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DBL%20Hendrix%20small.png College chemistry, 1983

Derek Lowe The 2002 Model

Dbl%20new%20portrait%20B%26W.png After 10 years of blogging. . .

Derek Lowe, an Arkansan by birth, got his BA from Hendrix College and his PhD in organic chemistry from Duke before spending time in Germany on a Humboldt Fellowship on his post-doc. He's worked for several major pharmaceutical companies since 1989 on drug discovery projects against schizophrenia, Alzheimer's, diabetes, osteoporosis and other diseases. To contact Derek email him directly: derekb.lowe@gmail.com Twitter: Dereklowe

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In the Pipeline: Don't miss Derek Lowe's excellent commentary on drug discovery and the pharma industry in general at In the Pipeline

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May 6, 2013

Ken Frazier at Merck: An Assessment

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Posted by Derek

Here's a fine profile of Merck's Ken Frazier at Forbes. Matthew Herper does a good job of showing the hole that Merck has been slowly sliding into over the past few years, and wonders if Frazier is going to be able to drag the company out of it:

But it is clear that Frazier still views himself through the prism of his lawyerly training–he has not yet grown into a commanding and decisive chief executive. He’s scrupulous about not making anyone else look bad–working almost too hard in interviews to be clear that Perlmutter’s predecessor was not fired–and seems to be afraid to be seen as making too many big changes. “I am a person who does not subscribe to the hero-CEO school of thought,” he says. His persona is the culmination of the careful lessons he learned from his long climb to the top and his masterful legal defense against the lawsuits related to the pain pill Vioxx, which saved Merck and got him the top job. In order to be a great leader, he’s going to have to unlearn them.

I don't subscribe much to the hero-CEO school, either, at least not for a company the size of Merck. But even for a huge company, I think a rotten CEO can do a lot more harm than a good one can help (there's some thermodynamic way to express that, I'm sure). Frazier is certainly not in that category, and I've enjoyed some of the things he's had to say in the past (although I've also wondered about the follow-through). I wonder, though: how much of what Merck needs is in Frazier's power to do anything about? Or any one person's?

Update: here's David Shaywitz at Forbes, wondering about similar issues and what biopharma CEOs can actually do about them.

Comments (14) + TrackBacks (0) | Category: Business and Markets


COMMENTS

1. RB Woodweird on May 6, 2013 11:23 AM writes...

Why does being a really good lawyer qualify you to be a pharma CEO? Sure, it should qualify you to be head of Legal, but lawyers are not known for their people or financial skills.

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2. Nekekami on May 6, 2013 11:25 AM writes...

Much as you have issues with Andy Groove, Derek, you still have to admit that the comparison of CEO choices between Intel and, as exemplified here, Merck is that Intel chooses CEO's that actually have an in-depth understanding of what the company does, and the logistics to achieve that. Intel's new CEO has a 30-year career as an engineer in the corp for example, including chief engineer at plants and later managing entire plants.

In contrast, Merck has a CEO from the legal/finance branch, and those corporations tend to be less long-term stable and, based on evidence from other corporations, also sacrifice R&D etc.

Such corporate culture differences can contribute to problems with R&D efficiency, such as reduced logistics efficiency for example, in my experience.

Opinions?

Permalink to Comment

3. patentgeek on May 6, 2013 12:15 PM writes...

@1 RB Woodweird: Agreed, many do not, though some do, especially in financial area. Even then, corporate lawyers are generally trained to identify and mitigate risk, to look for (and advise on) everything that could lead to liability. A leader of an inherently high-risk enterprise needs a different mind-set, I think.

@2 Nekekemi: I feel the same way. Merck used to elevate people from the technical ranks for senior roles, maintaining a strong historical continuity. That has gone by the wayside, at Merck and many others (including chemistry heavyweights like DuPont).

Permalink to Comment

4. anon2 on May 6, 2013 1:18 PM writes...

Seems to me that the choice of Frazier as CEO was good for Merck at the time in that the company needed someone with his image and instincts to give positive impact on Merck's image after the Vioxx fiasco. But the time for someone in this role in this way can be of a short-term need, and then it's important to move on. It reminds me of Gerald Ford taking over as POTUS after Nixon resigned, but by the time he could be elected on his how merits a few years later the country's needs had moved on.

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5. Mr. Gladstone on May 6, 2013 6:17 PM writes...

I guess everyone has forgotten John J. Horan

http://www.businesswire.com/news/home/20110125007195/en/John-J.-Horan-Merck-Chairman-CEO-Dies

Permalink to Comment

6. Anonymous on May 6, 2013 7:02 PM writes...

I'm a scientist at Merck and was very skeptical about a lawyer as our CEO. The more I listen to Ken and observe his actions, the more impressed I am with his decisions and leadership skills. For example, we're watching costs very tightly but had to pull long term EPS guidance last year because it was more important to manage the business rather cut things just to meet Wall Street's short term expectations. It's a delicate and difficult balance.

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7. Anon2 on May 6, 2013 9:37 PM writes...

I agree with #6 anonymous - he is actually quite popular with research staff at Merck.

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8. anon3 on May 6, 2013 11:34 PM writes...

#6 and #7 He is not that popular with the tens of thousands of laid off employees.

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9. anon3 on May 6, 2013 11:36 PM writes...

#6 and #7 He is not that popular with the tens of thousands of laid off employees.

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10. Matthew Herper on May 7, 2013 7:01 AM writes...

@5 I've actually heard that Frazier has modeled himself somewhat on Mr. Horan.

I don't see how there was any other choice for CEO of Merck. As I tried to make clear in the story, he knows the business incredibly well, and I think any outsider would have had a harder time.

The question is whether he's slowly, methodically building something or if progress is just slow. I went into this story hoping to figure out what his long term vision was, and although I feel I got close, I don't think I did. And I don't know if that's my failure or his.

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11. anonymous on May 7, 2013 8:54 AM writes...

#5...I know John Horan and John was my friend. But, Mr. Frazier, you are no Horan! The times are different and is like an apple and an orange.

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12. Helical_Investor on May 7, 2013 9:14 AM writes...

If all here have not read Jim Collins' 2001 book 'Good to Great', I heartily recommend it. He has a lot to say about what makes for a great CEO, and just how important the role truly is in making good companies great. Celebrity or 'hero' CEOs rarely lead this transition for more than fleeting periods. It tend to be the quieter, open to criticism, leaders that bring companies through these transitions.

Zz

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13. MTK on May 7, 2013 10:55 AM writes...

Some here actually believe Big Pharma is in the business of discovering and developing drugs as opposed to selling drugs.

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14. Mr. Gladstone on May 7, 2013 12:06 PM writes...

Matthew - I enjoy your writing.

It is a bit disconcerting that Frazier was not able to clearly articulate a long term vision for Merck given the opportunity to do so in your article. Most CEOs can do this in their sleep. That being said, in your experience, is this fundamentally different from other big pharma CEOs - can they all give you a clear vision for their companies or are they managing quarter to quarter? The reality lately seems to be that the vision of ALL big pharma is buy back company stock, cut costs and move into emerging markets. Perhaps it is no longer big pharma but more herd pharma.
Maybe he was trying not to sound like the herd and pander to Wall Street interests - this could be visionary.

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