Kenneth Frazier, one of the most outspoken voices for racial justice in corporate America, will retire from his post as Merck chief executive this summer, and will be replaced by the drugmaker’s executive vice-president, Robert Davis.
Mr Frazier is one of only a handful of African-American chief executives of Fortune 500 companies, and spoke out against the killing of George Floyd last year. He will stay on as Merck’s executive chairman from July.
He has been chief executive and chairman since 2011, before which he was Merck’s general counsel.
In his 10 years at Merck, Mr Frazier oversaw the start of a new era in cancer care, with treatments stimulating the immune system to tackle tumours.
He also commended Mr Frazier’s belief in the importance of a “strong, values-based culture”.
“These characteristics and accomplishments, coupled with his principled stances on broader public issues, especially those involving intolerance and injustice, make his planned retirement felt so personally by every member of the board,” he added.
Other business leaders also praised his work. Chuck Robbins, Cisco chief executive, wrote on Twitter: “He is a compassionate leader who will be missed on a day-to-day basis, but we will continue to seek his insights for a long time to come!”
Mr Davis, the incoming chief, is also a lawyer by training. He joined Merck as chief financial officer in 2014, and his role expanded two years later to include business development, investor relations and corporate strategy.
Mr Davis said he looked forward to steering the company through the coming launch of a pneumonia vaccine, as well as more oncology treatments.
He added that his broad industry experience — including time at Eli Lilly and medical technology company Baxter — would help him “challenge internal thinking”.
“We have to find a way to make every dollar we invest more productive so . . . how do we leverage new technologies, new capabilities to do that?” he said on the earnings call. “We have to focus increasingly on the outcomes from our medicine, the value we demonstrate and how we ensure affordable access.”
Shares in Merck, which have risen more than 130 per cent since 2011, fell 1.8 per cent to $75.97.
The news of Mr Frazier’s planned retirement came as Merck announced a quarterly loss but issued a rosy outlook for 2021, guiding to sales between $51.8bn and $53.8bn, and adjusted earnings per share of $6.48 to $6.68.
It missed expectations for the fourth quarter, as the pandemic kept people away from their healthcare providers, especially for vaccinations for other diseases. Merck said coronavirus cost the company $400m in lost revenue in the quarter, and $2.5bn in the full year.
In the fourth quarter, sales rose 5 per cent year-on-year to $12.5bn, driven by a 30 per cent surge in sales of Keytruda, but lower than the consensus forecast for $12.7bn. Adjusted earnings per share were $1.32, compared with the average analyst estimate of $1.38.
The company’s net loss of $2bn compared with earnings of $2.4bn for the same period the year before. Spending on research and development soared 37 per cent year-on-year, because of upfront payments for acquisitions and collaborations.
Merck has pulled back from its work on a Covid-19 vaccine, after disappointing results in an early trial. It is working on drugs to treat the disease. It said it may have interim data for its oral drug, developed with Ridgeback Biotherapeutics, in the first quarter, and expected to have more than 10m courses produced by the end of 2021.
Merck said it expected the drug would be able to tackle new variants of the Sars-Cov-2 virus, because its mechanism had also been effective against other viruses. It is testing the drug against the emergent strains.
Get alerts on Merck & Co Inc when a new story is published