It's not surprising that COVID-19 has attracted many of the biggest drugmakers on the planet. Pfizer (PFE -1.05%) launched the best-selling vaccine Comirnaty with the help of its partner, BioNTech. Merck (MRK 0.25%) is likely to soon have the first COVID-19 pill on the market.
Pfizer has delivered greater stock gains than Merck since the beginning of the pandemic. But which is the better COVID-19 stock going forward? Here's how the two pharma stocks stack up against each other.
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The case for Merck
Merck and its partner Ridgeback Biotherapeutics hit the ball out of the park with their interim results from a late-stage study of COVID-19 pill molnupiravir. The drug reduced the risk of hospitalization or death by around 50%, compared to placebo for patients with mild-to-moderate COVID-19.
Molnupiravir seems likely to win U.S. Emergency Use Authorization (EUA) soon. If it does, Merck stands to rake in in the ballpark of $7 billion from the antiviral drug within the next few months. Bernstein analyst Ronny Gal thinks that molnupiravir could make around $3 billion per year beginning in 2023.
However, Merck has an even bigger blockbuster already with cancer immunotherapy Keytruda. Sales for the drug are on track to top $16 billion in 2021. That amount is likely to grow in the coming years as Keytruda picks up approvals for additional indications.
Merck's lineup includes two other cancer drugs with solid momentum -- Lynparza and Lenvima. Its newly approved pneumococcal conjugate vaccine Vaxneuvance should gain market share quickly. The company's other vaccines, including the Gardasil human papillomavirus (HPV) vaccine, also continue to deliver solid sales growth.
The big-drugmaker's pipeline could soon expand. Merck plans to acquire Acceleron Pharma for $11.5 billion. The crown jewel with this deal is Acceleron's promising pulmonary arterial hypertension drug sotatercept.
The case for Pfizer
Pfizer expects Comirnaty to make around $33.5 billion in sales this year. The company splits profits with BioNTech. However, the COVID-19 vaccine will definitely continue to be a huge moneymaker for Pfizer.
It might not be long before Pfizer competes head-to-head with Merck in the COVID-19 pill market, as well. Pfizer is already evaluating its own oral antiviral therapy in late-stage testing. Unlike Merck's and Ridgeback's molnupiravir, Pfizer's PF-07321332 was developed to specifically target coronaviruses. Pfizer hopes to file for EUA for the COVID-19 pill before the end of the year.
Like Merck, Pfizer also has other growth drivers beyond COVID-19. These include blockbusters such as blood thinner Eliquis, prostate cancer drug Xtandi, and rare heart disease drug Vyndaqel/Vyndamax.
Also like Merck, Pfizer has a new pneumococcal conjugate vaccine on the market. Its Prevnar 20 addresses five more serotypes than Merck's vaccine does.
Over the long term, Pfizer's vaccine seems likely to be the bigger winner. In the meantime, Pfizer will profit from both vaccines after reaching a legal settlement with Merck in which it will receive royalties from sales of Vaxneuvance.
Pfizer's pipeline features several promising late-stage candidates, notably including respiratory syncytial virus vaccine PF-06928316. The company's pending acquisition of Trillium Therapeutics will also bolster Pfizer's pipeline with blood cancer candidates TTI-622 and TTI-621.
Better COVID-19 stock?
Merck will almost certainly have a monster winner with molnupiravir. However, Pfizer should be poised to achieve even greater overall success with the combination of Comirnaty and its own COVID-19 pill. If you're looking for the better stock strictly based on the opportunity in the COVID-19 market, Pfizer is it.
What about if we look at other factors beyond COVID-19? Pfizer's shares trade at a discount to Merck's based on forward earnings multiples. Also, Merck is much more dependent on one product (Keytruda) than Pfizer is. In addition, Pfizer offers a more attractive dividend than Merck does. My view is that all of this makes Pfizer a better pick than Merck.
