Originally published May 16 2005
Merck selects insider to replace CEO
by Mike Adams, the Health Ranger, NaturalNews Editor
After withdrawing arthritis drug Vioxx from the market, Merck & Co. Inc. Chief Executive Raymond Gilmartin resigned, leaving Merck to name a replacement. Richard Clark, CEO of Merck spin-off company Medco is set to replace Gilmartin immediately. Some analysts feel promoting from within was a poor choice since investors feel outsiders tend to promote product innovation, but others say promoting from within is more likely to offer a smooth transition for Merck shareholders. Clark did not mention any major changes in strategy at Merck.
Inc. (MRK.N: Quote, Profile, Research) on Thursday named a company insider to replace embattled Chief Executive Raymond Gilmartin, a move that was greeted with little enthusiasm by investors who hoped for a high-profile outsider to turn the drugmaker around.
Gilmartin, who resigned, will be replaced immediately by Richard Clark, who is currently president of Merck's manufacturing division.
He was previously CEO of Medco Health Solutions Inc., the pharmacy benefit management company that was recently spun off by Merck.
Gilmartin resigned ahead of his scheduled retirement in 2006, following the withdrawal of the company's arthritis drug Vioxx last September and Merck's failure to produce enough new drugs to offset the ones that are losing patent protection.
"I think highly of Clark, but he's basically a consolation prize because Wall Street wanted new blood, and he's a Merck insider," said Deutsche Bank analyst Barbara Ryan.
Instead, it formed an executive committee led by Lawrence Bossidy, former chairman and CEO of Honeywell International Inc., to fill that role.
Pharmacy benefit managers, like Medco, are paid by insurers to watch that drugstores only dispense medicines on the insurance plan's list of preauthorized drugs -- a middleman role to keep drug costs down.
Clark said on a conference call he will not ignore innovation, but did not immediately announce any major changes in strategy at Merck.
"We will be focused on internal growth as well as external growth through licensing" of products from other companies, Clark said.
Merck shocked investors and rattled prescription drug users when it withdrew Vioxx after a study showed the medicine doubled the risk of heart attack and stroke.
Gilmartin joined Merck as president and chief executive officer in June 1994, and was named chairman in 1994.
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