Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Johnson & Johnson and Merck Lead the Dow's Sluggish Rise

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

As the markets flirt with the all-time highs we've seen recently, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) has paced this Veterans Day with modest gains so far. Even though most blue-chip stocks are trending down across the Dow Jones, the index has still picked up about 20 points near the end of trading, led by big days from Wal-Mart and IBM.

Johnson & Johnson (NYSE: JNJ  ) and Merck (NYSE: MRK  ) are doing their best to prop up health care today despite the sector's sluggish outing, but these two big pharma leaders show why not all health care giants are made equal.

Johnson & Johnson and Merck's differing paths
Johnson & Johnson and Merck both boast of huge and diverse drug portfolios. They're partners on star immunology blockbuster drug Remicade, a therapy that made $1.65 billion for Merck and nearly $5 billion for Johnson & Johnson over the first nine months of the year. Yet while Merck's stock has only climbed roughly 17.5% for the year -- a strong showing, no doubt, but one that puts it in the bottom third of the Dow Jones -- Johnson & Johnson's stock has racked up gains of more than 38% in 2013, making it among the Dow's 10 best picks year to date.

The performance of the companies' drugs have a lot to say on how these stocks are performing. Merck and Johnson & Johnson both share infectious disease-treating therapies, but Merck's failed to generate much growth out of the segment. The company's top drug in the treatment area, Isentress, has managed 6% growth this year so far to reach $1.2 billion in sales through nine months. That's no bad mark, but other infectious disease-treating drugs like Pegintron and Victrelis have struggled with slumping sales.

Johnson & Johnson's top seller in the segment, fellow HIV-fighting therapy Prezista, grew sales by 14.2% over the first nine months of the year. It also has seen revenue climb to $1.2 billion in total throughout 2013, and other infectious disease drugs, such as the fast-rising Incivo, are bolstering Johnson & Johnson's unit.

Johnson & Johnson markets hepatitis C-fighting Incivo alongside Vertex Pharmaceuticals, which labels the drug as Incivek, but it's racked up more than 34% sales growth through the first nine months of the year to reach more than $400 million in revenue. That's not blockbuster status, but it's a solid piece of Johnson & Johnson's pipeline that has experienced strong growth to keep this company moving in the right direction.

However, both Incivo and Merck's Victrelis, another hepatitis C-treating drug, will face much bigger competition than just each other in coming years. The rise of the oral hep-C therapies, led by AbbVie's as yet-unnamed therapy and Gilead Sciences' sofosbuvir, are nearing approval and will fundamentally shift this market in the future. When that happens, look for Incivo, Victrelis, and the old guard of hepatitis C treatments to feel the effects in a big way.

Your path to long-term wealth
Johnson & Johnson and Merck are two great examples of one of investing's best rules: The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "
3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2721757, ~/Articles/ArticleHandler.aspx, 9/24/2016 10:34:21 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:55 PM
^DJI $18261.45 Down -131.01 -0.71%
JNJ $118.81 Down -0.65 -0.54%
Johnson and Johnso… CAPS Rating: *****
MRK $62.96 Down -0.06 -0.10%
Merck and Co. CAPS Rating: ****