Who Will Run PhRMA? AZ’s Chip Davis, For Now

The Pharmaceutical Research & Manufacturers of America is buying some time to find a replacement for departing CEO Billy Tauzin. The trade association has named AstraZeneca VP-Corporate & External Relations Chip Davis to serve as “senior operating officer” and—we suspect—as interim CEO in waiting.

Davis is taking a leave of absence from AstraZeneca to join PhRMA “to help with the association’s leadership transition.” For now, that means he will be reporting to Tauzin, who is stepping down as CEO June 30. In other words, Davis’ first job will be to step in for PhRMA’s number two executive, EVP Mimi Simoneaux Kneuer, who will be leaving the trade association in May.

But we expect Davis is really there to buy some time for PhRMA to find a replacement for Tauzin. PhRMA says Davis will stay on “until a replacement for Tauzin is named,” and—since we understand the search for a new CEO is really just beginning—that probably means a period as interim CEO.

Davis is a perfect choice for the job. He has been AZ’s liaison to PhRMA and played a key role in guiding the association’s work on health care reform during the chairmanship of AZ CEO David Brennan. With Davis at the helm, PhRMA should be able to maintain and develop some of the critical alliances that helped the association do so well in the reform debate, particularly its partnerships with organized labor.

Brennan’s term ended in March, but he is chairing the search committee for Tauzin’s replacement.

At the same time, because Davis is so close to Brennan, he is sure to be temporary. Pfizer CEO Jeff Kindler isn't likely to let the past chair--in effect--run the association for his term.

Why the delay in replacing Tauzin permanently?

Well, for one thing, circumstances have changed radically since Tauzin announced his resignation in February, at a time when the prospects for health care reform looked dim. Now, the health care bill is law—and, as we note in The RPM Report—the final bill is essentially a complete tactical victory for PhRMA. In other words, what looked like a potentially crushing setback has become an amazing victory.

There are also strategic reasons for PhRMA to wait a bit on naming a replacement, if only to broaden the pool of candidates. After the flap caused by the negotiations to hire Tauzin while he was still in Congress, for instance, it would be best if PhRMA waits before talking seriously to any sitting members of Congress.

More to the point, it behooves PhRMA to wait and see how the elections go this fall. Best to read the tea leaves (or maybe the Tea Party?) before making the next CEO choice.

One other reason for PhRMA to take its time: the search might take longer than you think. After all, CEO of PhRMA may not exactly be a dream job.

Imagine PhRMA came to you with this offer: "We just scored an across-the-board victory on the biggest piece of domestic policy legislation in a generation, so naturally we didn't want our old CEO to stay. We're sure you can do better. Oh, and by the way, we are going to be slashing our budget pretty radically now that all that health reform stuff is over. And, on top of that, figure on our top 10 members merging into our top 5 in the years to come. When can you start?"

So clearly it is far too early to talk about who will take over PhRMA permanently. There is no short list. But never fear: we won't let that stop us from speculating. Look for our list of names in the next post...