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Monday, Pfizer (PFE) said President and CEO Ian Read will become chairman of the board by the end of the year, giving up the reins after eight years.
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The council also announced that it had unanimously elected Albert Bourla, director of operations, to succeed Read, effective January 1 st. Bourla joined Pfizer for 25 years. The move follows the decision made last week by Merck (MRK) will change its retirement policy for CEOs and allow Kenneth Frazier to stay beyond December 2019.
"It's an honor to serve as CEO of Pfizer for eight years," said Read in a statement. "However, the moment is propitious for a change of leadership and Albert is the right person to guide Pfizer in the years to come."
Today, in the stock market, shares of Pfizer, a component of the Dow Jones, rose 0.8%, or nearly 44.40. Meanwhile, the shares of other pharmaceutical companies have raised a fraction.
Pfizer's "thoughtful" succession plan
Under Read, Pfizer has obtained 30 approvals from the Food and Drug Administration, the council said in a press release. The pharmaceutical company also has a potential of 25 to 30 approvals currently underway, of which 15 should be blockbusters.
But also under Read, the largest US drug maker sabotaged two major mergers. Four years ago, AstraZeneca (AZN) rejected a public offer of Pfizer. In 2016, Pfizer waived its $ 160 million merger with Allergan (AGN) after the modification of US tax rules.
Shantanu Narayen, who serves on Pfizer's board of directors, described the announcement as "a thoughtful, multi-year succession planning process." He noted that Bourla had impressed the board with his record.
Prior to taking up his current duties earlier this year, Mr. Bourla headed Pfizer's Innovative Health Unit. In 2017, this unit generated sales of $ 31.4 billion and pre-tax revenues of $ 18.3 billion, up 8% and 17%, respectively, on an operating basis.
Prices of US drugs examined
The transition comes as US drug prices continue to be scrutinized. After a conversation with President Donald Trump in July, Read temporarily opted to postpone rising drug prices.
Read said Pfizer will postpone the increase in its drug prices until Trump produces its health plan or until the end of the year, whichever comes first.
Following this, other pharmaceutical companies like Novartis (NVS) and Merck aligned themselves.
Also in July, Pfizer reduced its sales outlook for 2018 by $ 500 million mid-term. Pfizer noted that the updated guidance reflected unfavorable changes in exchange rates. He now sees sales of $ 53 to $ 55 billion. The mid-point exceeded expectations, at $ 54.31 billion.
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