MRK Merck and Co Inc

By Jared S. Hopkins and Colin Kellaher 

Merck & Co. on Thursday said Kenneth Frazier, its chairman and chief executive, will retire as CEO at the end of June.

The Kenilworth, N.J., drugmaker said Robert Davis, currently executive vice president of global services and chief financial officer, will succeed Mr. Frazier as CEO, effective July 1.

"It has been a distinct honor and privilege to serve this great company as its CEO over the past decade," Mr. Frazier said on the company's earnings call Thursday.

Under Mr. Frazier's leadership, Merck became a leader in the emerging field of cancer immunotherapy and in the development of the drug Keytruda, now one of Merck's top sellers.

Keytruda, which treats lung and other cancers, totaled more than $14 billion in global sales last year.

Mr. Frazier, a lawyer who has led Merck since 2011, is among the few Black CEOs at S&P 500 companies and has been a leading industry voice in recent years encouraging companies to hire more Black employees. He has also steered Merck through criticism from politicians and patients about how the industry prices its medications.

Three years ago, the Merck board allowed Mr. Frazier to remain CEO and no longer required the CEO to retire when he turned 65 in 2019.

Despite Keytruda's success, some investors and analysts have worried that Merck may be too dependent on the therapy for growth. In the last couple of years, Merck has done deals for small companies to augment its pipeline, and it also plans to spin off some slow-growth legacy products.

The selection of Mr. Davis is a likely sign of "intensified" business development to reduce the company's dependency on Keytruda, according to a Thursday note from Citigroup Inc. analyst Andrew Baum. Keytruda sales made up nearly one-third of the company's approximate $48 billion in revenue last year, Merck said Thursday.

A graduate of Harvard Law School, Mr. Frazier worked at law firm Drinker Biddle & Reath before joining Merck in 1992. He became general counsel in 1999, and defended Merck from allegations that its 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.

Mr. Frazier has also been unafraid to take on delicate, sometimes controversial topics, whether it was drug pricing or former President Donald Trump.

Issues of race and the workplace have been an important issue to Mr. Frazier. Last month he helped start a nonprofit organization with other CEOs to connect employers with Black workers.

In 2017, Mr. Frazier stepped down from one of Mr. Trump's business committees, saying it was a matter of personal conscience after Mr. Trump's comments about racially charged violence in Charlottesville, Va.

Mr. Frazier's announced exit follows the recent retirement of longtime R&D chief Roger Perlmtter, who has been succeeded by Dean Li.

Merck said Mr. Davis, who joined as CFO in 2014, will become president on April 1, at which time the company's four operating divisions will begin reporting to him. Prior to joining Merck, Mr. Davis held roles at Baxter and Eli Lilly & Co.

Write to Jared S. Hopkins at jared.hopkins@wsj.com and Colin Kellaher at colin.kellaher@wsj.com

(END) Dow Jones Newswires

February 04, 2021 09:44 ET (14:44 GMT)

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