Eli Lilly (LLY 0.18%) and GlaxoSmithKline (GSK 1.17%) are undergoing transformations. Both big drugmakers have launched multiple new products to drive future growth while simultaneously dealing with sagging sales of older drugs.

The companies' executions of these transformation efforts differ, though. So do their future prospects. Which big pharma stock is the better pick for long-term investors? Here's how Lilly and GlaxoSmithKline compare.

Scientist holding a pill with other pills on a clear surface.

Image source: Getty Images.

The case for Eli Lilly

Eli Lilly's second-quarter results provide a pretty good snapshot of where the company stands right now. The drugmaker eked out year-over-year revenue growth of only 1% but still topped Wall Street estimates.

With such weak growth, Lilly obviously had some underperforming products in the mix. The company took a huge hit from tanking sales for erectile dysfunction drug Cialis as it faces generic rivals. Sales for osteoporosis drug Forteo fell with intense competition. Lilly's rebates for insulin products Humalog and Humulin caused sales to slide.

But there's plenty of good news for the company, too. Diabetes drugs Trulicity and Jardiance are enjoying strong sales momentum. It's a similar story for insulin injection Basaglar. Lilly has emerged as a winner in the immunology market with great sales for Taltz and Olumiant. The company's relatively new cancer drug Verzenio and migraine drug Emgality are also picking up steam.

Lilly awaits several FDA approvals that could be key to its future success. Migraine drug lasmiditan, in particular, holds blockbuster sales potential. The company claims 18 drugs in late-stage testing. These programs include several existing drugs for which Lilly hopes to win additional approved indications in addition to new drugs such as tanezumab, a pain medication that the company is codeveloping with Pfizer.

Income-oriented investors should like Lilly's dividend yield of 2.34%. The company has increased its dividend payout by nearly 32% over the last five years. Lilly also claims a reasonable payout ratio of 57.4%, which indicates flexibility in keeping the dividends flowing.

Wall Street analysts project that Lilly will increase its average annual earnings by a little under 10% over the next five years. This is a pretty good growth rate, especially viewed in the context of Lilly's dividend and its relatively attractive valuation, with shares trading at 16.5 times expected earnings.

The case for GlaxoSmithKline

GlaxoSmithKline reported solid year-over-year revenue growth of 7% in its latest quarterly update. The British drugmaker even upped its full-year 2019 earnings guidance. It should be noted, however, that GSK's outlook still calls for adjusted earnings per share to fall between 3% and 5% from the prior year.

Loss of exclusivity for Advair continues to be the biggest thorn in GlaxoSmithKline's side. The company also has a basket of other older products for which sales are declining, including respiratory drug Flovent and seizure drug Lamictal.

Like Eli Lilly, though, GSK has some strong newer products in its lineup. Its respiratory drugs continue to perform really well overall, particularly Trelegy Ellipta and Nucala. Sales for lupus drug Benlysta are soaring. Ovarian cancer drug Zejula is also off to a great start.

GlaxoSmithKline's greatest success story, however, is its vaccine franchise. Sales of shingles vaccine Shingrix are skyrocketing. Its meningitis vaccines Bexsero and Menveo continue to show solid momentum as well.

The company is currently awaiting regulatory approvals for a combination of cabotegravir and rilpivirine in treating HIV, plus a new indication for Zejula as a fourth-line monotherapy treatment for ovarian cancer. GSK also has 13 late-stage clinical programs, most of which are seeking additional approved indications for already-approved drugs.

GSK's dividend yield of 4.57% is a big draw for many investors. However, the company has cut its dividend by 24% over the last five years.

Analysts estimate that GlaxoSmithKline will increase its average annual earnings by a little over 10% through the next five years. This projected growth rate makes the stock look even more attractively valued, with shares trading at only 13 times expected earnings.

Better buy

GlaxoSmithKline might look like the smarter pick with its higher dividend yield and slightly higher Wall Street growth estimate. However, my vote between these two stocks goes to Eli Lilly. I think that Lilly has less risk with its current lineup and pipeline than GSK does.

But I'm not recommending Lilly as a stock to buy right now. My take is that there are too many stocks that offer even better long-term growth prospects.