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PFE vs. MRK: Which Oncology Drug Giant is a Better Buy Now?
PFEPfizer(PFE) ZACKS·2025-05-19 13:30

Core Insights - Merck and Pfizer are leading pharmaceutical companies with strong oncology portfolios, but their revenue reliance differs significantly, with oncology accounting for over 50% of Merck's total revenues compared to around 25% for Pfizer [1][2]. Group 1: Pfizer's Position - Pfizer is recovering from a slowdown in 2023/early 2024, with diminishing COVID-related uncertainties leading to reduced revenue volatility [3]. - Non-COVID operational revenues improved in 2024, driven by key products like Vyndaqel, Padcev, and Eliquis, as well as new launches and acquisitions [4]. - Pfizer anticipates cost cuts and restructuring to yield savings of 7.7billionbytheendof2027,whichshouldenhanceprofitgrowth[5].−ChallengesincludedecliningsalesofCOVID−19productsandsignificantimpactsfrompatentexpirationsexpectedbetween2026−2030[6].−Pfizerhasfacedsetbacks,includingthediscontinuationoftheGLP−1Ragonistdanuglipronduetosafetyconcerns[7].−AsofMarch31,2025,Pfizerhadcashandcashequivalentsof7.7 billion by the end of 2027, which should enhance profit growth [5]. - Challenges include declining sales of COVID-19 products and significant impacts from patent expirations expected between 2026-2030 [6]. - Pfizer has faced setbacks, including the discontinuation of the GLP-1R agonist danuglipron due to safety concerns [7]. - As of March 31, 2025, Pfizer had cash and cash equivalents of 17.3 billion and long-term debt of 57.6billion,withadebt−to−capitalratioof0.41[8].Group2:Merck′sPosition−Merckhasoversixblockbusterdrugs,withKeytrudabeingtheprimaryrevenuedriver,particularlyinearly−stagenon−smallcelllungcancer[9].−Thecompanyhasmadesignificantregulatoryandclinicalprogress,withitsphaseIIIpipelinenearlytriplingsince2021[10].−However,MerckisheavilyreliantonKeytruda,raisingconcernsaboutitsabilitytodiversifyitsproductlineupaheadofthedrug′spatentlossin2028[11].−Merckended2024withcashandcashequivalentsof57.6 billion, with a debt-to-capital ratio of 0.41 [8]. Group 2: Merck's Position - Merck has over six blockbuster drugs, with Keytruda being the primary revenue driver, particularly in early-stage non-small cell lung cancer [9]. - The company has made significant regulatory and clinical progress, with its phase III pipeline nearly tripling since 2021 [10]. - However, Merck is heavily reliant on Keytruda, raising concerns about its ability to diversify its product lineup ahead of the drug's patent loss in 2028 [11]. - Merck ended 2024 with cash and cash equivalents of 9.2 billion and long-term debt of $33.5 billion, also with a debt-to-capital ratio of 0.41 [12]. Group 3: Financial Estimates and Performance - The Zacks Consensus Estimate for Pfizer's 2025 sales implies a year-over-year decrease of 0.6%, while Merck's estimates suggest a 0.9% increase [13][17]. - Year-to-date, Pfizer's stock has declined by 10.8%, while Merck's stock has dropped by 22.9%, compared to the industry's decrease of 4.0% [19]. - Pfizer's dividend yield of 7.5% is higher than Merck's 4.3%, and Pfizer's return on equity is 20.3%, lower than Merck's 43.2% [22][23]. Group 4: Market Outlook - Both companies are cheaper than larger drugmakers like AbbVie and Eli Lilly, but Merck's reliance on Keytruda and challenges in other areas raise concerns about its future growth [28]. - Pfizer's improving growth prospects, rising estimates, and higher dividend yield position it as a better investment option compared to Merck [29].