expanding growth market is certain to

make a buyer’s heart beat faster. "Sometimes a firm can secure its

position by buying up another small company," says Nicholas. This not

only expands its market share, but also shows potential investors that

it is an aggressive firm on the move.

Additionally, the targeted firm must radiate a sense of smooth

acquisition to the potential buyer. Remove all possible infringement

issues and solve all human resource problems. Sometimes a

pre-negotiated labor contract can be a selling point. While it is

always a great fear among employees, most buyers do not want come in

and face the hassle of mass firings, and then have to recruit and

train replacements. If a buyer sees a solid group working of

high-morale workers performing well under a unified management, he is

likely to pay well for this whole, trouble-free package.

In business the old maxim of grow or die still holds true. If a firm

succeeds, eventually it will expand beyond one ownership and one

source of funding. Even if the liquidity is only selling pieces of

your the company as pubic stock offerings, it will mean a substantial

change, with a lot more horses pulling the wagon. The owner can gather

all the new reins himself, or he can hand them over to someone else

and go retire to a sprawling beach home in Aruba. Either way, working

toward liquidity is a vital a part of today’s business planning,

requiring as much attention as the current sales figures.

– Bart Jackson

Top Of Page
Tax Time Tips

This year everyone gets a tax break. April 15 falls on a Saturday, so

everyone has an extra two days to file. Not that the IRS encourages

procrastination, not at all. In fact, the revenue-gathering

organization has already put out its "last minute" tax tips.

The list begins with IRS spokesperson Gregg Semanick asking: "Looking

for ways to avoid the last-minute rush for doing your taxes? The IRS

offers some stress relieving ideas to help those that have not yet

filed."

"Historically," Semanick continues, in a prepared statement, "over 35

percent of the tax returns are filed during April."

But, he continues, "there is no need to be in line at the Post Office

at the eleventh hour on April 17. Our best advice: E-file now; pay

later. You can electronically file your return now and schedule a

payment via an electronic funds withdrawal from a bank account on

April 17. If due a refund, E-filing and requesting direct deposit of a

refund into a bank account, you can receive your money in as little as

two weeks even if e-filing a tax return during the last days of the

tax season."

The IRS offers these additional tips:

Don’t procrastinate and organize your tax records. Resist the

temptation to put off your taxes until the last minute. Your haste to

meet the filing deadline may cause you to overlook potential sources

of tax savings and will likely increase your risk of making an error.

Tax preparation time can be significantly reduced if you develop a

system for organizing your records and receipts. Start with the

income, deduction, or tax credit items that were on last year’s

return.

Visit the IRS online at IRS.gov. Millions of taxpayers visited the IRS

Web site, www.irs.gov, in calendar year 2005, downloading forms,

publications, and a variety of topic-oriented tax information. Anyone

with Internet access can also find tax law information and answers to

frequently asked tax questions.

Access "1040 Central" for your tax information needs. Taxpayers with

an adjusted gross income of $50,000 or less can file their tax returns

for free and online using the Free File Program at IRS.gov. The

popularity of IRS.gov is reflected in the fact that there were more

than 176 million visits to the Web site and 1.2 billion page views

last year.

File your return electronically. Through mid-March, over 1 million New

Jerseyans have already filed using the E-file program. Aside from ease

of filing, IRS E-file is the fastest and most accurate way to file a

tax return. If you’re due a refund, the waiting time for E-filers is

half that of paper filers. Taxpayers may use IRS E-file through their

tax preparer, over-the-counter software, or Internet programs as well

as the Free File program at IRS.gov. The Free File program can be used

by taxpayers with an adjusted gross income of $50,000 or less.

Seek free tax return preparation through volunteer programs. Free tax

help is available through the Volunteer Income Tax Assistance (VITA)

or Tax Counseling for the Elderly (TCE) sites. The free VITA program

services are available to taxpayers with incomes of $38,000 or less,

non-English speaking, and the disabled. The free TCE program services

are available to taxpayers 60 years of age or older. To obtain the

location, dates, and hours of the VITA or TCE volunteer site closest

to you, call the IRS toll-free Tax Help Line for Individuals at

1-800-829-1040 or call AARP at 1-888-227-7669.

Choose your tax preparer wisely. While most preparers provide

excellent service to their clients, the IRS urges taxpayers to be very

careful when choosing a tax preparer. You should be as careful as you

would in choosing a doctor or a lawyer. It is important to know that

even if someone else prepares your return, you are legally and

ultimately responsible for all the information on the tax return.

Taxpayers needing Form 4868 or any other federal tax form should act

soon to be sure they have the form in time. Forms are available on the

IRS Web site, www.irs.gov, or by calling toll-free 800-829-3676.


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