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Merck vs. J&J: Which Healthcare Giant Should Investors Choose?
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Key Takeaways
J&J's diversified portfolio and Innovative Medicine growth support its outlook despite Stelara's LOE.
Merck's Keytruda drives growth, but its 2028 patent expiry creates a major long-term challenge.
Merck's new drugs and acquisitions strengthen growth prospects, while Gardasil sales remain under pressure.
Johnson & Johnson (JNJ - Free Report) and Merck (MRK - Free Report) are two of the largest U.S. healthcare companies, making them compelling stocks to compare.
Both companies have strong positions in oncology and several other therapeutic areas, but their portfolios differ meaningfully. J&J has a broader healthcare footprint, with Innovative Medicine franchises spanning oncology, immunology, neuroscience, cardiovascular disease, pulmonary hypertension and infectious diseases, complemented by its sizable MedTech business.
Merck, meanwhile, has a particularly strong presence in oncology and vaccines, led by Keytruda and Gardasil, along with businesses in cardiovascular/pulmonary hypertension, virology and other hospital-focused medicines.
Both companies are contending with upcoming patent expirations. So, which stock looks more attractive today? A closer look at their fundamentals, growth prospects and key risks can help investors decide.
The Case for J&J Stock
J&J’s biggest strength is its diversified business model, operating through pharmaceuticals and medical devices divisions, which reduces dependence on any single product or market. It has more than 275 subsidiaries and boasts 28 platforms or products with more than $1 billion in annual sales, with the aim of adding even more. Its diversification helps it to withstand economic cycles more effectively. It also boasts strong cash flows and has increased its dividends for 64 consecutive years. J&J believes the depth of its portfolio and pipeline is stronger than ever.
J&J’s Innovative Medicines segment is the company’s primary growth engine. Innovative Medicine segment sales rose 6.2% organically in the first half of 2026, despite the loss of exclusivity (LOE) of the blockbuster drug, Stelara. Growth was driven by J&J’s key drugs like Darzalex, Erleada and Tremfya. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant and Spravato also contributed significantly to growth.
J&J’s MedTech growth slowed in the second quarter, reflecting weakness in Cardiovascular, particularly Abiomed due to slow procedure volumes, and continued China VBP headwinds.
J&J’s recent pipeline launches, including Inlexzo, Imaavy and Icotyde, are gaining traction and could become significant growth drivers in future quarters. J&J’s new cancer drugs, Carvykti, Tecvayli, Talvey and Rybrevant/Lazcluze are contributing significantly to top-line growth, driven by market share gains.
J&J believes 10 of its new products in the Innovative Medicine segment have the potential to reach peak sales of $5 billion, including Talvey, Tecvayli, Imaavy, Caplyta, Inlexzo, Rybrevant plus Lazcluze and Icotyde.
J&J expects 2026 to be a year of accelerated growth. The company is confident that it can achieve its target of generating more than $100 billion in revenues in 2026. It expects sales to continue to improve in 2027, with a “line of sight” to double-digit growth by the end of the decade. J&J believes that it is already achieving this growth. Though J&J’s total revenues are currently rising in a mid-single-digit range, excluding Stelara, J&J’s top line grew in a double-digit range in both the first and second quarters of 2026.
J&J also expects its MedTech business to do better in the second half of the year compared with the first, driven by strength in Vision, Orthopedics, Surgery and better performance in Cardiovascular. While the Abiomed softness creates a new overhang, it accounts for less than 2% of sales, and J&J has other top-line drivers to compensate.
However, J&J faces its share of headwinds, including the Stelara patent cliff, the upcoming LOE of key drugs Opsumit and Simponi, and softness in MedTech. The legal battle surrounding its talc lawsuits is another headwind. Though the issue is close to resolution, it has not yet been fully resolved.
The Case for MRK Stock
Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda, approved for several types of cancers, has played an instrumental role in driving Merck’s steady revenue growth over the past few years. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.
Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca (AZN - Free Report) -partnered Lynparza and Eisai-partnered Lenvima, are also contributing to top-line growth.
MRK’s Animal Health business is also a key contributor to its top-line growth, with sales expected to more than double by the mid-2030s.
