Merck’s strategy of “investing thoughtfully” in science-based R&D is paying off, says CEO Kenneth C. Frazier.
For the first quarter, the Kenilworth, N.J.-based pharmaceutical giant “smashed” expectations, posting earnings of $1.12 per share—seven cents above The Street’s consensus forecast and more than four times higher than the same period last year. Revenues rose 8% to $10.8 billion in large part due to a 55% increase in sales of Keytruda lung cancer treatment.
Merck “had a very strong start to 2019,” Frazier said in the company’s conference call with analysts.
“Our current portfolio of assets continues to drive strong growth and we are working to ensure that we capture the near-term opportunities in front of us to maintain this momentum, while planning for the next generation of treatments,” he said.
As “operational strengths” in oncology, vaccines, and select hospitals and specialty products continue to grow—particularly across the globe including China, the company raised its guidance for 2019 revenues to a range of $43.9 to $45.1 billion, and GAAP earnings to a range of $4.02 to $4.12 per share.
Merck is also growing its pipeline through R&D “with external innovation,” to launch potential new treatments and vaccines, oncology, HIV and “many other areas of significant and ongoing unmet needs,” Frazier said.
“There is also impressive work underway in our discovery hubs in Cambridge, London, and South San Francisco, where we are incorporating some of the most scientifically advanced modalities and technologies in the world,” he said. “Importantly, these hubs are located where many of the best biotech and scientific mines are gathered. And we’re benefiting from the vibrant academics and biotech communities in each of our respective hubs.”
Last year Frazier told Harvard Business Review that his biggest contribution to Merck’s strategy has been making sure it continues to be led by science-based R&D.
“When I came to this job, some pharmaceutical companies were taking resources away from R&D,” he said. “Merck is a science-based, R&D-based company, and I wanted to reinforce that from the very beginning. We’ve even begun to insource things that we outsourced 10 years ago, because we realize that they are critical to our long-term success. At the end of the day, the quality of this company largely comes down to the quality of the science and of the scientists.”
Frazier joined the company in 1992 as vice president, general counsel and secretary of the company’s joint venture with Astra AB. He became vice president of public affairs in 1994, and in 1997, was also named assistant general counsel. In 1999, Frazier was promoted to general counsel of Merck.
From 2007 to 2010, he served as president of global human health, Merck’s sales and marketing division. In 2010, Frazier became president of Merck. He was appointed CEO and a member of Merck’s board in January 2011 and became chairman in December 2011.
Prior to joining Merck, Frazier was a partner with the Philadelphia law firm of Drinker Biddle & Reath.
He’s No. 71 on Chief Executive and RHR International’s CEO1000 Tracker, a ranking of the top 1,000 public/private companies
Headquarters: Kenilworth, NJ
Education:Bachelor’s degree from The Pennsylvania State University and holds a
J.D. from Harvard Law School.
First joined company: 1992
Prior to joining Merck: Drinker Biddle and Reath
Named CEO: 2011