A New CEO's RX For What Ails Merck
View From the Top
By John Simons

(FORTUNE Magazine) – RICHARD T. CLARK CERTAINLY DOESN'T look like the face of change. Merck's newly anointed CEO, after all, is a stout, silver-haired 59-year-old replacing Raymond Gilmartin, another graying executive of similar proportions. Clark has been at Merck for the better part of 32 years. He's described as straightforward and focused, but he lacks the pizzazz Wall Street expected. Scoffs one insider: "He's not someone who walks in a room and sucks all the air out."

But Clark could be exactly what the drugmaker needs. In his few short weeks on the job he's taken several opportunities to rub elbows with employees, a big departure from Gilmartin's more aloof style. "I need to create a compelling vision and get people passionate about that," says Clark. He wants them to have fun as well. At a dinner with newly promoted scientists, he joked that he'd recently been promoted too. Perhaps the biggest signal of change: Former CEO Gilmartin insisted Merck would never undertake a large-scale merger or acquisition. His stance came to symbolize the Merck insularity and haughtiness that only underscored its diminishing stature. Clark, however, is open to the idea. He told FORTUNE: "We have sound financial footing. So if we need to do mergers and acquisitions, we have the ability to do that. I don't want to give anyone the impression we're not open to good ideas."

Clark was never supposed to be the man in charge. Several years ago, to prepare for Gilmartin's planned retirement in 2006, Gilmartin and the board compiled a list of potential successors. They included younger standouts like Bradley Sheares, 48, the company's head of sales and marketing, and Judy Lewent, 56, Merck's chief financial officer. The plan was to ease them into roles of increasing responsibility. But when Merck began to stumble--earnings misses, drug-trial failures, and finally September's Vioxx recall--the prospect of an untested CEO quickly evaporated.

So just as the Vioxx recall began, the board hired headhunters Heidrick & Struggles. "Some of us never believed that a star--someone who would titillate--was the way to go for this," says William Bowen, a longtime Merck board member. Others say it was clear that Merck couldn't attract a celebrity CEO even if it wanted to. The search team eventually identified some 20 serious candidates, mostly European drug executives and five Merck managers. Clark, who started at Merck in 1972 doing quality control, rising in 1997 to COO (and later CEO) of Medco Health Solutions, was the dark horse.

It was a ringing endorsement from Merck's chief scientist, Peter Kim, that catapulted Clark's name to the top of the list (it didn't hurt that he was furthest from the Vioxx mess). Clark says he wasn't terribly surprised when board member Larry Bossidy, the former CEO of Honeywell, came knocking on the door of his office suite. "I understand Merck and the culture here." But given his Medco stint, "I'm also an outsider." Clark will have at his disposal Bossidy, Bowen, and Harvard professor Samuel Thier (who are serving in place of a chairman as an executive advisory committee), but what he doesn't have is much time--he's about five years from retirement. Insiders describe him in baseball terms as the middle relief pitcher who takes over for a tired starter before the "closer" comes in to ensure a win. Perhaps by then Merck will be ready for a hotshot CEO. -- John Simons