The retired Merck CEO says public service is in his future, however politics just isn’t
One of the first things Ken Frazier reads in the morning is the obituaries in the New York Times.
“It’s not pathological,” said the 66-year-old Frazier in a telephone interview on Thursday. “The reason you read them is because most of us spend our lives polishing our résumés … and my dad used to say, ‘It’s what they end up saying about you that matters. Did you take care of people? ‘ It’s not on your résumé. “
Frazier has a good résumé that will be updated in June when he retires after 10 years at the helm as Merck’s Chief Executive Officer. Frazier will serve as CEO of the pharmaceutical giant for some time, while the company’s CFO Robert Davis will become CEO.
Frazier’s time leader Merck saw a dramatic change in the way some cancers are treated, and Merck was the developer of the greatest drug behind this new wave of cancer immunotherapy: Keytruda. The drug had sales of more than $ 14 billion last year, 29% of total Merck sales. Some on Wall Street questioned whether the company is over-reliant on its star drug.
Frazier became a reluctant leader among CEOs when he first stepped down from a White House production council after former President Donald Trump failed to denounce the white supremacists who violently marched in Charlottesville in 2017. “They also had people who were very good people on both sides,” Trump said at the time.
Frazier resigned from the council shortly afterwards. Merck published a tweet in which the CEO said he had to “take a stand against intolerance and extremism”. Several other CEOs also resigned and Trump closed the council.
It illuminated Frazier, whom he had not been looking for.
But friends and colleagues are happy that he was accepted.
“I think Ken was reminding everyone that we could no longer afford to look away,” said Dr. Tony Coles, CEO of the biotech company Cerevel, who has known Frazier since both started at Merck in 1992. “It was no longer just acceptable for business executives to focus on their businesses internally.”
A focus on research
When asked what he was most proud of during his time as CEO of Merck, Frazier pointed to science.
“When I took over, the street said you shouldn’t invest in research,” Frazier recalled on Thursday by phone. “There was one publication I can’t recall saying that cutting research and investing in non-pharma assets could add value to the industry by CEOs.”
It was a time when companies like Valeant caught the attention of hedge fund investors, bought out other pharmaceutical companies, and cut research budgets. Frazier, who was hired by the legendary Merck CEO Roy Vagelos, bucked this trend. Between 2010 and 2020, Frazier increased Merck’s research budget by 24% to $ 13.6 billion.
“I tried to keep the flame on,” said Frazier. “I’ve tried to uphold Merck’s legacy. Merck is a science-based company.”
But that strategy is not in vogue, he said, “and our inventory is far in decline.”
In 2013 Frazier made one of the most important decisions of his time as CEO: He asked Dr. Roger Perlmutter to rejoin the company as head of research.
“Roger made this company what it is,” said Frazier. “I want to be very clear.”
But Frazier also recognized his own role in luring Mother-of-Pearl back. The physician-scientist who left Merck and moved to California to lead research at Amgen, “won’t come back unless he really believes I believe in that legacy, does he?” Said Frazier. “You’re not leaving sunny Santa Barbara to come to Rahway, New Jersey unless you’re going to work for someone who truly believes in what Merck stood for.”
The next year, the Food and Drug Administration approved Keytruda among a range of new therapies that use the immune system to fight cancer. It’s now approved for more than 20 different cancers and has been known to have been used to successfully treat the melanoma that spread to the liver and brain of former President Jimmy Carter.
Frazier’s tenure as CEO did not escape criticism from the investor or the medical community. Dr. Peter Bach, of the Memorial Sloan Kettering Cancer Center, said the way Merck conducted clinical trials for Keytruda was more of a corporate strategy for him to generate revenue than to provide information that would be most helpful to how the drug was performing could be best used.
“They are spreading their bets and making dozens and dozen smaller attempts in an endless array of indications,” Bach wrote in an email. “But small studies, especially with major therapies like Keytruda, don’t give that much insight into how to use therapies properly.”
The company came under fire in 2019 for a lack of an old but vital bladder cancer drug called BCG. Other pharmaceutical companies had stopped making the therapy, which is complex to manufacture but at a low cost – a loss combination for the pharmaceutical industry – and Merck was the only manufacturer left. Merck has more than doubled its production but has still not been able to meet demand, which has meant that some cancer patients have had to use more expensive and often less suitable therapies.
Dr. UPMC urologist Benjamin Davies was dismayed by the amount of money Merck was making from Keytruda while refusing to invest in a new facility to manufacture BCG.
