Until now, Pfizer (PFE) has reigned in the coronavirus space. The big pharma company is the leading seller of coronavirus vaccines and expects its vaccine to generate more than $33 billion in revenue this year. At the same time, Pfizer is testing a coronavirus treatment candidate -- a pill -- in phase 3 trials. It aims to report results this quarter.

Pfizer's dominance in vaccines isn't likely to end. But the company faces serious competition from another big pharma player in the world of coronavirus treatment pills. And this rival happens to be one big step ahead. Merck (MRK 0.81%) recently reported positive results from studies of its investigational COVID-19 pill and plans to apply for Emergency Use Authorization soon. Now the question is: If you want to invest in a coronavirus pill maker, should you choose Pfizer or Merck?

A person sits with a blanket on a couch and takes a pill.

Image source: Getty Images.

The Merck advantage

Merck has one particular advantage: The company has already reported phase 3 data. That means one major uncertainty is behind us. After all, failure can happen at any clinical development stage. Merck reported its investigational pill reduced the risk of hospitalization or death by 50%.

Of course, there's no guarantee the Food and Drug Administration will OK the drug candidate. But strong data clearly work in a company's favor.

If the product is authorized, it would become the first pill to treat COVID. It's meant for non-hospitalized, at-risk individuals with mild to moderate COVID. What's most exciting is that doctors could prescribe the treatment for patients to take at home in the early days of illness.

Right now, treatment candidates for non-hospitalized patients are limited to monoclonal antibodies, which must be given through infusion in a healthcare setting.

Merck's pill candidate works by interfering with the virus' replication. It causes the virus to make mistakes in the process, and the virus is therefore unable to strengthen in the body's cells.

Pfizer's drug candidate

Now, let's consider Pfizer. The company's candidate also tackles viral replication. But it does so in a different way. It's a protease inhibitor, meaning it blocks the action of protease enzymes involved in viral replication. These sorts of drugs are often used to treat the human immunodeficiency virus (HIV).

In phase 1, the drug candidate showed strong tolerability and safety. But we don't have further details. Like Merck's candidate, doctors could prescribe this potential drug to be taken at home right after a positive coronavirus test.

An SVB Leerink analyst predicts Merck's drug alone could generate peak annual sales of $5 billion, according to Stat News.

Next step: It's important to look beyond the company's coronavirus work. As I always say, we should invest in a company for the whole package and not just one product.

Merck has seven blockbuster drugs including mega-blockbuster cancer drug Keytruda. The company's pharmaceutical sales topped $43 billion last year. Keytruda's sales climbed 30% to more than $14 billion. The company also has a hefty animal health business that brought in more than $4 billion in 2020. Merck's pipeline includes 80 programs, and 24 are in phase 3 development.

Pfizer has eight blockbuster products including the coronavirus vaccine. And that product is the only one that beats Merck's Keytruda when it comes to sales. Pfizer's revenue totaled nearly $42 billion last year, and the company expects $78 billion to $80 billion this year. Pfizer's pipeline includes 100 programs, and 23 are in phase 3 trials.

Both companies face the challenge of patent expirations of big products in the coming years. A key patent for Keytruda expires in 2028. And Pfizer's best-selling blood thinner Eliquis also may face generic competition as of 2028. So it's important to see that each has full pipelines with many late-stage programs.

What about share performance?

Merck's performance surpassed that of Pfizer in the five-year period ending in December 2020.

MRK Chart

MRK data by YCharts.

But two big events have since happened. Pfizer spun off its Upjohn business, meaning it no longer will be a drag on earnings. And Pfizer began selling its coronavirus vaccine. Add to that its plans to develop additional mRNA products, and you've got a different business than the one you were looking at a couple of years ago.

Here's a look at Pfizer's share performance this year versus that of Merck.

MRK Chart

MRK data by YCharts.

I think Pfizer's momentum is just getting started. The company is just beginning its post-Upjohn transformation. Share performance in the future might be much different from what we saw in the past. At the same time, the shares trade for less than those of Merck in relation to forward earnings estimates.

MRK PE Ratio (Forward) Chart

MRK P/E ratio (forward) data by YCharts.

Of course, we don't yet have phase 3 data from Pfizer's investigational COVID pill. Merck is more of a solid bet looking at that alone. But as I said, it's best to look beyond just one product when investing. And Pfizer's transformation and low valuation offer it some extra points in my book. That's why it's the coronavirus-pill stock I would bet on right now.