Why Pfizer's Pipeline and Products May Have an Edge Over Merck & Co.

May 12, 2016
By Alex Keown, BioSpace.com Breaking News Staff

Pfizer Versus Merck: Evaluating Which Stock Has The Edge

If investors had to choose between Pfizer and Merck & Co. , it might be a tough decision. But Todd Campbell, writing for The Motley Fool, lays out his argument for which company he thinks edges out the other.

It seems clear that Merck’s Keytruda, the first real winner in the immuno-oncology field, is a great drug, and Campbell argues it’s Merck’s best drug. Most analysts predict Keytruda will be a blockbuster—$1 billion in annual sales—but Campbell points out that Pfizer has ten or eleven drugs on the market that have zoomed in sales in the last year.

So is Pfizer’s portfolio better?

Well, it’s really good. The company’s Ibrance, for breast cancer, had sales jump 1,000 percent in the last year to $429 million in the first quarter. Its Xalkori for lung cancer produced 24 percent year-over-year growth, and Chantix, which helps people stop smoking, grew 39 percent. And the company’s Xeljanz, for rheumatoid arthritis, doubled in sales.

Meanwhile, although Keytruda sales jumped from $83 million in the first quarter of 2015 to $249 million in the first quarter of 2016, the company’s overall revenue dropped 1 percent year over year in the first quarter.

“Both Pfizer and Merck pour billions of dollars into research and development, but a lot of Merck’s late-stage pipeline potential rests with expanding demand for Keytruda,” Campbell writes. “That may not be a bad bet, but Keytruda already faces stiff competition from Bristol-Myers Squibb ’s competing PD-1 drug, Opdivo, and more competition may be coming.”

Otherwise, Merck’s best pipeline best are anacetrapib, a CETP inhibitor to lower cholesterol, and verubecestat, a possible treatment for Alzheimer’s disease. However, Merck hasn’t had much to say about anacetrapib recently. The last related press release was in November 2015, when the company reported that a Data Monitoring Committee (DMC) had reviewed the study and it would continue without changes. That study has 30,000 patients in it, and is being sponsored by Oxford University. It’s expected to conclude in early 2017.

In January, Merck announced it had completed enrollment in its EPOCH trial, a Phase II/III trial for verubecestat. It’s expected to have primary trial completion in July 2017. Alzheimer’s drugs are longshots, but if it were even moderately successful, it would rake in plenty of money.

Pfizer’s late-stage pipeline appears geared more to biosimilars. Campbell writes, “It has over a half-dozen biosimilars in development that could soon begin carving away billions of dollars in sales from widely used biologics, such as Merck’s Remicade. Pfizer secured an EU go-ahead for its Remicade biosimilar, Inflectra, last year, and Merck reports that Remicade’s sales fell 30 percent year over year in Q1.” Pfizer also has a number of other biosimilars that could be worth $20 billion annually in 2020.

And Pfizer also has a PD-1 drug in its pipeline that could compete with Keytruda. Pfizer also has bococizumab, currently starting Phase III trials for cholesterol. Campbell feels that, because bococizumab is a PCSK9 inhibitor, and the FDA has already approved two PCSK9 inhibitors last year, the odds are better for a Pfizer approval. “Importantly,” he writes, “if Pfizer’s bococizumab trial shows that it can reduce the risk of cardiovascular events, including heart attack, then Pfizer could end up with the best-in-class drug in a multibillion-dollar market.”

If he only had to choose one, Campbell would lean toward Pfizer. Pfizer revenue is projected to grow 8.2 percent in 2016 and 3.4 percent in 2017. Merck’s revenue, however, is forecast to only grow by about 1 percent.

Luckily for investors, they can opt for both if they wish.

Pfizer’s are currently trading for $33.04.

Merck are currently trading for $54.03.