Exit of Ryan, Maione to have big impact

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Two game-changing personnel shifts were announced last month: one stunning in its inexplicable surprise, immediate impact and long-term implications; the second unfortunate and perhaps, in the end, inevitable.

Tom Ryan shocked the chain drug retailing community by announcing his intention to retire next year from CVS Caremark, the company he joined 36 years ago right out of pharmacy school and went on to renew, reshape and revolutionize in ways neither he nor chain drug retailing could envision.

Ryan will remain as CVS’ chief executive until next May, when current plans call for Larry Merlo, who has just been named president and chief operating officer of CVS Caremark, to succeed him. Initial indications are that Ryan intends to walk away from CVS rather than serve a term as chairman or remain as a board member.

For now, CVS Caremark has created an office of the chairman consisting of Ryan, Merlo and Per Lofberg, Caremark Pharmacy Services’ president, with the latter two reporting to Ryan.

It would be difficult to detail what Ryan has meant to CVS Caremark and the chain drug community. Indeed, no single executive in the industry’s 100-plus–year history has compiled so brilliant a record of success in profoundly altering the way a retailer is positioned, viewed, studied or copied.

Nor has any one individual equaled the impact Ryan has come to exert on the entire health care community. As he said in his characteristically understated internal memo announcing his plans, “We have accomplished so much in the nearly 50-year history of this company — evolving from a small regional drug store chain to the largest integrated provider of pharmacy health care in the world.”

When Ryan was named CVS president 16 years ago, the company recorded $4.33 billion in sales, with 1,328 drug stores in 15 states. Today, after three breathtaking acquisitions, a merger that both expanded the parameters of chain drug retailing and turned the industry upside down, and an entry into the immediate-care medical clinic business, CVS Caremark is America’s leading provider of pharmacy services. The $98.73 billion company operates a national drug chain with 7,027 stores in 44 states (plus Puerto Rico and the District of Columbia), 569 Minute Clinic facilities and a fledgling chain of up-market beauty stores. Its Caremark unit is America’s second-largest pharmacy benefits manager.

During this period, Ryan has emerged as the single most influential personality chain drug retailing has seen in the past 30 years. If there is a dominant member on the board of directors of the National Association of Chain Drug Stores, it is Tom Ryan. If there is one individual whose opinion, support and advice are consistently sought and jealously coveted, that individual is Tom Ryan. If there is one industry leader in chain drug retailing today, that leader is Tom Ryan.

It is far too soon to measure the potential impact of his departure, if indeed he does depart. Clearly, other individuals will emerge to take his place, and other leaders will eventually eclipse the charismatic personality and particular set of accomplishments that have set Ryan apart. But no one who really knows chain drug retailing can seriously doubt that his departure will impact this industry as decisively as his tenure has done. Someone will certainly succeed him; no one will ever replace him.

Frank Maione’s retirement as U.S. chief customer officer at Johnson & Johnson is viewed differently. Never has a supplier executive come along who has been at once so capable and so popular. His business career has been an unbroken string of successes. Companies whose sales efforts he has led — from Warner-Lambert to Pfizer’s consumer health division to J&J — have invariably and inevitably become the supplier sales organizations ranked first by retail customers.

Yet competence is not the first quality that comes to mind when Maione is mentioned. Rather, several others — popularity, kindness, compassion, thoughtfulness, friendship — come to mind.

His friends and admirers in the mass retailing community are legion, and they transcend company, position or area of responsibility and authority. Regardless of who you are or what you do, Maione always has time for you, and that time is not tied to your ability, willingness or opportunity to do business with him.

His departure from Johnson & Johnson comes at a particularly inappropriate time for the company — for many reasons. First, you don’t easily replace an executive of Maione’s ability and impact. Second, J&J particularly needs Maione’s skills right about now, exposed as it is to a slew of inexplicable product recalls. Third, Maione’s departure highlights a possibility voiced by many industry people — namely that J&J, in the end, is a company not particularly conducive to individual initiative or a creative, outside-the-box approach to doing business in the mass retailing community.

On the other hand, it’s highly unlikely that that community has seen the last of Frank Maione. Indeed, it’s probable that this is not the end of his brilliant career in retailing. Nor is it, to paraphrase Winston Churchill, even the beginning of the end. Rather, it is merely the end of the beginning.


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