Pfizer Inc. (NYSE:PFE) is one of the planet's biggest drugmakers and a staple in stock portfolios, but it faces a big problem that could suggest investors ought to own diabetes Goliath Novo Nordisk (NYSE:NVO) instead.

Digging itself out of a hole
Pfizer's biggest problem is patent expiration. After losing patent protection on Lipitor in 2012, Pfizer continues to struggle to regain its footing. Lipitor, the cholesterol-fighting statin of choice for millions of patients, generated $12 billion in annual revenue for Pfizer at its peak. But following the market entry of generic Lipitor competitors, Pfizer has notched an ongoing string of year-over-year sales declines, including a 4% overall revenue slide in 2014. As a result, everyone is wondering if new products can offset lost Lipitor sales, or whether Pfizer will need to acquire another company to spark growth.

PFE Revenue (TTM) Chart

Better bet?
Instead of worrying over Pfizer's pipeline potential, or if it will fork out tens of billions of shareholder dollars on an acquisition, I'd argue investors might be better served by owning Novo Nordisk.

Novo Nordisk won't give investors anywhere near the same seemingly-enticing dividend yield offered by Pfizer's shares, but it does offer a much better shot at significant future growth.

Source: Novo Nordisk.

The company's 27% share of the global diabetes market and 47% share of the insulin market makes it the world's biggest diabetes-drug maker. During the first nine months of 2014, the company's short-acting insulin, long-acting insulin, and modern insulin products generated sales of more than $5.7 billion. Add $1.4 billion in sales from the company's GLP-1 inhibitor Victoza, a drug that is increasingly being prescribed to help patients use insulin more efficiently, and its other diabetes-related products, and the diabetes indication accounted for about 80% of Novo Nordisk's $9.8 billion in sales through the first three quarters of last year.

During that period, Novo Nordisk's sales of diabetes products grew 9% year over year. Over the past decade, rising sales of its diabetes drugs helped revenue grow by a compounded 11.6% annually. Those are impressive growth numbers for a company its size, but sales could go much higher.

According to the International Diabetes Federation, the number of people with diabetes worldwide is expected to increase from 382 million in 2013 to 592 million in 2035. Much of that increase will occur in the United States, where Novo Nordisk already gets 48% of its sales and where an estimated 86 million people with pre-diabetes live.

Source: Novo Nordisk.

Profitable and shareholder-friendly
Between 2009 and 2013, Novo Nordisk reported an average operating margin of 34%. However, drug volume growth, sharp accountants' pencils, and new products lifted that operating margin to 38% in 2013, and Novo Nordisk believes it can eventually grow operating margin to 40%. 

Leveraging rising sales against better margins has more than doubled Novo Nordisk's trailing 12-month net income, from less than $2.25 billion five years ago to $4.73 billion exiting the third quarter of 2015.

NVO EPS Diluted (TTM) Chart

As a result, the company's trailing 12-month earnings per share have expanded from less than $0.80 to $1.79 during the period, and over the past 10 years the company has increased by 675% the amount of money returned to investors through buybacks and dividends. That's a pretty good track record for investors who like shareholder-friendly management teams. 

Looking forward
The demographic tailwinds from diabetes treatment is likely to support sales growth at Novo Nordisk for years, but the company also gets more than $1 billion in annual sales from its hemophilia and human growth hormone businesses, too. Additionally, the company recently won both U.S. and European Union approval for a higher-dose variation of Victoza that will be sold under the brand name Saxenda as an obesity treatment. While this drug market is still small, obesity costs the U.S. healthcare system $147 billion annually, suggesting there's a significant unmet need for new treatment options.

Looking even further out, Novo Nordisk's potential to create oral alternatives to injection-based diabetes therapies could prove to be one of the biggest innovations over the coming decade. The company is investing $3.7 billion to research such oral alternatives; while this research is in the very early stages, such a development could revolutionize diabetes treatment. If so, investors might be right to ignore Pfizer and opt for owning Novo Nordisk instead -- at least until Pfizer can prove itself again.