Merck & Co Inc said Baxter International Inc executive Robert Davis would join as chief financial officer, effective April 23, replacing Peter Kellogg.
The move come as Merck is struggling with slowing sales of its flagship drugs and failures or delays in new drug approvals, while Baxter is planning to split into two companies.
Sales of Merck's diabetes drug, Januvia, have been slowing and sales of its asthma drug, Singulair, fell by a more than a third last quarter due to generic competition.
The company cut 8,500 jobs in October and said it would cut annual operating costs by $2.5 billion.
Davis "will be an asset to us in implementing a significantly streamlined, more flexible cost structure and operating model, while enabling us to focus on our highest-potential growth opportunities," Merck CEO Kenneth Frazier said in a statement.
Davis, 47, was CFO of Baxter for four years until May 2010. Since then he has been the corporate vice president and president of the company's medical products business.
In his current role he oversaw the integration of the medication delivery and renal businesses, along with corporate manufacturing and research and development, Merck said.
Davis joined Baxter in 2004 after more than 14 years at Eli Lilly and Co.
Merck said Kellogg, 58 and its CFO since 2007, played a major role in the company's acquisition of rival Schering-Plough in 2009. He will leave the company on May 16.
(Reporting By Vrinda Manocha in Bangalore; Editing by Rodney Joyce and Savio D'Souza)