STEVE INSKEEP, host:
The business news includes the departure of a drug company's CEO.
The chairman and chief executive officer of Merck is stepping down. His replacement faces a host of problems at the pharmaceutical giant, and those problems include thousands of lawsuits from people who had heart attacks or strokes while taking Vioxx. NPR's Joanne Silberner has more.
JOANNE SILBERNER reporting:
Raymond Gilmartin was scheduled to retire next March when he reaches 65. Instead, Richard T. Clark will take over immediately as CEO of Merck. The company will go without a chairman of the board for a year or two. Clark has worked for Merck for 34 years. Stock analyst Al Rauch of AG Edwards Company says no one is expecting any surprises.
Mr. AL RAUCH (AG Edwards Company): For Merck, this means probably very little change going forward, more of the same, I think, and that's pretty much reflected in the stock price. People viewed an insider as just carrying on what Gilmartin was trying to do.
SILBERNER: Merck's stock closed yesterday just 18 cents under its opening price. The company is facing harsh criticism about its blockbuster painkiller Vioxx. A congressional committee released documents yesterday showing that Merck instructed its sales force to assure doctors the drug was eight to 11 times safer than other painkillers, ignoring its own studies showing the drug increased the risk of heart attacks. In a teleconference with reporters, Merck board member Lawrence Bossidy said Gilmartin was not asked to leave.
(Soundbite of teleconference)
Mr. LAWRENCE BOSSIDY (Merck Board of Directors): We announced in the fall that we were undertaking a search for a CEO and that we would try to have a person in place by the end of 2005. Ray Gilmartin has served for 10 years. He's been a part of the process. He certainly has led the efforts in terms of the Vioxx issue with distinction. And so in no way did we push him out.
SILBERNER: Gilmartin also said it was his choice.
Mr. RAY GILMARTIN (Former CEO, Merck): I'm voluntarily stepping down, and basically handing over the reins to Chet(ph).
SILBERNER: While board member Bossidy praised Gilmartin for leaving the company with plenty of drugs in development, the company had to give up on two of its most promising candidates after the drugs didn't test well. And it's about to lose patent protection on two of its biggest drugs. That need for drugs in the pipeline has driven many companies to merge with others who buy them out, something Merck hasn't done. Incoming CEO Richard T. Clark didn't rule it out yesterday.
Mr. RICHARD T. CLARK (New CEO, Merck): What we're focusing on is long-term shareholders' value and growing the pipeline. And it's evident to us that large-scale mergers haven't been able to accomplish that. But certainly as the new CEO, I'm open to any good ideas.
SILBERNER: Clark is just six years away from Merck's mandatory retirement age of 65. Analyst Al Rauch says Clark will be doing well if he uses that time to guide the company through the Vioxx problems and get it growing again. Joanne Silberner, NPR News. Transcript provided by NPR, Copyright NPR.
