ZACKS·2026-01-22 18:05Core Insights - Merck (MRK) and AbbVie (ABBV) are prominent pharmaceutical companies with strong positions in oncology and immunology, with AbbVie also expanding into aesthetics, neuroscience, and eye care, while Merck has a more diversified portfolio including vaccines and animal health [1] Group 1: Revenue and Growth Drivers - Oncology represents over 60% of Merck's total revenues, with Keytruda accounting for approximately half of its pharmaceutical sales [2] - AbbVie's immunology segment is the largest revenue contributor, with drugs like Humira, Skyrizi, and Rinvoq generating about half of total sales [2] - AbbVie has successfully managed the loss of exclusivity for Humira by launching new immunology drugs, Skyrizi and Rinvoq, which are projected to exceed combined sales of $25 billion in 2025 and $31 billion by 2027 [4][5] Group 2: Financial Performance - AbbVie's oncology segment generated $5.0 billion in revenue in the first nine months of 2025, a 2.7% increase year-over-year, while neuroscience drug sales rose 20.3% to nearly $7.8 billion [6] - Merck's Keytruda achieved sales of $23.3 billion in the first nine months of 2025, reflecting an 8% year-over-year growth [10] - AbbVie's stock has increased by 26.6% over the past year, while Merck's stock has risen by 15% [22] Group 3: Pipeline and M&A Activity - AbbVie has engaged in over 30 M&A transactions since early 2024 to enhance its early-stage pipeline, particularly in immunology [7] - Merck's phase III pipeline has nearly tripled since 2021, with plans to launch around 20 new vaccines and drugs, including a new pneumococcal vaccine and a pulmonary arterial hypertension drug [12] - Merck has been active in acquisitions, including the $9.2 billion purchase of Cidara Therapeutics and around $10 billion for Verona Pharma, to bolster its pipeline [13][14] Group 4: Challenges and Competitive Landscape - AbbVie faces near-term challenges such as biosimilar erosion of Humira and competitive pressures on Imbruvica, with aesthetics sales declining by 7.4% in the first nine months of 2025 [8] - Merck is heavily reliant on Keytruda, with concerns about its ability to grow non-oncology business ahead of Keytruda's patent expiration in 2028 [16] - Both companies are facing competitive pressures, with Merck's Gardasil sales declining due to weak performance in China and other vaccines also experiencing sales drops [15] Group 5: Valuation and Estimates - The Zacks Consensus Estimate for AbbVie's 2026 sales and EPS indicates a year-over-year increase of 10.2% and 38.4%, respectively, while Merck's estimates imply a 3.7% sales increase but a 15.9% decrease in EPS [17] - AbbVie trades at a higher price/earnings ratio of 14.84 compared to Merck's 13.81, although both are below the industry average of 17.75 [22] - AbbVie's dividend yield is 3.06%, slightly lower than Merck's 3.2% [26]