Better Buy: Gilead Sciences vs. Johnson & Johnson

Gilead Sciences (NASDAQ: GILD) and Johnson & Johnson (NYSE: JNJ) have been competing against each other for years in the HIV market. The clear winner in that battle has been Gilead. J&J could also soon make Gilead sip its heels in the immunology market.

But the decision between these two major health care shares involves more than just looking at the areas where Gilead and Johnson & Johnson compete directly against each other. This is how these two companies compare in total.

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The case for Gilead Sciences

We have already mentioned Gilead's victory over J&J in the HIV market. The reality is that Gilead has been dominant over all the other players in HIV for a long time. And that strip is not about to end anytime soon.

Gilead's Biktarvy is on track to generate sales for $ 4 billion or more this year. The HIV drug appears to achieve a top annual turnover of at least $ 6 billion. Some of the growth comes at the expense of Gilead's other HIV drugs. But the recent FDA approval of Descovy as a pre-exposure prophylaxis (PrEP) HIV therapy is likely to increase sales of the drug.

As Gilead's HIV juggernaut continues to fluctuate, Yescarta's cancer cell biotechnology is gaining momentum with sales almost doubling year over year. second quarter. New Gilead Sciences CEO Dan O & Day said at the Morgan Stanley Global Healthcare Conference in September that the company is "fully committed to cell therapy" and intends to expand leadership in the arena.

Although the rampant growth days of the Gilead hepatitis C virus (HCV) franchise are in the past, the good news is that sales appear to have stabilized. The company should not have to worry about the HCV drugs that will reduce overall performance going forward.

A major key to future performance is filgotinib. Gilead plans to file soon for regulatory approval in the United States for filgotinib in the treatment of rheumatoid arthritis. With other indications that may also be on the way, Gilead may be looking at top annual $ 4 billion ballpark sales and perhaps even higher.

Gilead also remains cautiously optimistic about the prospect of treating nonalcoholic steatohepatitis (NASH) despite some previous clinical relapses with selonsertib. Biotechnology evaluates two experimental NASH drugs in Phase 2 clinical trials. Results from these studies will dictate what next step Gilead will take in the potentially lucrative indication.

Don't be surprised if Gilead adds to the pipeline. The company claims the largest cash portfolio of biotechnologies. Gilead uses some of his money to expand his immunology collaboration with Galapagos . It also remains committed to the dividend program, with dividends currently yielding more than 4%.

Johnson & Johnson Case

Johnson & Johnson ranks as the largest health care system on the market. And it's not a close competition. J&J is one of the largest fabric makers in the world. It is one of the largest manufacturers of medical equipment. It is also one of the largest companies for consumer health products. The broad scope makes J&J one of the most diversified health care system's shares.

However, J & J's pharmaceutical segment is definitely the largest money maker. The company claims a diverse range of drugs on the market, including immunology explosives such as Remicade, Tremfya, Simponi and Stelara, along with cancer-success drugs Darzalex, Imbruvica (which J&J co-markets with AbbVie ), and Zytiga.

Several of these top-selling drugs continue to have solid sales growth, particularly Darzalex, Imbruvica and Tremfya. J&J should also have a big winner on the hands of depression medicine Spravato. On the other hand, J&J is also meeting declining sales for some of its most important drugs, especially Remicade.

Johnson & Johnson's drug pipeline is full of late-stage candidates. Many of these programs are aimed at additional indications for already approved medications. However, J&J also has several new products potentially on the way, especially including multiple sclerosis medical pony simulation and a couple of experimental myeloma therapies.

The company's medical device segment is second only to pharmaceuticals in total revenue generated. This segment has not produced good results for J&J in recent quarters. But one bright spot is atrial fibrillation. J&J could also take advantage of the acquisition earlier this year by the manufacturer of robotic surgical systems Auris Health.

Consumer health has not been a huge winner for J&J lately either. The segment's beauty products continue to deliver solid sales growth, albeit aided by acquisitions. Competition remains intense in the general consumer health market.

Even with less impressive benefits for consumer health and medical equipment, J&J still generates solid cash flow. It also uses its strong financial position to reward shareholders with steady dividends and share buybacks. The company's dividend currently yields just under 3%, and J&J increased its dividend for 57 consecutive years.

Better buy

Which of these two stocks is the better choice? I think it depends on the type of investor you are.

More conservative investors would be better off joining Johnson & Johnson. The diversification of the health care giant reduces the risk associated with investing in biotech stocks such as Gilead.

However, I think aggressive investors are likely to like Gilead over J&J. With Biktarvy and Descovy at the forefront of HIV, sustained momentum for Yescarta and a huge potential for filgotinib, Gilead could be in the background of a significant comeback following several years of decline caused by the HCV franchise.