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Gilmartin’s Gadfly

Deutsche Bank analyst wants CEO’s head on a platter.

Merck has been in serious need of a new CEO for years, but shareholders will have to suffer through another two and a half years with Raymond Gilmartin. He announced in early December that he will retire in June 2006, at the firm’s mandatory age of 65. For shareholders and the precious few critics of Mr. Gilmartin, that day can’t come soon enough.

For some time now, one of those critics, Barbara Ryan, a managing director and pharmaceutical analyst for Deutsche Bank Securities, has been haranguing very publicly that Mr. Gilmartin be ousted and Merck rebuilt. Though the company’s board—and, for that matter, the financial world—has ignored Ms. Ryan’s aggressive demands, she presses on, breaking with Wall Street decorum and arguing for more than a year now that Mr. Gilmartin is driving the company into the ground.

R. Gilmartin; Copyright © 2004 Acumen Sciences, LLC, All Rights Reserved.Why is Ms. Ryan so bothered? Because just as she predicted, sales of Merck’s core products are being ravaged by steady gains from generics competitors. Merck’s pipeline is among the pharmaceutical industry’s most dismal. And it looks like earnings for 2003 will be down for the second year in a row. In October, for the first time in his ten-year career at Merck, Mr. Gilmartin announced substantial layoffs, sacking 4,400 people, or 7% of his workforce, in a desperate bid to trim costs.

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