Ryan to retire from CVS helm

Larry Merlo

WOONSOCKET, R.I. —After spending 36 years with CVS Caremark, Tom Ryan, chairman, president and CEO, will retire as CEO in May 2011, setting in motion a succession plan that likely will position Larry Merlo as Ryan’s successor.

“I felt this was the right time to move forward with our transition plan,” Ryan stated. “In my 36 years with the company, including 15 years as president, I have never felt better about our position than I do now. We have tremendous assets, an incredibly talented management team and a strategy that is resonating in the marketplace. I made my decision knowing that CVS Caremark is in an excellent position and that we have the right team in place to build on our success.”

As part of the succession plan, Merlo has been named president and COO and, according to the company, likely will succeed Ryan as CEO. Effective immediately, Merlo has taken on the additional responsibilities of human resources, legal, corporate compliance and government relations. He most recently served as EVP of the company and president of its CVS/pharmacy retail operations, overseeing a portfolio of more than 7,000 CVS/pharmacy locations with net revenues of more than $55 billion.

Merlo began his career in chain pharmacy in 1978 as an assistant manager with People’s Drug in Washington, D.C. He joined CVS as area VP of the metro Washington, D.C., area in 1990—the year CVS acquired People’s Drug. Over the years, Merlo has held various positions at CVS, including EVP stores of CVS Corp. from April 2000 to January 2007 and EVP stores of CVS Pharmacy Inc. from March 1998 to January 2007. He currently is chairman of the National Association of Chain Drug Stores.

CVS Caremark is initiating a search for Merlo’s successor as president of the CVS/pharmacy retail operations, looking both inside and outside of the company. To facilitate the transition, the company has formed an Office of the Chairman, which includes Ryan, Merlo and Per Lofberg, president of Caremark Pharmacy Services, the company’s PBM arm.

Under Ryan’s leadership, CVS has grown from a regional drug store chain with revenues of $5 billion in 1994 to a pharmacy health-care provider powerhouse with revenues nearing $100 billion. Over the years, CVS has transformed into an industry trailblazer with its innovative beauty concepts, highly successful loyalty card program and its vertically integrated pharmacy-PBM model via the 2007 acquisition of Caremark.

In a prepared statement, Ryan assured all that with Merlo’s and Lofberg’s complementary backgrounds, the company is in “excellent hands.” At least one industry observer agreed. “We view the promotion of Larry Merlo as a large positive, as he is one of the strongest and most experienced drug retailing executives in the industry,” stated Credit Suisse analyst Edward Kelly in a research note. “We attribute much of the company’s success in retail over the last few years to his store operations ability. While some have the impression that he is not a big strategic thinker, this initial conclusion is typical of most internal CEO promotions.”

Kelly acknowledged that Merlo’s PBM expertise is “somewhat limited,” but noted that it is no more so than Ryan’s expertise, and Lofberg, a 30-year veteran of the PBM industry, will continue in his current role.

Ryan’s Career at CVS
1975Graduated from the University of Rhode Island and joined CVS as a pharmacist.
1975-1985Held various positions and was named VP pharmacy operations in 1985.
1988Named SVP pharmacy
1990Named EVP stores
1994Named president and CEO of CVS/pharmacy
1996Named vice chairman and COO of CVS Corp.
1998Named president and CEO of CVS Corp.
1999Elected chairman of CVS Corp.
March 2007Named president and CEO of CVS Caremark
Nov. 2007Assumes additional role of chairman of CVS Caremark

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