Merck & Co CEO Kenneth Frazier. Picture: REUTERS
Merck & Co CEO Kenneth Frazier. Picture: REUTERS

Washington  — Merck & Co said on Thursday  Kenneth Frazier plans to retire as CEO after almost a decade leading the drugmaker.

Frazier, one of just four black CEOs in the Fortune 500, will be succeeded by Robert Davis, Merck’s CFO and executive vice-president for global services. Davis was unanimously selected by Merck’s board for the post. He will also be Merck’s new president, effective April 1.

Frazier, who will continue as executive chair, will step down as CEO effective June 30, the company said in a statement. He said serving as Merck’s CEO had been a privilege.

Davis is taking over at a time when the pandemic has reshaped much of the health-care industry, including hitting Merck sales in 2020, and as the company’s biggest product faces more competition in the coming years.

The drugmaker issued a stronger-than-expected outlook for the coming year, though its fourth-quarter revenue and earnings missed Wall Street expectations. Its shares were little changed in trading before US markets opened.

Leadership chapter

The CEO change represents a new leadership chapter for the company. Long-standing research chief Roger Perlmutter retired at the end of 2020. Dean Li, who was then senior vice-president of discovery sciences and translational medicine at Merck Research Laboratories, began in the role January 1.

A Harvard-trained lawyer, Frazier became CEO of Merck at the start of 2011. During his tenure, the Kenilworth, New Jersey-based company has grown its cancer franchise, headlined by the blockbuster immuno-oncology drug Keytruda, and invested in researching and developing new medicines.

Investors have questioned whether the company is too reliant on Keytruda, which brought in about $11.1bn in sales in 2019, nearly 24% of Merck’s revenue that year. The company has emphasised opportunities for Keytruda in additional forms of the disease along with experimental products such as pneumococcal vaccine candidates and the HIV medicine islatravir.

National profile

Frazier has assumed a national profile in recent years as he spoke out about race and racism. In 2017, after comments former US president Donald Trump made about racially charged violence in Charlottesville, Virginia, Frazier quit a presidential business council. More recently, he’s addressed persistent racial gaps in America, as well as at the top of the world’s largest corporations.

In December, Frazier became co-chair of the OneTen initiative, a group pledging $100m in an effort to hire 1-million black workers during the next decade. OneTen, which brings together Merck, General Motors and Walmart, among others, will connect employers with recruiters to focus on hiring and training black workers without four-year college degrees.

Frazier remained CEO after Merck pulled back a policy in 2018 that would have required him to retire at age 65. The company began its search for a successor that year with a particular focus on a group of internal candidates.

Veteran executive

Davis, who has been with Merck since he became CFO in 2014, is a veteran of the drug manufacturers Baxter International Inc. and Eli Lilly.

A graduate of Northwestern University School of Law and its Kellogg Graduate School of Management, he is director of Duke Energy and a board member with the global health and humanitarian non-profit Project Hope.

Frazier described his successor in a press release as someone who is knowledgeable about Merck and the pharmaceutical industry and has been a strong partner to him and the Merck management team.

Les Brun, Merck’s lead independent director, said that while planning for Frazier’s succession the board saw what Davis has contributed to the company and its leadership.

Bloomberg

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