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JNJ vs. MRK: Which Healthcare Titan Offers Better Growth Prospects?
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Key Takeaways
JNJ expects stronger 2025 growth, driven by new drug launches and expansion in Innovative Medicine.
MRK remains dependent on Keytruda, raising concerns ahead of its 2028 loss of exclusivity.
JNJ forecasts higher sales in second-half 2025 and projects 2025 as a catalyst year for future growth.
Both Johnson & Johnson (JNJ - Free Report) and Merck (MRK - Free Report) are leading U.S. healthcare conglomerates — blue-chip pharmaceutical companies with massive R&D budgets and blockbuster drug portfolios.
Both companies have a strong presence in oncology, immunology and neuroscience areas. Other than that, J&J also has drugs for cardiovascular and metabolic diseases, pulmonary arterial hypertension (PAH) and infectious diseases, along with a strong presence in the medical devices segment.
On the other hand, Merck boasts a strong presence in vaccines, virology and hospital acute care.
Both firms face looming patent expirations and headwinds from Medicare Part D redesign. But which one is a better investment option 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.
Its Innovative Medicine unit is showing a growth trend. The segment’s sales rose 4.4% in the first quarter of 2025 on an organic basis despite the loss of exclusivity (LOE) for its multi-billion-dollar product, Stelara, and the negative impact of the Part D redesign. In 2025, J&J expects growth in the Innovative Medicine segment in the face of Stelara biosimilar entrants 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 also has an interesting R&D pipeline that can generate innovative products and further drive its growth. J&J has been on an acquisition spree lately, with the latest acquisition of Intra-Cellular Therapies strengthening its presence in the neurological and psychiatric drug market.
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 anticorruption 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. The launch of generics is expected to significantly erode the drug’s sales, hurting J&J’s sales and profits in 2025. J&J also expects a negative impact of approximately $2 billion in sales due to the Medicare Part D redesign in 2025. The Part D redesign is expected to mainly hurt sales of drugs like Stelara, Tremfya, Erleada and PAH drugs
J&J faces more than 62,000 lawsuits for its talc-based products, primarily baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian cancer. J&J insists that its talc-based products are safe and do not cause cancer. The company permanently discontinued the sales of its talc-based Johnson’s Baby Powder.
In April, a bankruptcy court in Texas rejected J&J’s proposed bankruptcy plan to settle its talc lawsuits after a two-week trial in Houston. 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.
J&J’s cash and cash equivalents were $38.8 billion at the end of March 2025 against long-term debt of $38.4 billion, resulting in a debt-to-capital ratio of 0.33, much lower than the industry's average of 0.42.
The Case for MRK
Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda has played an instrumental role in driving Merck’s steady revenue growth in the past few years. Keytruda’s sales are gaining from rapid uptake across earlier-stage indications, mainly early-stage non-small cell lung cancer. Continued strong momentum in metastatic indications is also boosting sales growth. The company expects continued growth from Keytruda, particularly in early lung cancer. Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. Merck is working on different strategies to drive Keytruda's long-term growth.
Merck has been making meaningful regulatory and pipeline progress across areas like oncology (mainly Keytruda), vaccines and infectious diseases while executing strategic business moves. Merck’s phase III pipeline has almost tripled since 2021, supported by in-house pipeline progress as well as the addition of candidates through M&A deals.
Merck’s new products, Capvaxive and Winrevair, are witnessing strong launches and have the potential to generate significant revenues over the long term. Earlier this week, the FDA approved its respiratory syncytial virus (RSV) vaccine, Enflonsia (clesrovimab).
However, sales of Gardasil, which is Merck’s second-largest product, are declining due to a weak performance in China, which resulted from sluggish demand trends amid an economic slowdown. Merck is also seeing weakness in the diabetes franchise and the generic erosion of some drugs.
Merck is heavily reliant on Keytruda. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that the company is excessively dependent on the drug and it should look for ways to diversify its product lineup.
There are rising concerns about the firm’s ability to grow its non-oncology business ahead of the upcoming loss of exclusivity of Keytruda in 2028.
Also, competitive pressure might increase for Keytruda in the near future. Medicare Part D redesign is expected to hurt sales of diabetes drugs, Januvia/Janumet, in 2025.
At the end of March 2025, its cash and cash equivalents were $9.2 billion against long-term debt of $33.5 billion, resulting in a debt-to-capital ratio of 0.41, which is slightly lower than the industry average of 0.42.
How Do Estimates Compare for JNJ & MRK?
