- Jim Edwards

In every recession there's usually one bright spot for marketers: drugs. As consumers skimp on food, fuel and clothes, the business of health often benefits from "nondiscretionary" spending. Marketing budgets go up because consumers, insurers and government programs pay out even when times are tight.

Not this time round.

Budgets for prescription drugs look to be flat this year, and marketers predict an overall decline through 2011, the first setback the business has ever seen.

Unlike most categories, the decline is unrelated to the economic woes of the rest of the country. Instead, it is caused by an unusual confluence of events washing over the industry in the next few years:

• Patents have expired or are about to expire on several big-spending brands this year, turning them into unmarketed generics. Those brands include Johnson & Johnson's Risperdal anti-psychotic and Topamax anti-migraine drugs; Merck's Fosamax osteoporosis treatment; Abbott Laboratories' Depakote depression/epilepsy therapy and Pfizer's Zyrtec anti-allergy medication, which went over-the-counter. Ad budgets on those drugs total $116 million. Standard & Poor's estimates that sales losses from those brands "will exceed $20 billion." That money will be "unlikely to be fully replaced by the contributions of new product launches," S&P said. The expirations will continue, with the big one—Pfizer's Lipitor—scheduled to expire in June 2011.

• The FDA has become more skittish about approving new drugs, and has tightened requirements for new diabetes products. Among the other drugs that have felt its wrath: Novartis' Zelnorm (yanked from the market after heart attack worries); and Sanofi Aventis' obesity-fighter, Acomplia, which the agency declined to approve over concerns that it triggered suicidal feelings. Novartis had backed Zelnorm with $90 million, and Acomplia was expected to be a huge launch.

• Drug companies' R&D pipelines won't fill up the gaps until 2011, analysts said. Pfizer, for instance, has an anti-obesity drug in late-stage development. The estimated launch date for the drug, which currently goes by a catalog number, "CP-945598," has been pushed back from 2009 to 2011, per Jon LeCroy, an analyst at Natixis Bleichroeder.

"On the horizon there doesn't seem to be the products that would generate those large consumer advertising budgets," said Jay Popli, chief business officer at startup Hygeia Therapeutics. "The brands won't be there."

• The problem is compounded by the fact that the growing number of uninsured Americans is finally impacting total prescriptions written. Scrips were down 0.5% through May 23, per Natixis Bleichroeder.

Ad spend in 2008 is running at just 2% more than last year, according to both TNS Media Intelligence and Nielsen Monitor-Plus. Growth in 2007 was a healthy 5%, topping out at $5 billion, per Nielsen. In 2006, it was a giddy 14%.

But, executives are talking openly of a contraction in budgets next year. "I would say it's certainly possible and it's likely to be probable," said Popli. He should know, as the former director of consumer marketing for Sepracor's Lunesta he once controlled the largest drug ad budget in the industry ($300 million last year). Lunesta's budget is tracking down 64% from 2007.

"Most people I speak to in the industry believe there's going to be a contraction, mostly in TV dollars," said Jay Carter, svp-client services at AbelsonTaylor in Chicago. The agency handles Amgen and TAP Pharmaceuticals.

Analysts expect to see more money go online or into CRM programs, which are far cheaper than commercials. "They could make the largest Web buy ever instead of the smallest TV buy ever," said Jack Barrette, the former pharma ad sales chief at Yahoo! who is now CEO of Wego Health in Cambridge, Mass., a social media company.

"I think we're seeing a shift in dollars spent," said Jay Bigelow, president of MicroMass Communications in Cary, N.C., which runs relationship marketing programs for Novartis. "We're up 30% this year."

It's not just TV that is losing out. Some executives wonder how much more drug money can go into public relations, which has seen enormous growth in the category. However, Laurie Mobley, an associate director at WeissComm in Washington, which services Genentech and Actelion, still sees plenty of opportunity: "Our clients are pushing the need for segmentation and the need for specialty. The goal is not be on Good Morning America anymore."