Wednesday, April 17, 2013

Matt Herper's Stellar And Unflinching Look At Merck's Ken Frazier -- A Must Read

This is a fair, friendly and yet analytical piece -- it is a must read for anyone who would understand the New Merck, and where it is headed next. Matt has done an outstanding job here.

I'll say no more -- but it isn't just some fawning love letter to a powerful Chairman/CEO, as the last quoted paragraph below indicates -- just go read it -- and read it all:
. . . .In an industry ruled by white men who are either scientists or salesmen, Frazier is an unlikely boss–not just a lawyer but an African-American who grew up in Philadelphia’s inner city. His father was a janitor with a limited education and, Frazier says, “one of the most intelligent men I’ve met in my life.” Dad devoured two newspapers a day and, later on, his three kids’ college textbooks. As a child Ken idolized Thurgood Marshall and went to Penn State and then Harvard Law School, both on scholarship. Only then, he says, did he belatedly realize Harvard was “a factory to produce corporate lawyers. . . .”

“There was always something different about Merck,” Frazier says. “Now all drug companies have science, and all drug companies have production and manufacturing, and all drug companies have marketing and sales. But the emphasis is different in different companies. I fell in love with the science at Merck. . . .”

The resulting [March 2008] drop in the share price of Schering-Plough had an upside. It meant Merck could buy the company cheaply ($41 billion in cash and stock) in a 2009 deal Frazier helped engineer. Merck had disdained big mergers for decades, but the deal nearly doubled Merck’s earnings before interest, taxes, depreciation and amortization, from $9.9 billion to $17.8 billion. To make the deal work, Merck has cut 29,000 jobs, a third of its workforce. . . .

So -- balance in all things -- and Mr. Herper shows it here, with a nice flourish.

And yes -- this piece nicely captures why I wrote on Monday night that Mr. Frazier has earned his out-sized pay for 2012 -- some $15.5 million of it, all in. Carry on.

1 comment:

MAtt Herper said...

10. Matthew Herper on May 7, 2013 7:01 AM writes. . .

I've actually heard that Frazier has modeled himself somewhat on Mr. Horan.

I don't see how there was any other choice for CEO of Merck. As I tried to make clear in the story, he knows the business incredibly well, and I think any outsider would have had a harder time.

The question is whether he's slowly, methodically building something or if progress is just slow. I went into this story hoping to figure out what his long term vision was, and although I feel I got close, I don't think I did. And I don't know if that's my failure or his.

-- Matt