The Zacks Consensus Estimate for J&J’s 2025 sales and EPS implies a year-over-year increase of 2.7% and 6.2%, respectively. The Zacks Consensus Estimate for 2025 earnings has risen from $10.54 per share to $10.60 over the past 60 days, while that for 2026 has declined from $11.02 to $10.98 over the same timeframe.
JNJ Estimate Movement
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MRK’s 2025 sales and EPS implies a year-over-year increase of 0.9% and 16.6%, respectively. EPS estimates for both 2025 and 2026 have declined over the past 60 days.
MRK Estimate Movement
Image Source: Zacks Investment Research
Price Performance and Valuation of J&J & MRK
Year to date, J&J’s stock has risen 10% compared with the industry’s increase of 0.6%. Merck’s stock has declined 17.5%.
Image Source: Zacks Investment Research
MRK looks more attractive than J&J from a valuation standpoint. Going by the price/earnings ratio, J&J’s shares currently trade at 14.53 forward earnings, slightly lower than 15.23 for the industry and its 5-year mean of 15.77. Merck’s shares currently trade at 8.76 forward earnings, significantly lower than the industry as well as the stock’s 5-year mean of 12.88.
Image Source: Zacks Investment Research
J&J’s dividend yield is 3.32%, while Merck’s is slightly higher at 3.98%.
Merck has one of the world’s best-selling drugs in its portfolio, generating billions of dollars in revenues. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then. However, the company’s problems are too many at present, including persistent challenges for Gardasil in China, potential competition for Keytruda and rising competitive and generic pressure on some drugs. All these factors have raised doubts about Merck’s ability to navigate the Keytruda loss of exclusivity period successfully. Consistently declining estimates also reflect analysts’ pessimistic outlook for the stock.
On the other hand, J&J has shown steady revenue and EPS growth for years. J&J considers 2025 to be a “catalyst year,” positioning the company for growth in the second half of the decade. J&J expects operational sales growth in both the Innovative Medicine and MedTech segments to be higher in the second half of 2025 than in the first. While newly launched products should drive growth in the Innovative Medicines segment in the second half, the MedTech segment may benefit from new products and easier comps. J&J expects growth to accelerate from 2026 onward. Despite headwinds like softness in the MedTech unit, the legal battle surrounding its talc lawsuits, Stelara patent cliff and the potential impact of Part D redesign, J&J seems just one step ahead of Merck due to better prospects for sales and profit growth amid the various challenges.
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JNJ vs. MRK: Which Healthcare Titan Offers Better Growth Prospects?
Key Takeaways
Both Johnson & Johnson (JNJ - Free Report) and Merck (MRK - Free Report) are leading U.S. healthcare conglomerates — blue-chip pharmaceutical companies with massive R&D budgets and blockbuster drug portfolios.
Both companies have a strong presence in oncology, immunology and neuroscience areas. Other than that, J&J also has drugs for cardiovascular and metabolic diseases, pulmonary arterial hypertension (PAH) and infectious diseases, along with a strong presence in the medical devices segment.
On the other hand, Merck boasts a strong presence in vaccines, virology and hospital acute care.
Both firms face looming patent expirations and headwinds from Medicare Part D redesign. But which one is a better investment option 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.
Its Innovative Medicine unit is showing a growth trend. The segment’s sales rose 4.4% in the first quarter of 2025 on an organic basis despite the loss of exclusivity (LOE) for its multi-billion-dollar product, Stelara, and the negative impact of the Part D redesign. In 2025, J&J expects growth in the Innovative Medicine segment in the face of Stelara biosimilar entrants 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 also has an interesting R&D pipeline that can generate innovative products and further drive its growth. J&J has been on an acquisition spree lately, with the latest acquisition of Intra-Cellular Therapies strengthening its presence in the neurological and psychiatric drug market.
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 anticorruption 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. The launch of generics is expected to significantly erode the drug’s sales, hurting J&J’s sales and profits in 2025. J&J also expects a negative impact of approximately $2 billion in sales due to the Medicare Part D redesign in 2025. The Part D redesign is expected to mainly hurt sales of drugs like Stelara, Tremfya, Erleada and PAH drugs
J&J faces more than 62,000 lawsuits for its talc-based products, primarily baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian cancer. J&J insists that its talc-based products are safe and do not cause cancer. The company permanently discontinued the sales of its talc-based Johnson’s Baby Powder.
In April, a bankruptcy court in Texas rejected J&J’s proposed bankruptcy plan to settle its talc lawsuits after a two-week trial in Houston. 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.
