Amgen (NASDAQ:AMGN) and Biogen (NASDAQ:BIIB) have a lot in common. They are both hugely successful biotech giants that were founded decades ago. They each have produced stellar returns for their long-term shareholders and crank out copious amounts of cash flow each year.

However, both of these companies have long since passed their prime. They are both slow-moving giants that are facing their own set of growth challenges today.

Which of these stocks is the better choice for investors? 

Man scratching head in front of lots of question marks

Image source: Getty Images.

Growth

Amgen's growth has been powered by two mega-blockbuster drugs -- Enbrel and Neulasta -- for years. These two drugs are still incredibly important, as they comprise more than 40% of Amgen's total product sales. That's not great news, because sales of both of them have been declining as of late. 

Amgen has done everything it can to reduce its reliance on these aging giants and has experienced moderate success. Newer cancer drugs such as Kyprolis, Nplate, Xgeva, Blincyto, and Imlygic are posting double-digit revenue growth and collectively pull in billions in annual sales. The cholesterol-busting drug Repatha is picking up steam, and other drugs like Aimovig, Prolia, and Sensipar are all growing strong and offer hope. 

The bad news is that virtually all of Amgen's growth in these new drugs will be offset by the expected decline in Enbrel and Neulasta. That's why market watchers currently expect that Amgen's bottom line will only grow by about 2% annually over the next half-decade.

It's a similar story for Biogen. Sales of the company's cash-cow multiple sclerosis (MS) drugs have been trending in the wrong direction. That's a tough challenge to overcome because MS sales comprise two-thirds of total company revenue.

Offsetting those declines is Biogen's spinal muscular atrophy drug Spinraza, which was co-developed with Ionis Pharmaceuticals. Sales of this drug have grown rapidly, though there are signs that sales may already have peaked. 

Another growth avenue is the company's biosimilars division. Sales jumped 28% recently thanks to the launch of a copycat version of AbbVie's megablockbuster drug Humira, but total sales are not nearly large enough to move the needle. 

The good news is that Biogen offers investors a lottery ticket from its pipeline drug aducanumab. This drug is a hopeful treatment for Alzheimer's disease and could easily turn into a top seller if it wins approval. While the odds of success are likely long, the drug does offer investors reason for hope. 

Add it all up, and Biogen is expected to grow profits at just over 4% annually over the next five years. While this isn't all that exciting of a figure, it is enough to give Biogen a slight edge here.

Winner: Biogen. 

Looking after shareholders

Biogen and Amgen are both cash-flow machines. Amgen cranked out about $10.5 billion in free cash flow during 2018. Biogen is no slouch, either, at $5.4 billion. Both companies have looked for ways to return their ample cash flow to shareholders.

Biogen has focused primarily on stock buybacks. The company has spent tens of billions on buybacks over the last decade, with $4.4 billion spent on repurchases in 2018 alone. That huge repurchase activity has allowed the company's diluted share count to drop by more than 30% over the last decade.

Amgen has taken a more balanced approach to its capital return program. While it spends lavishly on stock buybacks -- Amgen's share count has fallen by 38% over the last 10 years -- it has also chosen to make cash payments to shareholders in the form of a fast-growing dividend

Both companies deserve credit for taking care of shareholders, but Amgen's shrinking share count and growing dividend payment give it the edge in my book.

Winner: Amgen.

Value

Since neither of these businesses is expected to grow much over the next half-decade, Wall Street has priced them accordingly.

Amgen is currently trading for about 14 times trailing earnings and 12 times forward earnings. The cheap valuation has pulled the company's dividend yield up to a tempting 3.2%. Those are numbers that should excite any value investor.

It's a similar story for Biogen. Shares can be purchased for about 14 times trailing earnings and about 11 times forward earnings. 

While these two valuations are basically neck-and-neck, I'd give the slight edge to Biogen here.

Winner: Biogen.

The better buy

I think that both of these stocks offer reasons for value investors to give them a closer look. Both companies are cash-flow machines that buy back tons of stock and offer modest growth prospects for a cheap price.

I'm a growth investor at heart, so neither of these companies interests me all that much right now. However, if forced to choose I think I'd give the nod to Biogen, since its expected growth rate is higher and it trades at a slightly cheaper valuation.