Whatever your view concerning the 2007 merger of CVS and Caremark (mine, as readers of this blog know, was that it would be a fiasco), one thing was pretty clear: as long as Tom Ryan was in charge, CVS would never admit defeat and dump Caremark.
Well, all bets are off after CVS announced today that Ryan, 58, who holds the titles of chairman, president and chief executive of the company, will retire in May 2011. CVS named Larry Merlo president and chief operating officer; he will take over as CEO after Ryan’s departure. Merlo was most recently president of CVS’ retail pharmacy operations. The company is initiating a search to fill Merlo’s prior job. To assist with the transition, the company has formed an Office of the Chairman comprised of Ryan, Merlo and Per Lofberg, president of the Caremark unit.
Ryan’s departure raises the question of whether the company will attempt to sell the PBM operation. Ryan spearheaded the acquisition of Caremark as part of his grand vision of changing the way healthcare is delivered by integrating drugstores, pharmacy benefits and other services like retail chains – this despite the long history of failure among those who had previously attempted to merge a PBM with a pharmacy chain or drug maker. Ryan’s dream began to crumble after Caremark mismanaged its core PBM business, losing billions of dollars in accounts.
All of which has to be a bitter pill to swallow for Ryan, who spent 36 years at CVS (16 as president) and was instrumental in expanding the company from a regional drug store chain with $5 billion in revenues in 1994 to an organization with revenues of nearly $100 billion ($43 billion in 2006 prior to the merger with Caremark).
Note: Corrected to fix error in Ryan’s planned retirement date.
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