Tis the Season....Pfizer's CEO Abruptly Announces His Departure
Late last week, Merck appointed Ken Frazier, a lawyer, to be the company’s next CEO. Frazier’s appointment, while expected, was historical because he was the first African American tapped to be the CEO of a major pharmaceutical company. Industry insiders contend that Frazier’s unlikely ascension is a tribute to his affability, PR prowess and ability to successfully use his considerable legal skills to navigate Merck through its troubled Vioxx era.
On the other hand, industry analysts and Pfizer shareholders have been less enamored of the performance of Jeffrey B. Kindler, another lawyer, who has led the company since 2006 when its former CEO Hank McKinnell Jr tried to single-handedly destroy the world’s largest drug maker. Kindler joined Pfizer in 2002 as its chief counsel after working at General Electric and McDonalds—clearly a man with little or no previous pharmaceutical industry experience. While critics contend that Kindler did a laudable job after stepping into the breech, there was consensus among a majority of Pfizer shareholders that it was time for a change at the top.
In a statement Sunday, Kindler announced that he wanted to “recharge my batteries, spend some rare time with my family and prepare for the next challenge in my career.” During his tenure, Kindler oversaw the acquisition and merger of Pfizer and Wyeth and successfully oversaw a settlement for illegal marketing of the painkiller Bextra which included a $1.3 billion criminal fine: the largest health care fraud case and criminal fine for a pharmaceutical company in US history.
The reason for Kindler’s unexpected and sudden departure is likely the impending patent expiry (2011) for its top selling cholesterol drug Lipitor (Pfizer acquired Lipitor after purchasing Warner Lambert Pharmaceuticals in the mid 1990s). Recent financial reports indicate that Lipitor accounted for $11.4 billion of Pfizer’s $50 billion in sales last year or 23% of its revenue. Most industry analysts agree that navigating Pfizer in a world without Lipitor will require an individual with many years of pharmaceutical industry experience and moxy.
To that end, Pfizer announced that Ian Read, currently head of the company’s biopharmaceutical operations will immediately take over as CEO. According to a profile on Forbes.com, Read is:
Senior Vice President; Group President, Pfizer Biopharmaceutical Businesses since October 2009. Previously, he was President Worldwide Pharmaceutical Operations from August 2006 until October 2009. Mr. Read has held various positions of increasing responsibility in pharmaceutical operations. He previously served as Area President for the Europe, Canada, Africa and Middle East and Latin America regions and Senior Vice President of the Pfizer Pharmaceuticals Group. Mr. Read was elected a Vice President of Pfizer Inc. in April 2001.
Also, Pfizer’s board of directors said that it would elect a new chairman (another position vacated by Kindler’s departure) at a meeting within the next two weeks.
Until next time...
Good Luck and Good Job Hunting!!!!
Since 2007, approximately 80,000 pharmaceutical jobs have been eliminated. The recent consolidation in the industry, e.g., Merck-Schering, Pfizer-Wyeth and Roche-Genentech suggests that many more life sciences jobs will be lost over the next year or so. Typically, to avoid law suits and possible discrimination claims, most companies will layoff a mixture of experienced and entry level employees that cover the racial, religious and age spectra. For those of you who may not know, Americans who are 40 and older constitute a “protected class of employees.” In other words, companies that layoff employees cannot disproportionately give pink slips to employees 40 years of age or older. This law was enacted because older employees typically have higher salaries and have accrued more benefits and vacation time than their more junior counterparts and eliminating them can drastically cut costs. While most companies are careful to layoff a mixture of junior and senior employees during large layoffs, a quick perusal of the demographics of employees who lose their jobs reveals that many of them are older, more experienced workers. Sacrificing a few entry level employees (to prevent any red flags) is worth it to the accountants who charged with cutting costs and orchestrating large corporate layoffs.
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The ink hasn’t had time to try on the deal sheet and Pfizer already has announced what the impact of its acquisition of Wyeth will have on the combined company. Here’s what to expect: Pfizer will shed at least 19,000 jobs from it newly combined work force of 128,000 employees; it will slash its stock dividend by 50%; and it will take a $2.3 billion charge to settle a federal investigation over off label promotion of its former pain drug Bextra. 