Pfizer veteran insider succeeds Jeffrey Kindler as CEO—with more to come
Pfizer’s Board of Directors has elected Ian C. Read, currently head of the company’s global biopharmaceutical operations, as President, CEO, and director. Read succeeds Jeff Kindler in a transition that was sudden and unexpected: occurring on a Sunday night, by early Monday morning Kindler’s name was nowhere to be seen on the company’s directory or website. Orderly succession planning it was not, which indicates that Pfizer is once again at a strategic crossroads that could either profit or penalize investors.
Read, 57, joined Pfizer in 1978. Since 2006, Read has led Pfizer’s Worldwide Biopharmaceutical Businesses, which now comprises five global business units—Primary Care, Specialty Care, Oncology, Established Products, and Emerging Markets—and accounts for approximately 85 percent of Pfizer’s annual revenues. Read can point to a track record that is truly global—his latest assignment heading the human pharmaceuticals business units buttressed his lengthy background in managing Pfizer’s international operations with exposure to the mission-critical US market, where he directed an overhaul of the company’s sales and marketing operations around primary care.
The abrupt timing of Kindler’s departure suggests that the company still has some work to do to ensure that revenues deriving from the Wyeth merger will compensate for the unprecedented loss in 2011 of exclusivity for the world’s largest selling drug, Lipitor. A recent company filing to the US SEC indicates that much of the burden is going to fall on employees, at least in the short-term, with expectations that as many as 3,000 to as many as 5,000 additional jobs will be shed in 2011, on top of the 19,000 Kindler committed to as part of the Wyeth combination. Analysts are expecting more scale efficiencies, noting that Pfizer’s current annual operating costs are still in the high $30 billion range. Kindler focused those efforts on R&D and sales—the company is moving gradually toward an all contract sales force—but allowed staffing to balloon in less prominent platform functions like communications and public affairs.
The Board will elect a non-executive chairman from its current membership at its next regularly scheduled meeting, which will take place within the next two weeks. That choice is going to be important: if the Board opts for an activist business leader member like former Gilette CEO Jim Kilts or ex Armstrong Holdings chair George Lorch, then expect a commitment to more internal change, particularly in resolving a longstanding internal dispute over the scale of its investments in in-house R&D, as well as a wide-open race for whoever succeeds Read to the top post. In fact, Read has to be seen as a transitional figure whose background in operations will help right the ship for the next phase—making the combination with Wyeth a viable business capable of generating long-term organic growth, rather than simply an amalgamation of adjacent businesses.
It must be noted as well that the business unit structure put in place during Kindler’s tenure can facilitate the separation of different business lines into independent entities, much like the deal Pfizer engineered with GSK last year around the HIV therapeutic franchise. This may be one answer to the widespread conclusion that Pfizer has become too big for anyone to manage successfully, particularly when the stakes depend on institutionalizing that elusive combination of scientific creativity and organizational enterprise. A big culture change will require that, and there is no management cookbook that the new team can apply to make it happen, because it’s personality-driven.