Merck Names 30-Year Company Veteran as CFO -- Update
25 March 2021 - 6:45AM
Dow Jones News
By Nina Trentmann
Drugmaker Merck & Co. promoted a 30-year company veteran to
the role of finance chief after elevating the incumbent to chief
executive officer.
Kenilworth, N.J.-based Merck said Wednesday that Caroline
Litchfield will become its executive vice president and chief
financial officer, effective April 1. Ms. Litchfield is currently
the company's treasurer and is set to succeed CFO Robert Davis, who
has been in the role for about seven years.
Mr. Davis will take over as Merck's president on April 1 and as
chief executive on July 1. The company's CEO Kenneth Frazier plans
to retire after about 10 years at the helm, Merck announced last
month.
In her new role, Ms. Litchfield will likely be responsible for
handling core tasks such as allocating capital and funding mergers
and acquisitions. Patent protection for cancer immunotherapy drug
Keytruda, one of Merck's main revenue drivers, will expire at the
end of 2028, which could force the company to pursue some deals,
analysts said.
"I think Merck has to partly get through this patent cliff by
acquiring companies or assets," said Louise Chen, a managing
director at financial services firm Cantor Fitzgerald LP. "The CFO
would be involved in deals of all sizes, so this is an important
role with high visibility," she said.
The company is also in the process of spinning off $6.5 billion
in assets, including women's-health products and cholesterol
treatments that have lost patent protection. The move to hive off
the products into a company called Organon & Co. will allow
Merck to focus on faster-growing cancer drugs, vaccines and
animal-health items, Mr. Frazier said in February 2020 when the
plan was first announced.
"Her long tenure with the company will surely help as the firm
breaks off its Organon business in the second quarter and likely
makes several acquisitions over the next few years," said Damien
Conover, an analyst at Morningstar Research Services LLC.
Internal promotions to the role of CFO at companies in the
S&P 500 and Fortune 500 have increased since 2018, according to
the Crist Kolder volatility report, which tracks executive moves.
Forty-three percent of sitting finance chiefs in 2020 were hired
internally, compared with 39.5% in 2019, the report said.
"In terms of succession planning, Merck appears to be very
focused on internal candidates and the choice of CFO follows that
philosophy," said Umer Raffat, a senior managing director at
Evercore ISI, an investment banking advisory firm.
Mr. Frazier in a press release lauded Ms. Litchfield's
leadership and financial expertise and pointed to the company's
commitment to developing talent and succession planning.
Ms. Litchfield joined Merck in 1990 in its U.K. business and
held a range of positions in the company's finance operations,
including managing the finances of its human health business, its
largest division.
Merck declined to make Ms. Litchfield available for an
interview.
Write to Nina Trentmann at Nina.Trentmann@wsj.com
(END) Dow Jones Newswires
March 24, 2021 15:30 ET (19:30 GMT)
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