Frenemies might be one of those annoying word mash-ups, but the term definitely describes the relationship between two of the biggest drugmakers on the planet: Pfizer (PFE -0.43%) and Bristol-Myers Squibb (BMY -0.68%). The two companies teamed up to market blockbuster anticoagulant Eliquis, but they compete in other areas.

So far this year, Pfizer stock has performed much better than Bristol-Myers Squibb's shares have. But which of these two big pharma stocks is the better pick now? Here's how Pfizer and Bristol-Myers Squibb compare.

Gloved hand holding a flask with a dropper and test tubes in the foreground.

Image source: Getty Images.

The case for Pfizer

Investors should focus on total return with any stock -- and that includes reinvested dividends. Pfizer's dividend yield of 3.13% gives the stock a nice head start on delivering a solid total return even before factoring in the potential for growth in its share price.

But Pfizer should generate plenty of growth in addition to just the dividend. The stock is on track to make 2018 its best year in a long time. Wall Street analysts project that Pfizer will achieve average annual earnings growth of more than 7.5% over the next five years, well above its performance over the last five years.

Several of Pfizer's current products should contribute to this anticipated growth. Eliquis ranks near the top of the list, with market research company EvaluatePharma predicting the anticoagulant will be the No. 5 best-selling drug in the world within the next few years. Cancer drug Ibrance is another major growth driver for Pfizer.

New drugs, though, provide the greatest opportunity for the company. One key pipeline candidate to watch is pain drug tanezumab, which Pfizer is developing with Eli Lilly. The big pharma company also has great expectations for its rare-disease drug tafamadis after great clinical results announced earlier this year.

Look for biosimilars to generate increasingly higher revenue for Pfizer as well. The company already markets a biosimilar to blockbuster immunology drug Remicade and is waiting on regulatory approval for biosimilars to successful cancer drugs Avastin and Herceptin.

Even Pfizer's current problem areas should become less troublesome in the future. The company expects to begin moving past issues that have caused product shortages for its sterile injectables business. And while Pfizer's big moneymaker Lyrica will soon join its list of drugs that have lost exclusivity, within a few years the negative impact on total revenue from slipping sales of these drugs will decrease significantly.   

The case for Bristol-Myers Squibb

Since we started off talking about Pfizer's dividend, let's do the same with Bristol-Myers Squibb (BMS). BMS' dividend yield of 2.96% is only a little behind Pfizer's yield. And while the drugmaker's payout ratio is really high, its cash flow should be sufficient to keep the dividends flowing.

Analysts expect BMS to deliver average earnings growth of around 11% over the next five years. Two key current drugs will help fuel that growth: Eliquis and Opdivo. Of the two, Opdivo is the most important for the company. Unlike Eliquis, the cancer immunotherapy is marketed only by BMS. EvaluatePharma thinks that Opdivo will rank as the fourth-best-selling drug in the world by 2024.

Other drugs in Bristol-Myers Squibb's current lineup should also contribute to its growth. Immunology drug Orencia and chemotherapy Sprycel continue to enjoy solid sales momentum. The company's other immunotherapy, Yervoy, could also receive a boost if combination studies with Opdivo go well.

What about the pipeline? BMS has several late-stage clinical studies underway that, if successful, could add new indications for existing drugs. The company doesn't have many new late-stage candidates that aren't part of combos with its existing drugs, though. 

Like Pfizer, BMS has been plagued by falling sales for older drugs. The company's hepatitis B, hepatitis C, and HIV drugs have seen major revenue declines in the face of newer and more effective competition. However, it's only a matter of time before sales for these drugs bottom out. As will be the case with Pfizer, when that happens it should clear the way for the growth from newer products to shine more brightly.  

Better buy

If you believe Wall Street's earnings growth projections, Bristol-Myers Squibb looks like the better pick. However, a lot of the optimism for BMS is based on successful combination studies for Opdivo. There's a real possibility of disappointments with these studies. 

While I think that BMS should still be a solid long-term winner, I like Pfizer's prospects even more. Pfizer's fortunes don't primarily hinge on one drug. And the company's pipeline is deep and broad, giving Pfizer more shots on goal. BMS is a good big pharma pick, but Pfizer is better, in my view.