NEW YORK (CNN/Money) -
Drugmaker Merck & Co. -- set back on its heels last year when its Vioxx painkiller was forced off the market -- named company veteran Richard T. Clark as its new CEO and president Thursday, succeeding Raymond Gilmartin, who is retiring next year.
Clark, who begins the top job immediately, was previously president of Merck (down $0.13 to $34.80, Research)'s manufacturing division and previously was the chairman and chief executive officer of Medco Health Solutions. Clark joined the company in 1972, working his way up from the job of quality control inspector.
"You have to remember that I was born and raised in Merck," said Clark, during a teleconference with journalists.
Clark said the company is "fully committed" to maintaining long-term shareholder value and would continue to focus on targeted acquisitions to fill its pipeline.
"I expect that Clark is going to take an evolutionary, rather than a revolutionary approach," said John Boris, analyst for Harris Nesbitt. Clark will probably spend much of his time conducting a "360 degree review" of Merck's operations, since his expertise lies primarily in one area, which is manufacturing, said Boris.
Clark's promotion to CEO was announced as Senate hearings were held regarding Vioxx, the blockbuster arthritis painkiller that Merck withdrew last Sept. 30 because of health risks. The company reported a 15 percent drop in profit for the first quarter as sales continued to be hurt by the absence of Vioxx.
Merck, which had total sales of $22.9 billion in 2004, also faces the impending patent expiration of another key drug. Zocor, a cholesterol-lowering medicine, is set to expire in June 2006. Merck projects Zocor sales to hit $4.2 billion to $4.5 billion in 2005.
Merck officials refused to discuss Vioxx during the teleconference.
Lawrence Bossidy, former chairman and chief executive officer of Honeywell International Inc., was named chairman of the board's newly formed Executive Committee, which will support Clark as he begins the top job. Bossidy is chairman of the compensation and benefits committee, which conducted the succession process, according to Merck.
Bossidy said a search for a new CEO was conducted "inside and outside the industry" and Clark was selected based on his experience with Merck and the industry.
Gilmartin, who was named CEO in 1994, will serve as special adviser to the executive committee until he retires in March 2006, the company said. The executive committee will fill the job of chairman for one or two years until it selects a successor for Gilmartin, said Bossidy.
Boris said Bossidy would appoint Clark to the chairman position based on his work performance. If Clark is appointed chairman after one year, then that would be a good sign, but if nearly two years pass without an appointment, then Bossidy might be looking for another candidate, the analyst added.
"The faster Merck appoints [Clark] as chairman, the better the signal is," said Boris.
Gilmartin said he was "very pleased" that Clark was selected as his successor.
"He's an excellent candidate," said Gilmartin. "Dick's long tenure here at Merck will make this is a smooth transition process."
Gilmartin said he would act as consultant until his retirement, but would not interfere with the management of the company.
"When you're the retired CEO, you get out of the way, in effect," said Gilmartin. "Dick is the new CEO and I think it's important that he have a clear field."
Bossidy denied that Gilmartin had been asked to leave the company. "In no way did we push him out," said Bossidy to journalists.
Bossidy said that Clark was a "vigorous" 59 years old and planned to hold the top job for five or six years until retirement age.
Like his predecessor Gilmartin, Clark is not a scientist. Sena Lund, analyst for Cathay Financial, said this would be offset by Clark's strong rapport and experience in working with Peter Kim, president of Merck Research Laboratories.
"I think it's a decent choice, and with the challenges Merck faces, they needed someone who knows the company and knows the environment," said Lund.
Lund owns Merck shares but Cathay Financial does not conduct banking with them.