Ahead of a CEO shuffle at the end of the month, Merck & Co. is tapping one of its own to spearhead the company's strategy in the coming years.
Merck will slot 23-year company veteran Michael Klobuchar into the newly minted role of executive vice president and chief strategy officer July 5—just a few short days after Kenneth Frazier is due to retire as CEO. Frazier, who's been the company's CEO since 2011, will pass the reins to Merck's chief financial officer Robert Davis June 30.
With the company's Organon spinoff complete and some $9 billion in hand, Merck is poised to chart its own destiny in the coming months and years. As strategy lead for the new, leaner outfit, Klobuchar will no doubt play a big part in those efforts.
In his new role, Klobuchar will rise to the ranks of Merck's executive committee and navigate the "advancement and execution" of its strategy, the company said in a statement. He'll transition from his current role as senior vice president of Merck Research Laboratories (MRL) Finance and Global Project and Alliance Management. MRL is the name of Merck's R&D unit.
Earlier in his career, Klobuchar served as the company’s senior vice president of corporate strategy and financial planning as well as president of the Merck Global Health Innovation Fund.
He first enlisted with Merck back in 1998 as a synthetic process development engineer, supporting pipeline prospects within its research group. He's also held technical, operational and financial titles across several areas of the company, Merck said.
Klobuchar's promotion comes at a major inflection point for Merck. Aside from the CEO switch, Merck in early June shed its women's health and biosimilars businesses along with some older meds via its Organon spinoff. Flush with $9 billion from the split, Merck will use those funds to hunt for business development deals, CEO-to-be Davis said at an investor event last month.
"Value-enhancing business development is an important priority for Merck," he said, noting the company will plan share buybacks if those opportunities don't pan out.
During an earnings call the month before that, Davis hinted Merck was "open to any opportunity to add a meaningful asset" and said the company had capital on hand to pull it off.
One reason investors might be hoping for an M&A-hungry Merck? In the aftermath of the Organon spinoff, the company is now even more reliant on its immuno-oncology superstar Keytruda. The drug, which generated $14.38 billion last year, is set to lose patent exclusivity toward the end of the decade.
Meanwhile, Moody's recently tagged Merck as one of several Big Pharmas well positioned for deal-making. Merck in particular has the most financial firepower to pull off M&A without hurting its current credit rating, the firm said.
Editor's note: This story was updated to correct an error. Kenneth Frazier joined Merck in 1992 and became CEO in 2011.