Corporate Executive of the Year: Kenneth Frazier Shares Prescription For Growth

Kenneth Frazier covers the latest issue of Black Enterprise magazine. (Image: File)

Such groundbreaking developments represent the core of Frazier’s strategic vision, injecting innovation into his operation while pursuing emerging markets. By doing so, Merck can significantly boost sales and meet the needs of its global customers. To achieve that goal, Frazier continues to direct a corporate reorganization–Merck has spent the past five years integrating mammoth Schering-Plough into its culture–and to narrow the company’s focus on “patients and patents.â€ This thrust was further confirmed by hawking its consumer products line, which included such household names as Coppertone sunscreen and Claritin allergy medicine, to German drug maker Bayer for $14.2 billion. At the same time, he’s charged his team with ensuring that Merck, known as MSD outside of the U.S. and Canada, provides increased access to healthcare for disadvantaged populations domestically and abroad.

Frazier’s approach has served as good medicine for shareholders. During his tenure as CEO, which began Jan. 1, 2011, his management has been responsible for increasing shareholder value; the stock price has appreciated by 86% (see chart).

For his leadership role in bolstering Merck’s corporate performance, driving innovation, and exerting an impact on global health, Frazier has been selected as the 2014 black enterprise Corporate Executive of the Year.

A Massive Global Operation
From Merck’s expansive, lush campus tucked away in Whitehouse Station, New Jersey, 59-year-old Frazier runs a massive operation. Established in 1891 as the U.S. subsidiary of the German company Merck KGaA (the two companies have been separate since 1917), Merck has global reach: Its prescription drugs, vaccines, therapies, and health products treat people in more than 140 countries. The pharmaceuticals goliath grossed $44 billion in 2013, making it the nation’s third biggest drug manufacturer and the largest publicly traded company operated by an African American CEO. The company has more than 76,000 employees across the globe and an additional 1,300 through joint ventures in China and Brazil.

In 2013, the company spent a whopping $7.5 billion in R&D for its team of 12,000 scientists and others to create new drugs and vaccines. As of April 30, it had 34 programs–either in Phase 2 and 3 of development or under review–in its pipeline. It’s essential to keep the products flowing, Frazier says, because pharmaceutical companies are forced into reinvention every decade or so–the rough lifespan of a useful patent before a given medicine is forced to compete with lower-priced generic offerings. So in 2012 when the patent expired for its asthma drug Singulair, which grossed about $1 billion a year, Merck had to replace that revenue with other blockbuster products.

Frazier’s R&D efforts are expected to pay off big. According to market analysis from Goldman Sachs, although Merck will meet tough competition from Bristol-Myers Squibb, the estimated $20 billion market for cancer immunotherapy drugs will provide room for major players with Merck as one of the leaders. The Goldman Sachs report further states: “[Merck] aggressively advanced their PD-1 program by completing both a U.S. and [European Union] filing ahead of [Bristol-Myers Squibb], and we see today’s news as a positive for the entire PD-1 category. [Merck] expects to have seven clinical studies for regulatory filing in progress by end-2014 (three in melanoma, two in lung, one in bladder, and one in head and neck). As for its hepatitis C treatment, Merck is expected to be a dominant force in the market.â€

Find out more on Frazier’s prescription for growth on the next page …