“They have a financial responsibility to their investors,” Davies said at the time. “But I think you have a moral obligation too.”
Ultimately, Merck agreed and said in October it planned to invest in building a new factory for the drug. However, the company warned it would take five to six years to build, which means the bottlenecks will not be resolved immediately.
Davies, who was contacted on Thursday, called it a “cloud for an otherwise amazing career”.
On Wall Street
From an investor perspective, “Merck has done well by major pharmaceutical standards,” said Les Funtleyder, a long-time healthcare investor with E Squared Capital Management.
Merck’s stock has more than doubled under Frazier’s leadership, but that’s on par with rival Pfizer (whose CEO Albert Bourla Frazier tweeted well on Thursday) and much less than that of competitors like Eli Lilly, their stock rose by almost five. fold in the same period.
Still, much of the criticism does not extend to Frazier himself. Funtleyder described him as “the most approachable of all pharmaceutical CEOs”. Funtleyder said he was ready “to speak to any investor at any time. He wasn’t hiding in his office like most of the others.”
President Donald Trump, right, speaks as Ken Frazier, Chairman and CEO of Merck & Co., listens during a meeting with representatives from the Pharmaceutical Research and Manufacturers of America (PhRMA) at the White House in Washington, DC, USA. on Tuesday January 31, 2017.
Ron Sachs | Pool | Bloomberg
Bach, a well-known drug industry critic, actually uses a photo of himself alongside Frazier as his profile picture on Twitter. He said his respect for the CEO grew as he met him personally, fueled first by Frazier’s decision to “forego Trump’s nonsense as CEO after Charlottesville,” and then by his caution about promising too much vaccine during the pandemic , reinforced.
“If all CEOs were like him,” said Bach, “the industry would be completely different.”
Funtleyder added, “I hope he is running for office.”
Frazier said that was not in his plans.
“I want to do a public service, but a public service does not mean that I have chosen an office,” said Frazier.
He declined to say exactly what his plans for the future were, but found that he had many offers.
“I am very concerned with issues of justice and equity, especially in education,” Frazier said. “What interests me most is the opportunity.”
He cited an initiative he co-chair called OneTen, which aims to fill the opportunity gap for black Americans.
“Almost 80% of African Americans by the age of 26 do not have a four-year degree,” Frazier said. “If you need a four-year degree as a prerequisite, you are structurally excluding people who can develop the skills to do valuable work so they don’t succeed.”
Frazier was a unique voice following the death of George Floyd last summer. He joined CNBC on June 1 and described in a crude testimonial the “tremendous amount of pent-up anger among many people in the African American community”.
“This African American man who I or any other African American man could be is being treated as less than human,” Frazier said. “I think what really caused the spark that started all of this is how are the officers reacting to what I just said? They have this videotape now and there has been no action for four days. Nobody thinks it is worthily even arrest the officer. “
Empty at the top
With Frazier’s resignation, only three black company CEOs will be in the Fortune 500 index.
“I don’t think we’ve done enough,” said Coles. “I don’t think we checked closely enough. I don’t think we might have had the courage to make better and faster progress.”
But he also noted that, despite Frazier’s influence on social justice, Frack “should begin with the fact that Merck has performed exceptionally well, for merely calling him a warrior of social justice would underestimate what he was doing with Keytruda and the rest of the great Merck products have done for society. “
Ultimately, that’s what Frazier thinks about as he prepares for retirement. Merck’s dedication to improving maternal mortality and developing the first Ebola vaccine are among his proudest accomplishments. However, he emphasizes that the people at Merck are most responsible for the success of their drugs.
“This recognition that CEOs receive is much of what I call narrative fallacy,” said Frazier. “When the people at Merck, all the dedicated, talented people at Merck, do keytruda while you’re sitting in the chair, they say, ‘Look, he did keytruda!’ You know, Bill Belichick is now finding out that winning a Super Bowl without a quarterback named Tom Brady is a lot harder than winning a Super Bowl if the quarterback is Tom Brady, and yet Bill Belichick is considered to be in the Hall of Go fame a great coach. “
“It’s the people at Merck,” Frazier continued, “it was their dedication, their dedication, their brilliance, their perseverance that led to a number of important products coming to market. And my job was to get them out the way to go. ” Give them the resources and the peace of mind to do what they did. That was my role. “
When Frazier became CEO ten years ago, he said Vagelos told him there are two metrics that are really important to the job: “How many people do you help? And how much help do you give to those people?”
When asked how he thinks he did it, Frazier said, “I did everything right.”