Which big pharma stock performed best of all in 2016? None other than one of the oldest of them all -- Johnson & Johnson (JNJ -0.43%). The company's shares gained nearly 15% last year, enough to beat out the other top 25 largest drugmakers. Here's how Johnson & Johnson did it. 

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A tough year for most -- but not all

Probably the most important reason Johnson & Johnson outgained other big pharma stocks is that 2016 was a rotten year for most of them. Worries about the outcome of the U.S. elections threw a wet blanket on many pharmaceutical stocks. Pipeline disappointments hurt some also.

A few big pharma stocks did well last year, though. Merck (MRK 0.28%) came in just behind J&J with stock gains of 12%. Cancer drug Keytruda primarily fueled Merck's solid results. While the drug chalked up sales of $919 million in the first three quarters of 2016, the long-term prospects for Keytruda really excited investors.

AbbVie (ABBV -0.41%) took the No. 3 spot among big pharma stocks, with its share price increasing nearly 9% last year. The key driver for AbbVie continued to be impressive growth for blockbuster autoimmune disease drug Humira. However, AbbVie also benefited from a newer drug which just happens to be one in which the company partners with J&J -- Imbruvica. In the first three quarters of last year, Abbvie's portion of Imbruvica revenue more than tripled year over year to $1.3 billion.

Not a numbers game

Here's the funny thing about Johnson & Johnson emerging as the best big pharma stock of 2016: The company's growth wasn't all that great. In fact, both Merck and AbbVie outperformed J&J in terms of revenue growth and earnings growth in the first nine months of last year.

Data source: 10-Q filings. Chart by author.

Johnson & Johnson's results were weighed down by weak performance from its consumer and medical devices segments. Consumer sales actually declined slightly in the first nine months of 2016 compared with the prior-year period, while medical devices revenue increased by only 1.1% during the period.

The company's pharmaceuticals segment produced much better sales growth. However, even if we only looked at that stronger business unit, J&J's growth still trailed both AbbVie and Merck. J&J made less revenue from its fastest-growing product, up-and-coming cancer drug Imbruvica, than AbbVie did. So why did Johnson & Johnson's stock outperform other big pharma stocks?

J&J's attraction

I have written before that if you're looking for a growth stock, there are better opportunities than Johnson & Johnson. If you're looking for a dividend stock, there are better opportunities than J&J. The same is true if you're looking for a value stock. On the other hand, for investors seeking a mix of all three components Johnson & Johnson is arguably one of the best stocks around.

My theory is that investors in 2016 were attracted to the unique offering that J&J provided. Election years can sometimes be chaotic. Last year certainly proved to fit that bill. Stability can be quite attractive during turbulent times. Few stocks provide the stability that Johnson & Johnson does, with 130 years of operation, 32 years in a row of adjusted earnings increases, and 54 consecutive years of dividend increases.

Also, the company's broad scope of operations was likely a plus. While J&J's consumer and medical devices segments weren't growing sales much (if at all), the business units continued to generate plenty of profits and cash flow. In addition, having these other segments insulated the company to some degree from worries impacting other pharmaceutical companies about potential push-back on drug price increases.

Repeat performance?

Will Johnson & Johnson again emerge as the top big pharma stock this year? It's possible, but I wouldn't count on it. 

Merck should begin to experience the success from Keytruda even more this year than in 2016. AbbVie still has huge winners with Humira and Imbruvica and could also get some good news for its pipeline in 2017. J&J also carries a higher valuation based on forward earnings than both of these companies.

However, Johnson & Johnson could still provide nice gains for shareholders in 2017 and beyond. Wall Street projects the company's average annual earnings growth over the next few years will be just under 7%. That's not exactly awe-inspiring, but it's in line with J&J's earnings growth over the last five years. J&J's stock price increased 65% during that period.