Merck’s expanding drug pipeline and potential new blockbuster drugs beyond Keytruda look encouraging. Its late-stage pipeline has expanded substantially since 2021, supported by in-house progress as well as the addition of candidates through M&A deals. Merck expects to launch 20 new drugs by 2030, with many already launched.
Its new products, pulmonary arterial hypertension drug Winrevair, cancer drug Welireg and 21-valent pneumococcal conjugate vaccine Capvaxive, have begun to contribute significantly to top-line growth.
The company has accelerated acquisitions over the past year as it prepares for the 2028 patent expiry of Keytruda. The company strengthened its pipeline with the 2025 acquisition of Verona Pharma, adding COPD drug Ohtuvayre. The 2026 buyouts of Cidara Therapeutics and Terns Pharmaceuticals added late-stage influenza and hematology/cancer pipeline assets, respectively.
However, sales of Merck’s second-largest product, its HPV vaccine Gardasil, are facing a slowdown, with sales declining 9% in the first half of 2026 due to weaker demand in China, Japan and the United States. Sales of some other Merck vaccines, like Proquad, M-M-R II, Varivax, Rotateq and Vaxneuvance, also declined in the first half of 2026.
Merck is heavily reliant on Keytruda. While Keytruda may be Merck’s biggest strength and a solid reason to own the stock, the company is excessively dependent on the drug. Keytruda’s core U.S. patent is expected to expire around 2028, with additional patents expiring shortly thereafter. Keytruda is expected to face significant biosimilar competition around 2028-2029. Once biosimilars enter the market, Keytruda’s sales are likely to decline sharply.
Merck faces continued revenue pressure from declining demand for its diabetes drugs Januvia/Janumet and increasing generic erosion across products such as Isentress/Isentress HD, Bridion and Dificid.
Merck’s new products, Winrevair, Welireg and Capvaxive, key pipeline progress and the expansion of its respiratory and infectious disease and oncology portfolios through the acquisitions of Verona Pharma, Cidara Therapeutics and Terns Pharmaceuticals have improved its long-term growth prospects.
How Do Estimates Compare for JNJ & MRK?
The Zacks Consensus Estimate for J&J’s 2026 sales and EPS implies a year-over-year increase of 7.3% and 6.3%, respectively. The Zacks Consensus Estimate for 2026 earnings has declined from $11.65 to $11.59 over the past 30 days, while that for 2027 earnings is stable at $12.80 over the same time frame.
JNJ Estimate Movement
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MRK’s 2026 sales and EPS implies a year-over-year increase of 3.5% and 5%, respectively. The Zacks Consensus Estimate for 2026 earnings has declined from $3.21 to $2.98 over the past 30 days, while that for 2027 has decreased from $9.71 to $9.67.
MRK Estimate Movement
Image Source: Zacks Investment Research
Price Performance and Valuation of JNJ & MRK
Shares of J&J and Merck have surged 30.6% and 43.6%, respectively, year to date compared with the industry’s growth of 21.3%.
Image Source: Zacks Investment Research
MRK looks slightly more attractive than J&J from a valuation standpoint. Going by the price/earnings ratio, J&J’s shares currently trade at 21.63 forward earnings, higher than 19.73 for the industry and its 5-year mean of 15.65. Merck’s shares currently trade at 20.56 forward earnings, above the industry as well as the stock’s 5-year mean of 12.86.
Image Source: Zacks Investment Research
J&J’s dividend yield is 2.01%, while Merck’s is slightly higher at 2.28%.
J&J’s investment case is supported by steady sales and earnings growth, continued strength in its Innovative Medicine business, and improving fundamentals and outlook. In addition, ongoing pipeline advancements, favorable regulatory developments and strategic M&A activity have further strengthened the company’s growth prospects and investor sentiment.
On the other hand, Merck’s new products, strong progress in its pipeline, and business development and acquisitions have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity. However, Merck faces several near-term challenges, including persistent challenges for Gardasil, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. Also, near-term profitability remains affected by costs related to Merck’s various acquisitions.
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Merck vs. J&J: Which Healthcare Giant Should Investors Choose?
