Longtime Merck CEO, minority advocate Ken Frazier retires
Longtime Merck executive Ken Frazier, whose leadership helped bring the pharmaceutical manufacturer one of the most profitable drugs in history and who is one of the few remaining black CEOs of a large corporation, is retiring.
Frazier, Merck’s CEO since early 2011 and advocate for minority advancement who has assumed then President Trump’s tacit support for white supremacists, will retire on June 30.
Frazier, 66, will be replaced by Rob Davis, chief financial officer since 2014, the company said Thursday in announcing its quarterly financial results. Frazier will become executive chairman of the board during a transition period. The change comes just months after Dr. Dean Li took over as Merck’s head of research and development.
Frazier joined Merck, now headquartered in Kenilworth, New Jersey, in 1992 as general counsel for one of the company’s pharmaceutical companies and worked his way up to the top spot. He is one of the few black CEOs to head a Fortune 500 company.
Last month, when Walgreens named Roz Brewer as its new CEO, there were four. With Frazier’s departure, that number is back to three.
Blacks make up 12.8% of the US population, but only 0.6% of Fortune 500 CEOs are African American. They earn 10% of all college degrees and hold 8% of professional positions, but only 3.2% of all senior-level roles in Fortune 500 companies, according to Coqual, a think tank that studies diversity on the spot. of work.
The main reason companies have few black CEOs is that many rely on longstanding perceptions of who has the skills to take on leadership roles, said Adia Harvey Wingfield, a sociology professor at Washington University in St. Louis. “Those pictures aren’t usually people of color, and they’re usually not of white women,” said Harvey Wingfield, who has studied racial and gender inequalities in professional occupations. “What is not said is that these people are usually white men.”
Company promotion policies are often unclear, and research shows that black workers are less likely to enter departments that channel workers into leadership roles, he said. “If you run a business and your opinion is that you implicitly don’t see black people suitable for that type of job, it is likely that it will be harder for them to get that type of job,” said Harvey Wingfield.
Last year, researchers from Stanford University’s Graduate School of Business studied the race, ethnicity, and gender of employees who report directly to Fortune 100 company CEOs. part were not in positions responsible for leading a unit that reported a profit or a loss, said David Larcker, a professor who took part in the study. Most CEOs, he said, are promoted after showing a profit posting record.
“The underrepresented groups were in functional areas that were very unlikely to result in a promotion to CEO or board positions,” said Larcker.
Many people of color and women had jobs in human resources or other “cost center” areas that companies don’t usually pull out for CEO or board positions, she said. But determining why this happens is much more difficult, Larcker said.
“There are many explanations, discrimination is one,” he said. “There must be many great talents and high education and high energy, good ethics, in all genders and races.”
Corporate America must change its perception of who is qualified to be a manager, and this can be done with leadership training programs that focus on advancing leaders of color, Harvey Wingfield said. They can also match up promising black employees with mentors rather than letting employees form relationships that could lead to promotions, he said.
At Merck, Frazier clashed with then-President Donald Trump over his refusal to condemn the violence of white supremacists who marched in Charlottesville, Virginia in 2017.
“American leaders must honor our core values by clearly rejecting expressions of hatred, fanaticism and group supremacy,” Frazier said at the time.
He resigned from the president’s production board and was attacked repeatedly by Trumpon Twitter on the same day. Other leaders followed and the council was quickly dissolved.
Frazier spoke publicly about inequality in the United States again last year during the protests that followed George Floyd’s death at the hands of the police in Minneapolis. Frazier said it could very well have been him.
Frazier, a social justice advocate who has won awards from the NAACP and the National Minority Quality Forum, co-founded OneTen, a coalition of organizations committed to training and promoting one million Black Americans in family support work.
A Harvard-trained attorney raised in a poor, rude neighborhood of Philadelphia, Frazier was instrumental in successfully defending Merck from an avalanche of lawsuits following the 2004 recall of the pain reliever Vioxx for causing heart attacks and strokes.
It also helped orchestrate arguably Merck’s best deal ever, its $ 41 billion acquisition of New Jersey compatriot Schering-Plow in 2009. That deal was primarily aimed at getting Organon’s women’s health business. company, which Merck is now in the process of turning off to spur the growth of both companies after the split.
But Schering-Plow’s research labs had a hidden gem that, once discovered and developed, became the leading cancer immunotherapy drug, Keytruda.
“None of us were smart enough to know what we had in pembrolizumab,” Keytruda’s chemical name, Frazier said during a conference call with analysts Thursday.
Keytruda now generates $ 14 billion in annual sales, more than a quarter of Merck’s revenue. It is approved for dozens of cancer types and patient groups, including two approvals in the fourth quarter, and is currently being tested in approximately 1,400 studies for further uses.
More recently, Merck concluded approximately 120 deals last year, including one to purchase anticancer drug developer VelosBio to further expand Merck’s anticancer drug franchise. Both Frazier and Davis said Merck will continue to focus on driving growth through innovative science, rather than megadeals that are partly intended to reduce costs.
Merck, one of the world’s leading vaccine manufacturers, announced last week that it was eliminating its two COVID-19 vaccine candidates, because the immune responses they triggered in early test volunteers “were lower than those reported with the” natural infection and the results “of other experimental vaccines from the companies, Li said. However, Merck is continuing to test a couple of potential treatments for the novel coronavirus and is expected to have some study results in the coming months.
Merck reported a fourth-quarter loss of $ 2.09 billion, or 83 cents per share, in part due to a $ 2.7 billion charge to purchase VelosBio. Adjusted earnings came in at $ 3.4 billion, or $ 1.32 per share, well below Wall Street’s $ 1.38 forecast.
A year earlier, Merck had posted net income of $ 2.36 billion, or 92 cents per share.
Total revenue was $ 12.51 billion, up 5% from the previous year, but less than the $ 12.67 billion forecast by analysts. Keytruda’s sales were just under $ 4 billion in the quarter, up 28% from the previous year.
In afternoon trading, Merck shares fell $ 1.28, or 1.7%, to $ 76.03. Stock prices more than doubled and revenue nearly doubled, under Frazier as CEO.
Merck & Co. said it expects earnings per share for 2021 to fluctuate between $ 5.52 and $ 5.72. Annual revenue is expected to be $ 51.8 billion to $ 53.8 billion. Analysts had expected $ 6.30 per share and average revenues of $ 51.66 billion.
However, the company said those estimates will change if the long-planned spin-off of its subsidiary Organon occurs in the second quarter as planned. Merck also said it expects the impact of the pandemic to cut 2021 revenue by 2%.
AP business writer Tom Krisher contributed to this report from Detroit. Follow Linda A. Johnson at https://twitter.com/LindaJ_onPharma