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CEO Daily Brief – Dec. 6, 2010

Pfizer Names Ian Read CEO after Kindler Steps Down Pfizer Inc., the world’s biggest drugmaker, has named Ian C. Read …

Pfizer Names Ian Read CEO after Kindler Steps Down

Pfizer Inc., the world’s biggest drugmaker, has named Ian C. Read chief executive officer in what appears to analysts to be a more sudden than expected retirement of the former CEO. Read, the head of Pfizer’s global biopharmaceutical operations since 2006, replaces Jeffrey B. Kindler. Kindler was named CEO on July 28, 2006. Since then, the shares have fallen 35 percent to $16.73, as of Dec. 3 in New York Stock Exchange trading.

The company must prepare to face generic competition to its top-selling cholesterol treatment Lipitor. Pfizer will lose U.S. patent protection Lipitor, which had $11.4 billion in sales last year. While the drugmaker moved to make up for the loss by paying $68 billion last year to acquire Wyeth, adding the Enbrel arthritis treatment and Prevnar pneumonia vaccine, it also has had four setbacks this year in developing its research pipeline.

Constance J. Horner, the board’s lead independent director, cited Read’s experience in emerging markets in announcing the change. “Today’s business leaders need to understand global markets, drive change and innovation, and move quickly to adapt to competitive pressures. Ian’s track record throughout his career has demonstrated these exact strengths.” For more about the change in CEOs, as reported by Bloomberg, please click here.

Overcoming Merger Risks

CEOs well understand that all mergers involve risk—and carry no guarantees of fulfilling ROI expectations. It is commonly believed that less than half of corporate marriages succeed in the minds of the most important constituents: shareholders, customers, and employees. But as 2010 comes to a close and the credit crunch begins dissipating, many companies have more cash on hand for mergers. United/Continental, Southwest/AirTran, Intel/McAfee, Pfizer/King Pharmaceuticals, Bristol-Myers/ZymoGenetics, and Stanley Works/Black & Decker are involved in various stages of mergers, and many other companies are starting the courting process for anticipated deals in 2011.

Rick Heinick identifies three critical steps in mitigating merger risk: knowing the level of risk, keeping the integration process versatile, and staying focused on the real value drivers. The greatest and most obvious merger risk is overpaying for an asset, yet once you sign on the dotted line, you’ll find other risks that require evaluation. If the particular expertise of the acquirer matches the market experience of the business it’s acquiring, the risk quotient will drop. Other characteristics of the deal that affect the level of risk include the fit of the core businesses, size of the deal, type of deal, talent retention plan, and integration capability. A larger company that purchases a ready and willing smaller company—for example, Google’s (GOOG) potential acquisition of Groupon—will have a relatively low level of risk, while a big-bucks merger—such as the potential union of Sanofi-Aventis and Genzyme, where resistance to the merger exists—may involve high risk. The key is to develop an integration game plan that takes these risks into consideration. For instance, if you determine that talent flight risk exists, find ways to re-recruit those employees so they feel engaged and inspired by the company’s future. Unfortunately, although most experts concur that early integration planning leads to successful mergers, some executives acting on advice from counsel focus their companies more on what they can’t do than what they can.

For more from Businessweek about merger risk, please click here.

Now is the Time to Rekindle U.S. Growth, Innovation: CEO Muhtar Kent

Looking back, Muhtar Kent, chairman of the Board and CEO, The Coca-Cola Company, notes that in the process of innovating and creating a technology and service-driven economy, America replaced 40 million antiquated jobs with 80 million new high-paying and high-skilled jobs between 1980 and 2000. In those two decades, we witnessed a unique creation of new wealth and ideas — all because of innovation and tax policies that promote growth and investment. All because of the entrepreneurial spirit and vitality of a nation that cultivates diverse cultures, people, and points of view. In a recent speech before the National Press Club, he says it’s the same formula — the same antidote — that will ultimately solve our current problems.

If we — together — create the right climate for investment, entrepreneurship and competitiveness, there is no limit to how far we can advance over the coming decade. In the coming years, our national focus needs to be more on entrepreneurship and growth and less on taxation and regulation that threatens incentive, investment and growth.The greatest opportunities for American innovation will lie at an intersection of supply chain and sustainability. Education is also important. While we have a higher education system that is still largely the envy of most of the world, we need to think creatively about new solutions for our primary education system. The third area that needs our national focus is entrepreneurship. The fourth area that needs a national focus is international trade. Today, global American-based companies like Coca-Cola directly employ 22 million workers in the U.S. and support more than 41 million additional American jobs through our supply chains. That’s nearly one-in-three American workers. For more from the Huffington Post about Kent’s observations on the economy, please click here.

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