Key Takeaways
Johnson & Johnson (JNJ - Free Report) and Merck (MRK - Free Report) are two of the largest U.S. healthcare companies, making them compelling stocks to compare.
Both companies have strong positions in oncology and several other therapeutic areas, but their portfolios differ meaningfully. J&J has a broader healthcare footprint, with Innovative Medicine franchises spanning oncology, immunology, neuroscience, cardiovascular disease, pulmonary hypertension and infectious diseases, complemented by its sizable MedTech business.
Merck, meanwhile, has a particularly strong presence in oncology and vaccines, led by Keytruda and Gardasil, along with businesses in cardiovascular/pulmonary hypertension, virology and other hospital-focused medicines.
Both companies are contending with upcoming patent expirations. So, which stock looks more attractive today? A closer look at their fundamentals, growth prospects and key risks can help investors decide.
The Case for J&J Stock
J&J’s biggest strength is its diversified business model, operating through pharmaceuticals and medical devices divisions, which reduces dependence on any single product or market. It has more than 275 subsidiaries and boasts 28 platforms or products with more than $1 billion in annual sales, with the aim of adding even more. Its diversification helps it to withstand economic cycles more effectively. It also boasts strong cash flows and has increased its dividends for 64 consecutive years. J&J believes the depth of its portfolio and pipeline is stronger than ever.
J&J’s Innovative Medicines segment is the company’s primary growth engine. Innovative Medicine segment sales rose 6.2% organically in the first half of 2026, despite the loss of exclusivity (LOE) of the blockbuster drug, Stelara. Growth was driven by J&J’s key drugs like Darzalex, Erleada and Tremfya. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant and Spravato also contributed significantly to growth.
J&J’s MedTech growth slowed in the second quarter, reflecting weakness in Cardiovascular, particularly Abiomed due to slow procedure volumes, and continued China VBP headwinds.
J&J’s recent pipeline launches, including Inlexzo, Imaavy and Icotyde, are gaining traction and could become significant growth drivers in future quarters. J&J’s new cancer drugs, Carvykti, Tecvayli, Talvey and Rybrevant/Lazcluze are contributing significantly to top-line growth, driven by market share gains.
J&J believes 10 of its new products in the Innovative Medicine segment have the potential to reach peak sales of $5 billion, including Talvey, Tecvayli, Imaavy, Caplyta, Inlexzo, Rybrevant plus Lazcluze and Icotyde.
J&J expects 2026 to be a year of accelerated growth. The company is confident that it can achieve its target of generating more than $100 billion in revenues in 2026. It expects sales to continue to improve in 2027, with a “line of sight” to double-digit growth by the end of the decade. J&J believes that it is already achieving this growth. Though J&J’s total revenues are currently rising in a mid-single-digit range, excluding Stelara, J&J’s top line grew in a double-digit range in both the first and second quarters of 2026.
J&J also expects its MedTech business to do better in the second half of the year compared with the first, driven by strength in Vision, Orthopedics, Surgery and better performance in Cardiovascular. While the Abiomed softness creates a new overhang, it accounts for less than 2% of sales, and J&J has other top-line drivers to compensate.
However, J&J faces its share of headwinds, including the Stelara patent cliff, the upcoming LOE of key drugs Opsumit and Simponi, and softness in MedTech. The legal battle surrounding its talc lawsuits is another headwind. Though the issue is close to resolution, it has not yet been fully resolved.
The Case for MRK Stock
Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda, approved for several types of cancers, has played an instrumental role in driving Merck’s steady revenue growth over the past few years. Though Keytruda will lose patent exclusivity in 2028, its sales are expected to remain strong until then.
Merck expects Keytruda to achieve peak sales of $35 billion by 2028. Merck’s other oncology drugs, Welireg, AstraZeneca (AZN - Free Report) -partnered Lynparza and Eisai-partnered Lenvima, are also contributing to top-line growth.
MRK’s Animal Health business is also a key contributor to its top-line growth, with sales expected to more than double by the mid-2030s.
Merck’s expanding drug pipeline and potential new blockbuster drugs beyond Keytruda look encouraging. Its late-stage pipeline has expanded substantially since 2021, supported by in-house progress as well as the addition of candidates through M&A deals. Merck expects to launch 20 new drugs by 2030, with many already launched.
