By Mark Terry
Pfizer announced its succession plan for when Ian Read steps down as chief executive officer on January 1, 2019. The new chief executive officer will be Albert Bourla, who is currently the company’s chief operating officer. Read will stay on as executive chairman of the board of directors.
Read became Pfizer’s chief executive on December 6, 2010, and chairman on December 12, 2011. Under his leadership, the company has marked up 30 drug approvals in the U.S., a total shareholder return of 250 percent, and a direct return of capital to shareholders of more than $120 billion.
He also unsuccessfully attempted two mega-mergers. The first was a 2014 bid to buy UK-based AstraZeneca for $119 billion. This fell apart primarily due to resistance by both the U.S. and UK governments to the deal. In 2016, an attempt to acquire Dublin-based Allergan for $160 billion was dashed when the U.S. Treasury Department implemented new rules regarding tax inversions. A tax inversion is where a U.S. company buys a company based in another country with a very low corporate tax rate, then shifts their headquarters to that country to take advantage of the lower rate. It was estimated that the Allergan deal would have resulted in a $1 billion lower tax rate at the time for Pfizer.
Before taking on the role of chief operating officer on January 1, 2018, Bourla led Pfizer’s Innovative Health business. He also founded the Innovative Health Emerging Markets region, which reported revenues in 2017 of $4.4 billion. Before taking on that role, he was the group president of the Vaccines, Oncology and Consumer Healthcare business unit.
Shantanu Narayen, Lead Independent Director of Pfizer’s board of directors, stated, “Today’s leadership announcement is part of a thoughtful, multi-year success planning process. The board has been impressed with Albert’s performance, depth of experience and track record for success, and we are confident that as chief executive officer he will drive innovation and further advancements across the business.”
The news follows last week’s announcement by Merck & Co that they had rescinded the company’s mandatory retirement age of 65 for its chief executive officer, Kenneth C. Frazier, so he could stay on longer. Leslie A. Brun, lead director for Merck’s board, stated, “CEO succession has been our top priority, and removing the mandatory retirement policy enables the board to make the best decision concerning the timing of the transition.”
Depending on the source, Read is either 64 or 65. Earlier this year, Pfizer offered Read a bigger payday to keep him around until at least March 31, 2019, and also to keep him from working for a competing company through March 31, 2021. This involved a 61 percent increase in compensation to $27.9 million.
In today’s announcement, Read stated, “It’s been an honor to serve as Pfizer’s CEO for the past eight years. However, now is the right time for a leadership change, and Albert is the right person to guide Pfizer through the coming era. Albert is an energizing leader who has an unwavering commitment to serving patients. With 25 years at Pfizer, he has developed an extensive knowledge of the industry and demonstrated an ability to build and grow businesses. With Albert at the helm, our dedicated colleagues across the globe are poised to deliver the next stage of growth. I look forward to working with Albert and the board to continue serving patients and delivering value for shareholders.”