Merck Names 30-Year Company Veteran as CFO -- Update

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 [e-mail]

(END) Dow Jones Newswires

March 24, 2021 15:30 ET (19:30 GMT)

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