J&J’s cash and cash equivalents were $38.8 billion at the end of March 2025 against long-term debt of $38.4 billion, resulting in a debt-to-capital ratio of 0.33, much lower than the industry's average of 0.42.
The Case for MRK
Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda has played an instrumental role in driving Merck’s steady revenue growth in the past few years. Keytruda’s sales are gaining from rapid uptake across earlier-stage indications, mainly early-stage non-small cell lung cancer. Continued strong momentum in metastatic indications is also boosting sales growth. The company expects continued growth from Keytruda, particularly in early lung cancer. Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. Merck is working on different strategies to drive Keytruda's long-term growth.
Merck has been making meaningful regulatory and pipeline progress across areas like oncology (mainly Keytruda), vaccines and infectious diseases while executing strategic business moves. Merck’s phase III pipeline has almost tripled since 2021, supported by in-house pipeline progress as well as the addition of candidates through M&A deals.
Merck’s new products, Capvaxive and Winrevair, are witnessing strong launches and have the potential to generate significant revenues over the long term. Earlier this week, the FDA approved its respiratory syncytial virus (RSV) vaccine, Enflonsia (clesrovimab).
However, sales of Gardasil, which is Merck’s second-largest product, are declining due to a weak performance in China, which resulted from sluggish demand trends amid an economic slowdown. Merck is also seeing weakness in the diabetes franchise and the generic erosion of some drugs.
Merck is heavily reliant on Keytruda. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that the company is excessively dependent on the drug and it should look for ways to diversify its product lineup.
There are rising concerns about the firm’s ability to grow its non-oncology business ahead of the upcoming loss of exclusivity of Keytruda in 2028.
Also, competitive pressure might increase for Keytruda in the near future. Medicare Part D redesign is expected to hurt sales of diabetes drugs, Januvia/Janumet, in 2025.
At the end of March 2025, its cash and cash equivalents were $9.2 billion against long-term debt of $33.5 billion, resulting in a debt-to-capital ratio of 0.41, which is slightly lower than the industry average of 0.42.
How Do Estimates Compare for JNJ & MRK?
The Zacks Consensus Estimate for J&J’s 2025 sales and EPS implies a year-over-year increase of 2.7% and 6.2%, respectively. The Zacks Consensus Estimate for 2025 earnings has risen from $10.54 per share to $10.60 over the past 60 days, while that for 2026 has declined from $11.02 to $10.98 over the same timeframe.
JNJ Estimate Movement
The Zacks Consensus Estimate for MRK’s 2025 sales and EPS implies a year-over-year increase of 0.9% and 16.6%, respectively. EPS estimates for both 2025 and 2026 have declined over the past 60 days.
MRK Estimate Movement
Price Performance and Valuation of J&J & MRK
Year to date, J&J’s stock has risen 10% compared with the industry’s increase of 0.6%. Merck’s stock has declined 17.5%.
MRK looks more attractive than J&J from a valuation standpoint. Going by the price/earnings ratio, J&J’s shares currently trade at 14.53 forward earnings, slightly lower than 15.23 for the industry and its 5-year mean of 15.77. Merck’s shares currently trade at 8.76 forward earnings, significantly lower than the industry as well as the stock’s 5-year mean of 12.88.
J&J’s dividend yield is 3.32%, while Merck’s is slightly higher at 3.98%.
JNJ or MRK: Which is a Better Pick?
Both Merck & J&J have a Zacks Rank #3 (Hold) each, which makes choosing one stock a difficult task. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merck has one of the world’s best-selling drugs in its portfolio, generating billions of dollars in revenues. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then. However, the company’s problems are too many at present, including persistent challenges for Gardasil in China, potential competition for Keytruda and rising competitive and generic pressure on some drugs. All these factors have raised doubts about Merck’s ability to navigate the Keytruda loss of exclusivity period successfully. Consistently declining estimates also reflect analysts’ pessimistic outlook for the stock.
On the other hand, J&J has shown steady revenue and EPS growth for years. J&J considers 2025 to be a “catalyst year,” positioning the company for growth in the second half of the decade. J&J expects operational sales growth in both the Innovative Medicine and MedTech segments to be higher in the second half of 2025 than in the first. While newly launched products should drive growth in the Innovative Medicines segment in the second half, the MedTech segment may benefit from new products and easier comps. J&J expects growth to accelerate from 2026 onward. Despite headwinds like softness in the MedTech unit, the legal battle surrounding its talc lawsuits, Stelara patent cliff and the potential impact of Part D redesign, J&J seems just one step ahead of Merck due to better prospects for sales and profit growth amid the various challenges.