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MERCK & CO., INC.

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Pfizer to replace longtime CEO Read with veteran Bourla

10/01/2018 | 02:36pm EDT
FILE PHOTO: Pfizer Chief Executive Ian Read leaves after appearing at a commons science committee hearing at Portcullis House in London

(Reuters) - Pfizer Inc Chief Executive Officer Ian Read will hand over the reins of the largest U.S. drugmaker to veteran insider Albert Bourla in January, after eight years at the helm, in the backdrop of increased scrutiny over drug pricing.

Under Read, a Scot who joined the company in 1978, Pfizer has weathered patent expirations of several blockbusters, including cholesterol drug Lipitor, through dealmaking, expansion in emerging markets and cost cuts.

Pfizer won 30 approvals from the U.S. health regulator during his tenure. Read, however, failed to pull off two mega deals - acquisition of British drugmaker AstraZeneca Plc in 2014 and Botox maker Allergan Plc in 2016 - that would have helped lower its corporate taxes.

Bourla, 56, was promoted to the newly created post of chief operating officer at the start of this year and was widely seen as the leading candidate for the top job.

Before becoming COO, he led the drugmaker's Innovative Health business, which holds its newer, patent-protected medicines, since the start of 2016. The unit recorded an 8 percent rise in revenue in 2017 to $31.4 billion.

"Now is the right time for a leadership change and Albert is the right person to guide Pfizer through the coming era," Read, who will become executive chairman, said.

Shares of the drugmaker, which have risen about 160 percent since Read took over as CEO in December 2010, were trading up nearly a percent at $44.42. The stock had earlier touched 17-year high of $44.51.

"This looks like a well-considered transition, thus I'm not convinced it will herald a major change in strategic thinking, particularly as Ian will still stay on as chairman," Berenberg analyst Alistair Campbell said.

The leadership change comes at a time when the Trump administration has been pressuring drugmakers to lower prescription costs. Read, after a conversation with President Trump in July, had decided to defer price increases for no more than six months.

Pfizer, which has been trying to sell its consumer healthcare business for the past one year, is bracing for patent expiration of its neurological disease treatment Lyrica, which raked in $1.2 billion in second-quarter sales.

The company's drug pipeline has the potential for about 25-30 approvals through 2022, Pfizer said, adding that it expects up to 15 of them to fetch multi-billions in sales.

"The timing of this transition makes sense given Reed's age and the company's current strong portfolio of new products," Edward Jones analyst Ashtyn Evans said.

Last week, rival Merck & Co Inc said it would amend a policy to allow its head, Kenneth Frazier, to remain CEO beyond 2019 when he was expected to retire.

(Reporting by Tamara Mathias and Ankur Banerjee in Bengaluru; Editing by Patrick Graham and Arun Koyyur)

By Tamara Mathias and Ankur Banerjee


ę Reuters 2018
Stocks mentioned in the article
ChangeLast1st jan.
ALBERT INC. 1.61% 5040 End-of-day quote.-25.22%
ALLERGAN PLC 0.00%End-of-day quote.0.97%
ASTRAZENECA PLC -0.47% 8253 Delayed Quote.13.22%
CHANGE INC. -0.48% 2684 End-of-day quote.-23.86%
MERCK & CO., INC. 0.79% 77.85 Delayed Quote.-5.57%
NEXT PLC -0.89% 8040 Delayed Quote.14.48%
PFIZER, INC. 0.69% 42.1 Delayed Quote.13.58%
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Financials (USD)
Sales 2021 46 551 M - -
Net income 2021 12 867 M - -
Net Debt 2021 11 752 M - -
P/E ratio 2021 16,5x
Yield 2021 3,39%
Capitalization 196 B 196 B -
EV / Sales 2021 4,45x
EV / Sales 2022 4,05x
Nbr of Employees 73 500
Free-Float 70,7%
Chart MERCK & CO., INC.
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Merck & Co., Inc. Technical Analysis Chart | MRK | US58933Y1055 | MarketScreener
Technical analysis trends MERCK & CO., INC.
Short TermMid-TermLong Term
TrendsNeutralNeutralNeutral
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 25
Last Close Price 77,24 $
Average target price 94,10 $
Spread / Average Target 21,8%
EPS Revisions
Managers and Directors
Robert M. Davis President, Chief Executive Officer & Director
Caroline A. Litchfield Chief Financial Officer & Executive Vice President
Kenneth C. Frazier Executive Chairman
Sandy Tremps Vice President-R&D IT CIO
Dave Williams Chief Information & Digital Officer
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