Happy early birthday, Kenneth Frazier.
Frazier, who became Merck & Co., CEO in 2011, will remain the top executive after he turns 65 late next year. The Merck board announced on Wednesday that it had ditched its mandatory retirement policy for the top spot in favor of keeping him on.
“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,” Lead Director Leslie A. Brun said in a statement. “We look forward to Ken’s continuing leadership and the impact it will have.”
Frazier, who has been with the Kenilworth, New Jersey-based company since 1992, has accomplished plenty in recent years but he he and Merck face challenges going forward.
He has overseen the approval and huge success of PD-1 superstar Keytruda and last year won praise from the public and peers when he resigned from the president's manufacturing council over Trump’s handling of the protest in Charlottesville, Virginia. For that kind of leadership, he has become one of the top paid pharma executives with a 2016 compensation package that totaled $21.8 million.
For now, the board policy change will allow him to continue to navigate PD-1 superstar Keytruda, the drug that currently defines Merck. The med, which generated $3.8 billion last year, is projected to grow to $12.7 billion in sales over the next six years, according to Evaluate Pharma.
The blockbuster, which is already generating significant sums as a single-use drug, is also moving into potentially lucrative combo treatments. The FDA last month expanded Keytruda’s label to include data showing that, when combined with Eli Lilly’s Alimta and platinum chemo, the drug could cut the risk of death in in previously untreated non-small cell lung cancer by half versus solo chemo.
But it is a sensitive time for the drugmaker. Many analysts think that Merck is overly reliant on Keytruda and will have trouble growing compared to its peers as other treatment categories suffer, like antiviral, diabetes, cardiovascular and vaccines where it ceded its top spot this year to GlaxoSmithKline.
In fact, it is expected to have the slowest growth of the top 10 pharma players through 2024, according to Evaluate Pharma. It is projected to turn in $38 billion in sales that year, up from $35.4 billion last year, a CAGR of just 1%.
But CEO leadership is much more than generating pharma sales. Frazier, one of the few African-American CEOs in the country, is highly regarded among his peers. In fact, he managed to do something last year that few other pharma executives have in recent years: draw praise from the public. His stand against the violence in Charlottesville resonated with healthcare consumers as well with a broader mainstream audience.
Thanks poured in across Twitter and other social media even as two other CEOs, Under Armour’s Kevin Plank and Intel’s Brian Krzanich, also resigned. The exodus, along with critical comments from other business leaders on the council, led President Trump to disband the group and criticize them on Twitter.