Kenneth Frazier van Merck will retire as CEO at the end of June

“It has been a clear honor and privilege to serve this amazing company as CEO for the past decade,” said Mr. Frazier during the company’s earnings call on Thursday.

Under the leadership of Mr. Frazier, Merck became a leader in the emerging field of cancer immunotherapy and in the development of the drug Keytruda, now one of the top sellers. The therapy, which treats lung and other cancers, totaled more than $ 14 billion in worldwide sales last year.

Mr. Frazier, a lawyer who has led Merck since 2011, is one of the few Black CEOs at S&P 500 companies and has been a leading voice in the industry in recent years encouraging companies to hire more Black employees. He’s also guided Merck through criticism from politicians and patients about how the industry prizes his drugs.

Merck’s board of directors removed a policy three years ago requiring the CEO to retire after he turned 65, allowing Mr. Frazier to remain in this position upon reaching that age in 2019.

Only four of the chief executives of the 500 largest US companies – or 1% – are black, including Mr. Frazier. The others are Marvin Ellison from Lowe’s Cos., Roger Ferguson Jr. from the financial services provider Teachers Insurance and Annuity Association of America and René Jones, who runs M&T Bank in New York. When Rosalind Brewer takes over from Walgreens Boots Alliance in March Inc.,

the number will rise briefly to five as Mr Ferguson from TIAA retires at the end of the month.

Despite Keytruda’s success, some investors and analysts are concerned that Merck’s growth depends too much on the therapy. The drug maker has closed deals for small businesses in recent years to expand its pipeline, and it plans to phase out some slow-growing legacy products.

Mr Davis’s selection likely points to more intensive business development to reduce the company’s dependence on Keytruda, a Citigroup note said Thursday Inc.

analyst Andrew Baum. Keytruda’s sales made up nearly a third of the company’s estimated $ 48 billion in sales last year, Merck said Thursday.

Still, Mr. Davis’s rise suggests that Merck’s overall strategy is likely to remain stable in the near term, said Seamus Fernandez, an analyst with Guggenheim Securities LLC, though adding that “part of me is wondering if this is a way is to speed up and speed up decision making ”for deals.

A graduate of Harvard Law School, Mr. Frazier worked at the law firm Drinker Biddle & Reath before joining Merck in 1992. He became general counsel in 1999, defending Merck against allegations that the top-selling pain reliever Vioxx increased the risk of heart attacks and strokes. . Merck agreed in 2007 to pay $ 4.85 billion to settle thousands of claims.

Issues of race and the workplace have been important to Mr. Frazier, who last month helped start a nonprofit with other CEOs to connect employers with black workers.

He has also covered delicate, sometimes controversial topics during his tenure over Merck, ranging from drug prices to former President Donald Trump. Frazier stepped down from a White House business committee in 2017, calling his decision a matter of conscience after Trump blamed both sides for deadly clashes between white supremacists and counter-protesters in Charlottesville, Virginia.

Mr Frazier’s announced departure follows the recent retirement of former R&D chief Roger Perlmutter, who succeeded Dean Li in that role.

Merck said Mr. Davis, who joined the company in 2014 as CFO, will become president on April 1, after which the drug manufacturer’s four operating divisions will report to him. Prior to joining Merck, Mr. Davis held positions at Baxter International Inc.

and Eli Lilly & Co.

Mr. Davis joins a small group of finance directors who have risen to number one. According to the Crist | Kolder Volatility Report has promoted approximately 6% of CFOs to CEO of S&P 500 and Fortune 500 companies in recent years. The most common route is internal promotion from the role of chief operating officer.

Reporting its fourth-quarter earnings on Thursday, Merck said it expects total revenue of between $ 51.8 billion to $ 53.8 billion this year and adjusted earnings of $ 6.48 to $ 6.68. per share.

Analysts had forecast revenue of $ 51.66 billion and adjusted earnings of $ 6.30 per share.

Merck’s quarterly sales of $ 12.5 billion were up 5% from $ 11.9 billion in the same quarter a year earlier, as Keytruda’s sales increased nearly a third to approximately $ 4 billion. Analysts polled by FactSet expected sales of $ 12.67 billion for the last period.

—Lynn Cook and Nina Trentmann contributed to this article.

Write to Jared S. Hopkins at [email protected]