JNJ vs. MRK: Which Healthcare Titan Offers Better Growth Prospects?

Kinjel Shah

Wed, Jun 11, 2025, 7:36 AM 8 min read

The Case for J&J

J&J’s biggest strength is its diversified business model, which helps it to withstand economic cycles more effectively. It operates through more than 275 subsidiaries.

Its Innovative Medicine unit is showing a growth trend. The segment’s sales rose 4.4% in the first quarter of 2025 on an organic basis despite the loss of exclusivity (LOE) for its multi-billion-dollar product, Stelara, and the negative impact of the Part D redesign. In 2025, J&J expects growth in the Innovative Medicine segment in the face of Stelara biosimilar entrants to be driven by its key products such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey, and new indications for Tremfya and Rybrevant.

J&J also has an interesting R&D pipeline that can generate innovative products and further drive its growth. J&J has been on an acquisition spree lately, with the latest acquisition of Intra-Cellular Therapies strengthening its presence in the neurological and psychiatric drug market.

Sales in J&J’s MedTech business are facing continued headwinds in the Asia Pacific, specifically in China. Sales in China are being hurt by the impact of the volume-based procurement (VBP) program and the anticorruption campaign. J&J does not expect any improvement in its business in the Asia Pacific region, specifically in China, in 2025. Competitive pressure is also hurting sales growth in some MedTech businesses.

The company lost U.S. patent exclusivity of its blockbuster drug, Stelara, in 2025. The launch of generics is expected to significantly erode the drug’s sales, hurting J&J’s sales and profits in 2025. J&J also expects a negative impact of approximately $2 billion in sales due to the Medicare Part D redesign in 2025. The Part D redesign is expected to mainly hurt sales of drugs like Stelara, Tremfya, Erleada and PAH drugs

J&J faces more than 62,000 lawsuits for its talc-based products, primarily baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian cancer. J&J insists that its talc-based products are safe and do not cause cancer. The company permanently discontinued the sales of its talc-based Johnson’s Baby Powder.

In April, a bankruptcy court in Texas rejected J&J’s proposed bankruptcy plan to settle its talc lawsuits after a two-week trial in Houston. J&J will go back to the traditional tort system to fight the lawsuits individually with its bankruptcy strategy to settle the lawsuits failing for the third time.

J&J’s cash and cash equivalents were $38.8 billion at the end of March 2025 against long-term debt of $38.4 billion, resulting in a debt-to-capital ratio of 0.33, much lower than the industry's average of 0.42.

The Case for MRK

Merck boasts more than six blockbuster drugs in its portfolio, with Keytruda being the key top-line driver. Keytruda has played an instrumental role in driving Merck’s steady revenue growth in the past few years. Keytruda’s sales are gaining from rapid uptake across earlier-stage indications, mainly early-stage non-small cell lung cancer. Continued strong momentum in metastatic indications is also boosting sales growth. The company expects continued growth from Keytruda, particularly in early lung cancer. Merck is also developing a subcutaneous formulation of Keytruda that can extend its patent life. Merck is working on different strategies to drive Keytruda's long-term growth.

Merck has been making meaningful regulatory and pipeline progress across areas like oncology (mainly Keytruda), vaccines and infectious diseases while executing strategic business moves. Merck’s phase III pipeline has almost tripled since 2021, supported by in-house pipeline progress as well as the addition of candidates through M&A deals.

Merck’s new products, Capvaxive and Winrevair, are witnessing strong launches and have the potential to generate significant revenues over the long term. Earlier this week, the FDA approved its respiratory syncytial virus (RSV) vaccine, Enflonsia (clesrovimab).

However, sales of Gardasil, which is Merck’s second-largest product, are declining due to a weak performance in China, which resulted from sluggish demand trends amid an economic slowdown. Merck is also seeing weakness in the diabetes franchise and the generic erosion of some drugs.

Merck is heavily reliant on Keytruda. Though Keytruda may be Merck’s biggest strength and a solid reason to own the stock, it can also be argued that the company is excessively dependent on the drug and it should look for ways to diversify its product lineup.

There are rising concerns about the firm’s ability to grow its non-oncology business ahead of the upcoming loss of exclusivity of Keytruda in 2028.

Also, competitive pressure might increase for Keytruda in the near future. Medicare Part D redesign is expected to hurt sales of diabetes drugs, Januvia/Janumet, in 2025.

At the end of March 2025, its cash and cash equivalents were $9.2 billion against long-term debt of $33.5 billion, resulting in a debt-to-capital ratio of 0.41, which is slightly lower than the industry average of 0.42.

How Do Estimates Compare for JNJ & MRK?

The Zacks Consensus Estimate for J&J’s 2025 sales and EPS implies a year-over-year increase of 2.7% and 6.2%, respectively. The Zacks Consensus Estimate for 2025 earnings has risen from $10.54 per share to $10.60 over the past 60 days, while that for 2026 has declined from $11.02 to $10.98 over the same timeframe.