Pfizer OR Johnson & Johnson

Pfizer OR Johnson & Johnson

Two of the biggest healthcare stocks on the market in terms of market cap haven’t delivered big returns for investors in recent years. Both Pfizer (NYSE: PFE) and Johnson & Johnson (NYSE: JNJ) have lagged well behind the S&P 500.But the dynamics are changing for both companies. Which stock is likely to be the biggest winner for investors over the next decade? Here’s how Pfizer and Johnson & Johnson stack up against each other.

Pfizer’s about to be smaller — and that could be the biggest reason to consider buying the stock. In July, the company announced plans to merge its Upjohn unit with Mylan. A few months later, Pfizer revealed that the name of the new company resulting from this merger will be Viatris. Probably the most important thing to know about this transaction is that it will leave Pfizer with a lineup of drugs that should generate solid growth for years to come. At the top of that list are breast cancer drug Ibrance and anticoagulant Eliquis, which market researcher EvaluatePharma projects will be the No. 3 best-selling drug in the world by 2025. The Pfizer that remains after the Viatris deal will also claim a handful of drugs that don’t generate the level of sales that Ibrance and Eliquis do but are growing even faster than those two blockbusters. Sales are soaring for Pfizer’s immunology drug Xeljanz, cancer drug Inlyta, and rare heart disease drug Vyndaqel.Although Upjohn generates a lot of cash flow, the segment has been a drag on Pfizer’s revenue and earnings growth. Declining sales from the loss of exclusivity of stars of the past such as Lyrica have been hard for the company to overcome. But with Upjohn splitting off to merge with Mylan, Pfizer anticipates that it will deliver revenue and adjusted earnings growth that ranks among the best in the pharmaceutical industry, at least through the middle of the next decade.

Pfizer will also be left with a promising pipeline. The company currently has 24 late-stage programs, and several of them target additional approved indications for already-approved drugs. But Pfizer also has several new late-stage candidates with significant potential, notably including its PF-06482077 pneumococcal vaccine, and experimental pain drug tanezumab.

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