JNJ vs. PFE: Which Drug Giant is a Better Buy Now?

By Kinjel Shah | April 03, 2025, 9:59 AM

Johnson & Johnson JNJ and Pfizer PFE are two of the world’s largest pharmaceutical companies with diversified healthcare portfolios. J&J operates through pharmaceuticals and medical devices divisions. In Pharmaceuticals, it has one of the most diverse revenue streams in the industry, covering a broad range of areas such as neuroscience, cardiovascular and metabolism, immunology, oncology, pulmonary hypertension and infectious diseases. On the other hand, Pfizer holds a leading position in the oncology segment while also enjoying a strong presence in inflammation & immunology, rare disease and vaccines.

Both companies have interesting R&D pipelines that can generate innovative products and further drive growth. But which one is a better investment today? Let’s take a closer look at their fundamentals, growth prospects and challenges to make an informed choice.

The Case for J&J

J&J’s biggest strength is its diversified business model, which helps it to withstand economic cycles more effectively. It operates through more than 275 subsidiaries.

J&J’s Innovative Medicine unit is showing a growth trend. The segment’s sales rose 5.8% in 2024 on an organic basis. In 2025, J&J expects growth in the Innovative Medicine segment despite the loss of exclusivity (LOE) for its multi-billion-dollar product Stelara, the negative impact of the Part D redesign and the greater effect of currency fluctuations. Growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey, and new indications for Tremfya and Rybrevant.

J&J is also making rapid progress with its pipeline and has been on an acquisition spree lately, which has strengthened its pipeline.

On the flip side, sales in J&J’s MedTech business are facing continued headwinds in the Asia Pacific, specifically in China. Sales in China are being hurt by the impact of the volume-based procurement (VBP) program and the anti-corruption campaign. J&J does not expect any improvement in its business in the Asia Pacific region, specifically in China, in 2025. Competitive pressure is also hurting sales growth in some MedTech businesses.

The company lost U.S. patent exclusivity of its blockbuster drug, Stelara, in 2025. Stelara generated sales of $10.36 billion in 2024. The launch of generics is expected to significantly erode the drug’s sales, hurting J&J’s sales and profits in 2025.

J&J faces more than 62,000 lawsuits for its talc-based products, primarily its baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian and some other cancers. Earlier this week, a bankruptcy court in Texas rejected J&J’s proposed bankruptcy plan to settle its talc lawsuits. J&J will go back to the traditional tort system to fight the lawsuits individually with its bankruptcy strategy to settle the lawsuits failing for the third time.

It exited 2024 with cash and cash equivalents of $24.5 billion against a long-term debt of 30.65 billion, resulting in a debt-to-capital ratio of 0.3, which is less than the industry's average of 0.41.

The Case for PFE

Pfizer is one of the largest and most successful drugmakers in oncology. The 2023 acquisition of Seagen strengthened its position in oncology further.

After witnessing possibly its worst slowdown in 2023/early 2024, the company seems to be gradually making a comeback and entering a transition phase. With its COVID-related uncertainties diminishing, its revenue volatility is declining.

Though COVID revenues are declining, its non-COVID drugs and contributions from new and newly acquired products have started to drive growth. Revenues from Pfizer’s non-COVID products rose 12% operationally in 2024, exceeding the guidance range of 9-11%.

The continued growth of Pfizer’s diversified portfolio of drugs, particularly in oncology, is expected to support top-line growth in 2025. Also, Pfizer expects cost cuts and internal restructuring to deliver savings of at least $6.0 billion. Continued growth in non-COVID sales and significant cost-reduction measures should drive profit growth.

Pfizer faces its share of challenges, the key being declining sales of its COVID-19 products. Pfizer also expects a significant impact from the loss of patent exclusivity in the 2026-2030 period, as several of its key products will face patent expirations. The Medicare Part D redesign is also expected to hurt sales of Pfizer’s higher-priced drugs like Vyndaqel, Ibrance and Xeljanz in 2025.

As of Dec. 31, 2024, Pfizer had cash and cash equivalents of $20.48 billion on its balance sheet and $57.4 billion in long-term debt. Its debt-to-capital ratio of 0.42 is almost in line with the industry's average of 0.41.

How Do Estimates Compare for JNJ & PFE?

The Zacks Consensus Estimate for J&J’s 2025 sales and EPS implies a year-over-year increase of 1.4% and 6.0%, respectively. The EPS estimates for 2025 and 2026 have been stable at $10.58 per share and $11.07 per share, respectively, over the past 60 days.