Pfizer Names New CEO

In an abrupt shift in direction, the board of directors of Pfizer has picked Jeffrey B. Kindler to succeed Henry A. McKinnell Jr. as the company's CEO. McKinnell will stay on as chairman of the board through February 2007, leaving one year ahead of his previously scheduled retirement.

In a note to investors, Deutsche Bank stock analyst Barbara Ryan said the shake-up is an acknowledgement by the Pfizer board that "an abrupt departure from the current modus operandi was critical."

McKinnell shepherded Pfizer through a particularly rocky period for the pharmaceutical industry, marked by a flood of patent expiries, weakened new-drug pipelines, and severe criticism from government and patient groups over drug pricing. "The industry's business model was under assault by challenges of unprecedented magnitude and immediacy," Ryan notes.

But Pfizer's stock price has lost nearly 50% of its value over the past six years, and the company is now under pressure from shareholders to turn the stock around. The situation is particularly acute because sales of the cholesterol-lowering agent Lipitor, the company's top-selling product, are expected to be cannibalized by recently launched generic versions of Merck's cholesterol drug Zocor.

The change at the top does little to shed light on the direction that the world's largest drug company might take in the future. Kindler has been with Pfizer for just four years, most recently serving as vice chairman and general counselor, and his prior experience was at McDonald's and General Electric.

The new CEO said in a statement that he intends to "transform virtually every aspect of how we do business," including streamlining the organization to make it more cost-effective and encouraging speedier decision-making.

The appointment of Kindler has sparked concerns among analysts who cover Pfizer that the other presumed front-runners for the top job–Karen Katen, president of the firm's human health division, and David L. Shedlarz, vice chairman–will leave the company.