Its new products, pulmonary arterial hypertension drug Winrevair, cancer drug Welireg and 21-valent pneumococcal conjugate vaccine Capvaxive, have begun to contribute significantly to top-line growth.
The company has accelerated acquisitions over the past year as it prepares for the 2028 patent expiry of Keytruda. The company strengthened its pipeline with the 2025 acquisition of Verona Pharma, adding COPD drug Ohtuvayre. The 2026 buyouts of Cidara Therapeutics and Terns Pharmaceuticals added late-stage influenza and hematology/cancer pipeline assets, respectively.
However, sales of Merck’s second-largest product, its HPV vaccine Gardasil, are facing a slowdown, with sales declining 9% in the first half of 2026 due to weaker demand in China, Japan and the United States. Sales of some other Merck vaccines, like Proquad, M-M-R II, Varivax, Rotateq and Vaxneuvance, also declined in the first half of 2026.
Merck is heavily reliant on Keytruda. While Keytruda may be Merck’s biggest strength and a solid reason to own the stock, the company is excessively dependent on the drug. Keytruda’s core U.S. patent is expected to expire around 2028, with additional patents expiring shortly thereafter. Keytruda is expected to face significant biosimilar competition around 2028-2029. Once biosimilars enter the market, Keytruda’s sales are likely to decline sharply.
Merck faces continued revenue pressure from declining demand for its diabetes drugs Januvia/Janumet and increasing generic erosion across products such as Isentress/Isentress HD, Bridion and Dificid.
Merck’s new products, Winrevair, Welireg and Capvaxive, key pipeline progress and the expansion of its respiratory and infectious disease and oncology portfolios through the acquisitions of Verona Pharma, Cidara Therapeutics and Terns Pharmaceuticals have improved its long-term growth prospects.
How Do Estimates Compare for JNJ & MRK?
The Zacks Consensus Estimate for J&J’s 2026 sales and EPS implies a year-over-year increase of 7.3% and 6.3%, respectively. The Zacks Consensus Estimate for 2026 earnings has declined from $11.65 to $11.59 over the past 30 days, while that for 2027 earnings is stable at $12.80 over the same time frame.
JNJ Estimate Movement
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MRK’s 2026 sales and EPS implies a year-over-year increase of 3.5% and 5%, respectively. The Zacks Consensus Estimate for 2026 earnings has declined from $3.21 to $2.98 over the past 30 days, while that for 2027 has decreased from $9.71 to $9.67.
MRK Estimate Movement
Image Source: Zacks Investment Research
Price Performance and Valuation of JNJ & MRK
Shares of J&J and Merck have surged 30.6% and 43.6%, respectively, year to date compared with the industry’s growth of 21.3%.
Image Source: Zacks Investment Research
MRK looks slightly more attractive than J&J from a valuation standpoint. Going by the price/earnings ratio, J&J’s shares currently trade at 21.63 forward earnings, higher than 19.73 for the industry and its 5-year mean of 15.65. Merck’s shares currently trade at 20.56 forward earnings, above the industry as well as the stock’s 5-year mean of 12.86.
Image Source: Zacks Investment Research
J&J’s dividend yield is 2.01%, while Merck’s is slightly higher at 2.28%.
Image Source: Zacks Investment Research
JNJ or MRK: Which Is a Better Pick?
J&J carries a Zacks Rank #3 (Hold), while Merck has a Zacks Rank of 4 (Sell) at present, which clearly shows that J&J is the winner. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
J&J’s investment case is supported by steady sales and earnings growth, continued strength in its Innovative Medicine business, and improving fundamentals and outlook. In addition, ongoing pipeline advancements, favorable regulatory developments and strategic M&A activity have further strengthened the company’s growth prospects and investor sentiment.
On the other hand, Merck’s new products, strong progress in its pipeline, and business development and acquisitions have increased confidence that Merck may be able to maintain growth even after Keytruda loses exclusivity. However, Merck faces several near-term challenges, including persistent challenges for Gardasil, potential competition for Keytruda, and rising competitive and generic pressure on some of its drugs. Also, near-term profitability remains affected by costs related to Merck’s various acquisitions.