Comparing AstraZeneca (AZN 5.38%) and Pfizer (PFE -3.85%) would have been a much different exercise just one year ago. However, things have changed significantly for both drugmakers in 2020 because of the COVID-19 pandemic.
Both AstraZeneca and Pfizer rank among the leaders in the race to develop a safe and effective COVID-19 vaccine. So far this year, AstraZeneca has delivered better returns for investors. But which is the better coronavirus stock now? Here's how AstraZeneca and Pfizer stack up against each other.
Image source: Getty Images.
Coronavirus programs
Neither AstraZeneca nor Pfizer developed promising coronavirus vaccine candidates on their own. AstraZeneca teamed up with the University of Oxford, while Pfizer partnered with German biotech BioNTech (BNTX -1.57%). Both companies seem to have made smart moves because they're now in a position to be among the first to reach the market with their respective vaccines.
Pfizer has a lead over AstraZeneca in the U.S. after the British drugmaker had to temporarily pause a late-stage clinical study of its COVID-19 vaccine candidate. If everything goes according to plan, Pfizer and BioNTech expect to file for Food and Drug Administration (FDA) emergency use authorization of BNT162b2 in the third week of November.
AstraZeneca's late-stage study of AZD1222 is back on track now after the delay. The company confirmed on Thursday that it expects to report results from the study this year.
Both big drugmakers have a good chance of achieving tremendous commercial success with their COVID-19 vaccines. My view is that Pfizer will make more money than AstraZeneca, though, because it hasn't accepted federal funding for its development program, while AstraZeneca has.
Other products and pipeline candidates
AstraZeneca and Pfizer are so big that their COVID-19 programs won't be their only potential growth drivers. Each company already has multiple blockbusters on the market and a lot of candidates in their pipelines.
For now, AstraZeneca is delivering much stronger growth than Pfizer. The company had four blockbuster drugs generate year-over-year sales growth of 20% or more in the third quarter. Cancer drugs Tagrisso and Lynparza were its top performers, with sales soaring 30% and 42%, respectively. Imfinzi wasn't too far behind, with sales jumping 29% year over year.
AstraZeneca's pipeline includes a whopping 172 clinical programs. Twenty-four of those are late-stage programs, featuring nine new drug candidates.
Pfizer's growth has been held back by its Upjohn unit, which is home to the company's older drugs that have lost patent exclusivity. However, Pfizer recently received regulatory clearance to proceed with plans to spin off Upjohn and merge it with Mylan (MYL). This will leave the company in a better position to grow with solid winners including blood thinner Eliquis, breast cancer drug Ibrance, autoimmune disease drug Xeljanz, and rare disease drug Vyndaqel.
Pfizer has 92 clinical programs in its pipeline. Six of those are currently awaiting regulatory approvals. Another 21 programs are in late-stage studies, 12 of which are new candidates.
Dividends
It's not much of a contest between these two big pharma stocks when it comes to dividends. AstraZeneca's dividend currently yields a little over 2.5%. That's well below Pfizer's dividend yield of slightly above 4%.
Keep in mind, though, that Pfizer's dividend payout will be lower once the Upjohn-Mylan transaction closes this month. However, Pfizer's dividend yield will still likely be well above AstraZeneca's at that point. More importantly, Viatris -- the new entity resulting from the combination of Upjohn and Mylan -- will soon initiate its own dividend that, combined with Pfizer's dividend, will be close to the current dividend payout for Pfizer.
Better coronavirus stock?
If we were only comparing AstraZeneca and Pfizer based on their coronavirus programs, I'd give Pfizer the advantage. But an investment decision shouldn't be based only on one aspect of what a company has to offer.
My view is that the better stock overall between these two depends on your investing style. Income-seeking investors will probably prefer Pfizer. Other investors who aren't as focused on income will likely find AstraZeneca a better fit. Even with Upjohn out of the way, Pfizer probably won't be able to match the level of growth that AstraZeneca will deliver over the next few years.
