- Merck & Co.'s veteran CEO Kenneth Frazier will continue to lead the pharmaceutical giant through at least 2019, the company said Wednesday, after its board of directors agreed to cancel a policy which would have required him to retire in December of that year, when he turns 65.
- "CEO succession has been our top priority, and removing the mandatory retirement policy enables the Board to make the best decision concerning the timing of that transition," said Merck director Leslie Brun, speaking for the company's board.
- Frazier joined Merck in 1999, rising through the ranks to become company chief in 2011. Under his leadership, the pharma has recast itself as a leader in the fast-emerging field of immuno-oncology, transitioning from the primary care blockbusters that previously drove its business.
Succession planning at Merck will carry a little less urgency now, giving the company's board more flexibility in deciding when and how to replace Frazier.
The CEO, currently 63, has led the company for the past seven years. Under his watch, Merck's stock has nearly doubled in value, adding more than $50 billion to its market capitalization.
In 2011, when Frazier took over, Merck's portfolio was led by now-generic drugs like the asthma drug Singulair (montelukast sodium), cholesterol treatment Zetia (ezetimibe) and the anti-hypertensive Cozaar (losartan). Revenues that year totaled $48 billion.
Patent expirations and shifting markets, however, have forced Merck to transition, similar to what others across the industry have experienced.
Merck's business is now more focused, concentrated around a half-dozen key products. It's also smaller, bringing in only $40 billion last year. And its share price has grown more slowly over the past seven years than some of its industry peers, such as AbbVie and Eli Lilly.
Merck's future, however, looks brighter, mostly thanks to the market-shifting success of Keytruda (pembrolizumab), a cancer drug approved in 2014 that's since become the leading immuno-oncology treatment.
Merck's decision under Frazier to back Keytruda after initial skepticism has defined the past few years for the company, and will shape its future as well.
Under the pharma's past policies, Merck would need to soon decide on who would lead the company beginning in 2020.
Historically, the mandated retirement policy hasn't been merely theoretical for Merck. The company's former chief executive Roy Vagelos was forced out by the policy in 1994 when he turned 65.
"Retiring from Merck to me was like dropping off a cliff," he said in a 2012 interview. "I hated it."
Vagelos joined Regeneron in 1995, serving as the board's chair, where he helped steer the company into becoming a top biotech.
Rescinding the retirement policy gives it some breathing room to find its next chief and maintains stability at the top while Merck competes with its rivals in cancer.
Frazier earned $17.6 million last year, a little less than the $22 million and $24 million Merck paid him the past two years, respectively.
Shares in Merck were little moved in Wednesday trading, rising by about half a percentage point.
Andrew Dunn contributed reporting.