Merck chooses outsider to be chief executive

June 10, 1994|By New York Times News Service

In a surprise ending to an 18-month search, Merck & Co. said yesterday that it had chosen Raymond V. Gilmartin, an outside executive with no pharmaceutical experience, to succeed Dr. P. Roy Vagelos, who has headed the world's largest drugmaker since 1985.

Mr. Gilmartin, a 53-year-old electrical engineer, has headed Becton, Dickinson & Co., a medium-size hospital supply company, since 1989. He becomes chief executive and president of Merck and will add the position of chairman on Nov. 1, when Mr. Vagelos retires at 65.

"It's unbelievable," said Richard Vietor, an analyst at Merrill Lynch & Co. "He's a total outsider."

Mr. Gilmartin takes over the company at a time when a movement to lower the cost of health care is reshaping the industry.

Mr. Vagelos, when asked why a Merck executive was not chosen, said that Mr. Gilmartin was "clearly the best person for the job." Hospital suppliers were "hit by cost containment much earlier than the pharmaceutical industry," Mr. Vagelos added, "so he learned the lesson of staying ahead technologically, offering advantages to his customer and also watching his own costs very carefully."

But Larry Feinberg, a partner of Oracle Partners, health care investment managers, said that "a lot of investors are going to be bewildered."

Merck, based in Whitehouse Station, N.J., had $10.5 billion in sales last year. Franklin Lakes, N.J.-based Becton, Dickinson, which has divisions in Sparks and Cockeysville, had sales of $2.47 billion.

Mr. Gilmartin, who has an MBA degree from Harvard, said he is committed to continuing Merck's heavy spending on research for product development.

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