Swiss pharmaceutical giant Novartis has announced Daniel Vasella will be stepping down as CEO from February.
The announcement on Tuesday came as the Basel-based group reported record results in 2009. It posted a profit of $8.4 billion (SFr8.7 billion), up four per cent compared with last year.
Novartis also reported that the board of directors had appointed the head of its global pharmaceuticals division, Joe Jimenez, to succeed Vasella, who will continue on as chairman and focus on strategic priorities.
“After 14 years as CEO it is the right time to complete the carefully planned CEO succession process, which started over a year ago,” Vasella said, adding that with Jimenez’s “excellent track record” he expected 2010 to be a year of significant progress for the group.
Vasella had come under criticism for his double role as CEO and chairman, a dual mandate he has held for the past 11 years.
Novartis also announced that it would bow to mounting pressure by joining a growing list of Swiss companies to allow shareholders to have a consultative vote on executive pay.
The measures were welcomed by Swiss sustainable investment group, Ethos Foundation. Ethos lists many Swiss pension funds as members and has waged a long campaign to make large companies more accountable to shareholders.
"It is good to see that pressure by the shareholders has borne fruit," Ethos managing director Dominique Biedermann said in a statement.
Vasella's decision to end his dual mandate follows that of Franz Humer at rival pharmaceutical giant Roche and Peter Brabeck at Nestlé in 2008.
Under further changes Novartis has slimmed down its leadership structure by reducing the size of its executive committee from 12 to nine members.
The group posted a 54 per cent fourth quarter profit increase to $2.32 billion (SFr2.42 billion).
Turnover meanwhile rose seven per cent to $44.2 billion. Sales rose 28 per cent to $12.93 billion in the September-December period from $10.08 billion the previous year.
Vasella said the outgoing fourth quarter had been especially strong, with the company benefitting from better exchange rates and the shipment of large orders of swine flu vaccine in the final three months of 2009.
The company offered a positive outlook for 2010, but Vasella said much would depend on whether a takeover of United States eye-care company Alcon proceeded as planned.
"That is the swing factor," he said, adding that the Alcon deal would "propel Novartis to the global leadership position in eye-care and create a new growth platform".
Novartis's planned takeover of Alcon has met with resistance from some minority shareholders unhappy with the price being offered for their stake.
Novartis shares closed trading on Tuesday up 2.06 per cent at SFr56.85.
swissinfo.ch and agencies
Joseph “Joe” Jimenez, an American citizen, graduated from Stanford University in 1982 and earned an MBA from the University of California, Berkley in 1984.
He began his career at The Clorox Company, California, and later served as president of two operating divisions at ConAgra, Nebraska. In 1998, he joined the HJ Heinz Company, Pennsylvania, and was named President and Chief Executive Officer of the North America business.
From 2002 to 2006 he served as President and Chief Executive Officer of Heinz in Europe. Before joining Novartis, he served as a non-executive director of AstraZeneca plc, Britain, from 2002 to 2007, and was an advisor for the private equity organisation Blackstone Group, New York.
He joined Novartis in April 2007 as CEO of the Consumer Health Division. He was appointed to CEO of the Pharmaceuticals Division in October 2007. On January 26 2010 Novartis announced he would replace Daniel Vasella as CEO.
Novartis was created in 1996 through the merger of Ciba-Geigy and Sandoz, and is currently organized into four divisions:
Pharmaceuticals (prescription medicines)
Sandoz (generic prescription drugs)
Vaccines and Diagnostics
It is facing increased competition from generic drug makers and says it is looking to diversity its business portfolio.
The company employees 96,700 full-time staff.