New year, new top executive. Merck's ($MRK) 55-year-old President Kenneth Frazier (photo) will ascend to the CEO's office effective January 1. That's a couple of months before company policy would have forced current chief Richard Clark (photo)--who in March turns 65, the mandatory CEO retirement age-- to step aside.
Frazier's assumption of the CEO mantle has been expected for some time--even before Merck named him president, putting him directly in line for the job. Previously, he was global pharma president, but it was his performance as general counsel that marked him as a rising star. He held that job when Merck yanked its Vioxx painkiller off the market for safety reasons, and his handling of the subsequent litigation won kudos all around. Under his leadership, the company managed to settle liability litigation for $4.85 billion, which isn't chump change, but still was billions less than Wall Street had feared, as Reuters notes.
In the statement announcing Frazier's election, Clark called him a "gifted leader," saying that he "has made considerable contributions to our business every step of the way during his 18 years with Merck." For his part, Frazier said he was "honored and excited" and that he has a "strong optimism" about the company's future, even though drugmakers face "a period of dramatic industry change," a.k.a the patent cliff, pricing pressures, slowing growth in developed countries, and so on.
"For Merck to be a leader in the future, we must continue to adjust our operating model and achieve a level of transformation never before seen in our industry," Frazier said. Of course, Merck is already working through a transformation, with the integration of Schering-Plough, the company it bought for $49 billion last year. The company is shutting plants and R&D facilities and cutting more than 15,000 jobs to save $3.5 billion annually. We'll see what else Frazier has up his sleeve.