Merck’s Kenneth Frazier retires as CEO at the end of June

“It has been a clear honor and privilege to serve this wonderful company as its CEO over the past decade,” he said. Frazier said Thursday.

Led by mr. Frazier, Merck became a leader in the emerging field of cancer immunotherapy and in the development of the drug Keytruda, now one of its top sellers. The therapy, which treats lung and other cancers, amounted to more than $ 14 billion worldwide last year.

Mr. Frazier, an attorney who has led Merck since 2011, is one of the few black CEOs at S&P 500 companies and has been a leading voice in the industry for the past few years, encouraging companies to hire more black employees. He also sent Merck through criticism from politicians and patients about how the medicine is priced in the industry.

Merck’s board three years ago removed a policy requiring its CEO to retire after turning 65, which Mr. Frazier could stay in the role with reaching the age in 2019.

Only four of the top executives of America’s 500 best companies – or 1% – are black, including Mr. Frazier. The other is Marvin Ellison of the big-iron hardware store Lowe’s Cos., Roger Ferguson Jr. from the financial services firm Teachers Insurance and Annuity Association of America and René Jones, who runs M&T Bank in New York. When Rosalind Brewer took over from Walgreens Boots Alliance in March Inc.,

the number will briefly rise to five as Ferguson retires from TIAA at the end of the month.

Despite the success of Keytruda, some investors and analysts are concerned that Merck’s growth may depend too heavily on therapy. The drugmaker has been doing business for small businesses over the past few years to expand its pipeline, and it plans to eliminate some slow-growing products.

The choice of mr. Davis is likely to point to intensified business development to reduce dependence on Keytruda, according to a note from Citigroup on Thursday. Inc.

analyst Andrew Baum. The sale of Keytruda last year accounted for nearly one-third of the company’s $ 48 billion in revenue, Merck said Thursday.

The increase of mr. Davis, however, suggests that Merck’s overall strategy is likely to remain stable in the short term, said Seamus Fernandez, an analyst at Guggenheim Securities LLC, although he added that ” part of me wonders if this is a way to accelerate and accelerate. decision making ”for transactions.

Mr. Frazier, a graduate of Harvard Law School, worked for the law firm Drinker Biddle & Reath before joining Merck in 1992. He became general counsel in 1999 and defended Merck against allegations that his top-selling painkiller Vioxx increased the risk of heart attacks and strokes. . Merck agreed in 2007 to pay $ 4.85 billion to settle thousands of claims.

Issues regarding race and workplace were important to Mr. Frazier, who last month helped start a non-profit organization with other CEOs to connect employers with black workers.

He also tackled delicate, sometimes controversial topics during his tenure over Merck, ranging from drug prices to former President Donald Trump. Mr. Frazier resigned from a White House business committee in 2017, calling his decision a matter of conscience after Trump blamed both sides for deadly clashes between white supremacists and counter-protesters in Charlottesville, Va.

The announced resignation of mr. Frazier follows the recent retirement of Roger Perlmutter, a longtime R&D chief, who succeeded Dean Li in the role.

Merck said Mr. Davis, who joined the company as chief financial officer in 2014, will become president on April 1, and then the drugmaker’s four operating divisions will begin reporting to him. Prior to joining Merck, Davis held roles at Baxter International. Inc.

and Eli Lilly & Co.

Mr. Davis joins a small group of chief financial officers who have climbed to first place. About 6% CFOs have been promoted to CEOs at companies in the S&P 500 and Fortune 500 in recent years, according to the Crist | Kolder Volatility Report. The most common path is an internal promotion of the role of chief operating officer.

Merck said in its fourth-quarter report on Thursday that it expects total revenue this year to be between $ 51.8 billion and $ 53.8 billion and adjusted earnings from $ 6.48 to $ 6.68 per share.

Analysts forecast revenue of $ 51.66 billion and an adjusted earnings of $ 6.30 per share.

Merck’s quarterly revenue of $ 12.5 billion was 5% higher than $ 11.9 billion in the previous quarter, as Keytruda’s sales rose by almost one – third to about $ 4 billion. Analysts surveyed by FactSet expected revenue of $ 12.67 billion in the most recent period.

—Lynn Cook and Nina Trentmann contributed to this article.

Write to Jared S. Hopkins by [email protected]