Big problems tend to attract big problem solvers. So when a global pandemic first threatened the world earlier this year, it wasn't surprising that the two largest pharmaceutical companies on the planet moved quickly to develop COVID-19 vaccines. I'm referring, of course, to Johnson & Johnson (NYSE:JNJ) and Pfizer (NYSE:PFE).
So far this year, Pfizer has received a lot more attention for its vaccine candidate. However, J&J's day in the sun could soon be here. Which of these huge coronavirus stocks is the better pick right now? Here's how Johnson & Johnson and Pfizer stack up against each other.
How their coronavirus vaccines compare
Johnson & Johnson and Pfizer took different routes with their respective coronavirus vaccine programs. J&J embarked on an internal-development effort, while Pfizer partnered with German biotech BioNTech (NASDAQ:BNTX). Pfizer's approach was the faster one.
Pfizer and BioNTech announced a surprisingly high efficacy of 95% for their COVID-19 vaccine candidate BNT162b2 in November. This set the stage for the companies to quickly file for emergency use authorization (EUA) in the U.S. and equivalent approvals in other countries.
So far, BNT162b2 has picked up two regulatory approvals -- one in the U.K. and another in Canada. The Food and Drug Administration (FDA) seems likely to grant EUA to the vaccine within days after a positive recommendation from an advisory committee on Thursday. Bernstein analyst Ronny Gal projects that Pfizer and BioNTech will together make over $14 billion next year from sales of BNT162b2.
Johnson & Johnson should report interim efficacy results from a global late-stage study evaluating its COVID-19 vaccine JNJ-78436735 in early 2021. The big question for J&J is whether or not its candidate can compete with the high efficacy for BNT162b2 and Moderna's mRNA-1273.
However, J&J could have a key competitive advantage: Its vaccine requires only a single dose, while the other leading vaccines require two doses. The company is also selling JNJ-78436735 at cost during the pandemic. J&J won't be so altruistic after the healthcare crisis is over, though. Gal estimates the healthcare giant will rake in $3 billion in sales for its COVID-19 vaccine next year.
The rest of the story
Their coronavirus vaccine programs are important for both J&J and Pfizer. However, both companies have plenty of other growth drivers.
Johnson & Johnson runs three huge business segments that each generate billions of dollars in annual revenue. Its consumer health unit hasn't delivered impressive growth in recent years and the pandemic has hurt the performance of the company's medical-device segment in 2020.
It's a different story for J&J's pharmaceutical segment, though. Sales for blockbuster drugs including Tremfya, Stelara, Imbruvica, and Darzalex continue to enjoy strong momentum. Once the pandemic ends, look for J&J's medical-device business to also rebound nicely.
Pfizer's growth has been anemic in recent years, as well. But the company is now poised for solid growth after merging its Upjohn unit with Mylan to form Viatris. This transaction removed a basket of older drugs with declining sales from Pfizer's lineup.
Pfizer's future fortunes will be driven by strong performers such as blood thinner Eliquis, autoimmune-disease drug Xeljanz, and rare-disease drug Vyndaqel. Pfizer also has a deep pipeline with over 90 clinical-stage programs. Twenty-seven of these programs are either awaiting regulatory approval or are in late-stage testing.
Better coronavirus stock?
Both of these big healthcare stocks will likely be attractive to income-seeking investors. Johnson & Johnson is a Dividend Aristocrat, with a dividend yield of around 2.6%. Pfizer doesn't have as impressive of a track record of dividend hikes as J&J, but its dividend yield of 3.6% is juicier.
For investors looking for the best total returns, though, I think that Pfizer is the better pick. The company expects to generate adjusted earnings growth of around 10%, now that it doesn't have Upjohn weighing it down. With a strong dividend added in, Pfizer appears to be in a good position to deliver market-beating total returns over the long run.