Merck CEO Gilmartin Resigns replaced by Clark

posted on:
May 5, 2005

author:
Staff

Merck & Co. said Thursday that Raymond V. Gilmartin is stepping down effective immediately from the top jobs at the drug maker, which has been under fire since recalling its blockbuster painkiller Vioxx last fall.

Merck named Richard T. Clark, 59, as chief executive, president and a director in Gilmartin’s place. Gilmartin, 64, is also stepping down as chairman although no successor was named.

Clark is currently the president of Merck’s manufacturing division and previously served as the chairman and chief executive of Medco Health Solutions Inc. (MHS).

Merck shares rose 21 cents to $35.14 in premarket activity. Gilmartin, who has served as president and CEO since 1994, will serve as special advisor to the board’s executive committee until March 2006, when he will retire.

“I look forward to my new role as special advisor and to helping this transition work as smoothly as possible. I am a strong believer that a retired CEO should be available to help a new CEO, when asked, but otherwise should clear the way for the new leader,” Gilmartin said in a release. Merck, Whitehouse Station, N.J., said that Lawrence A. Bossidy, former chairman and CEO of Honeywell International Inc. (HON), will serve as chairperson of the board’s newly structured executive committee, which will work with Clark to provide support and continuity as he assumes his new duties.

Merck pulled Vioxx from the market last September after a study found it doubled patients’ risk of heart attack and strokes. The move was a double disaster for the company. Not only did it lose its second best-selling drug, whose sales totaled $2.5 billion in 2003, but it triggered thousands of product liability lawsuits. So far over 2,400 lawsuits have been filed and analysts estimate the company’s liability could reach $18 billion.

To make matters worse, the company’s top-selling drug, cholesterol-lowering agent Zocor, loses patent protection in 2006.

In April, Merck said its first-quarter profit slipped 15% because revenue was cut by the withdrawal of Vioxx and by much-lower sales of its top-selling cholesterol fighter, Zocor.

Still, its quarterly income of $1.37 billion, or 62 cents a share, for the January-March period beat the average estimate of 59 cents a share from analysts surveyed by Thomson Financial. In the year-earlier quarter, Merck earned $1.62 billion, or 73 cents a share.

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