NEW YORK (CNNMoney.com) -- Pfizer named Jeffrey Kindler, the company's general counsel, to succeed Henry "Hank" McKinnell as CEO of the world's largest pharmaceutical company, the company announced Friday.

Hank McKinnell will remain Pfizer's chairman of the board until his retirement in February, 2007.

Kindler beat out two internal candidates for the job - Karen Katen, head of Pfizer's human health group, and David Shedlarz, head of the finance division - according to published reports.

Kindler became general counsel at Pfizer in 2002, and soon made the contentious decision to continue selling Celebrex, an arthritis drug which is in the same class as Merck's Vioxx, which has been withdrawn due to heart risks, said the Journal.

Kindler, 51, previously served as chairman and CEO of Boston Market Corporation, and president of Partner Brands, both owned by McDonald's. He was general counsel at McDonald's from 1997 to 2001, according to Pfizer.

Pfizer's (Charts) stock has lost 37 percent since McKinnell took the helm as CEO, and investors hope Kindler can rekindle growth at the drug giant, said the report.

McKinnell was also criticized after Pfizer revealed his retirement package: the choice between an annual pension of $6.5 million or a lump sum of $83 million.

The company's biggest challenge is competition from generic drugs - a problem faced by other Big Pharma outfits as well. (Full story)

On June 30, Pfizer's patent ran out on Zoloft, the antidepressant with the household name that totaled $3.3 billion in 2005 sales. And in 2007, Pfizer is scheduled to lose patent protection on two other blockbusters: blood-pressure treatment Norvasc, which had $4.7 billion in 2005 sales, and allergy drug Zyrtec, with $1.3 billion in sales that year.

Pfizer is cutting $4 billion worth of costs to offset these patent losses, but it's not enough.

What the company really needs are new drugs to replace the outgoing blockbusters. Exubera sales are only expected to reach $90 million during its debut year of 2006, but they could eventually peak at $2 billion annually, according to projections from Deutsche Bank's Barbara Ryan.

And Pfizer does have other new drugs that could eventually contribute billions of dollars in revenue. Annual sales for its new cancer drug Sutent could reach $1 billion annually, according to Ryan, while annual sales for Lyrica, a new nerve pain treatment, could hit $900 million.

The company has freed up ample resources for future growth: Pfizer says it will spend $17 billion on acquisitions and up to another $17 billion on stock buybacks in the next year and a half, said the Journal.

"Jeff is a gifted, natural leader. He inspires confidence and offers vision and fresh perspective. He knows Pfizer and has had extensive experience outside Pfizer as well," said McKinnell in a statement.

The company's languishing price and internal conflict over picking the next CEO were the major factors driving the board to pick a new leader, said the Journal.

Pfizer directors met early Friday at the New York City offices of Cadwalader, Wickersham & Taft, one of the company's outside law firms, said the report.

Several of the directors were forced to fly to New York on short notice. "Once you start the (succession) process, it gridlocks the organization,'' a knowledgeable person told the Journal. "You want to make it done as fast as possible. The only thing worse than that is making the wrong decision.''

Pfizer board meets to discuss CEO succession