We recently compiled a list of the 13 Best Pharma Dividend Stocks To Buy In 2024. In this article, we are going to take a look at where Merck & Co., Inc. (NYSE:MRK) stands against the other pharma dividend stocks.

The pharmaceutical industry in 2024 faced a relatively quiet year, with deal volumes similar to 2023 but lower deal values, reflecting a shift toward smaller, more strategic transactions. Despite challenges such as patent expirations and market uncertainty, innovation remains strong, and there is a better investment environment for biotech. Lower interest rates have also eased capital costs, contributing to increased mergers and acquisitions activity. Biotech IPOs and venture capital investments are seeing a slight recovery, though investment is more concentrated in established companies. However, major pharmaceutical companies face a $300 billion growth gap due to patent expirations, making dealmaking crucial for future growth.

Looking ahead to 2025, EY believes that the pharmaceutical sector is expected to see more deal activity, especially if interest rates remain low. There may be a rise in larger acquisitions to address growth gaps, although smaller, strategic deals are likely to persist. Politically, the US policy environment is shifting with potential impacts on business, including lower corporate taxes and deregulation, but also the possibility of higher tariffs and continued drug pricing reforms. Changes in immigration and leadership within health agencies could also affect the pharmaceutical and biotech industries, with new appointees potentially disrupting the regulatory landscape.

As executives prepare for 2025, drug pricing and access remain their top concerns, according to a Deloitte survey. The survey highlighted that primary concerns include competition from generic drugs and biosimilars and the looming patent cliff, with over $300 billion in sales at risk due to expiring patents by 2030. This has executives expecting a surge in mergers and acquisitions in 2025.

Innovation remains at the forefront as companies look to fill gaps left by expiring patents. However, competition in profitable areas like oncology and immunology is fierce, leading to price pressures even before generics or biosimilars hit the market. On the flip side, the success of GLP-1 receptor agonists is sparking renewed interest in general medicines, with companies racing to tap into the $200 billion market. Additionally, about 20% of companies are adjusting their portfolios to focus on high-potential candidates and better meet market demands. Advanced therapies like cell and gene therapies are also gaining attention, with a shift away from more traditional drugs.

In addition to the competitive landscape, life sciences companies are also keeping a close eye on regulatory changes. In the United States, concerns about the Inflation Reduction Act are growing, while in Europe, shifts in clinical trial regulations could add complexity. As a result, life sciences companies are preparing for a year of both innovation-driven growth and regulatory challenges.

Our Methodology 

In this article, we reviewed Insider Monkey’s Q3 2024 database to identify pharmaceutical dividend stocks that hedge funds favored the most. The companies listed below are ranked in ascending order based on the number of hedge fund holders in each firm.

At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here)

Merck & Co., Inc. (NYSE:MRK)

Dividend Yield as of December 28: 3.30%

Number of Hedge Fund Holders: 86

Merck & Co., Inc. (NYSE:MRK) is a global healthcare company operating through two segments – Pharmaceutical and Animal Health. The Pharmaceutical segment offers a range of human health products, including treatments for oncology, immunology, neuroscience, virology, cardiovascular conditions, and diabetes, under well-known brands like Keytruda, Januvia, and Bridion. It also provides vaccines for various age groups under brands such as Gardasil and Pneumovax.

Merck & Co., Inc. (NYSE:MRK) has recently partnered with the Chinese biopharma company Hansoh to develop an oral GLP-1 receptor agonist for treating metabolic conditions and obesity, entering a market dominated by Eli Lilly and Novo Nordisk. Despite strong performances in oncology and vaccines, Merck’s stock has fallen 20% over the past six months. The licensing deal with Hansoh includes a $112 million upfront payment and up to $1.9 billion in royalties and milestones.

Merck & Co., Inc. (NYSE:MRK) reported $16.7 billion in total revenues, a 4% increase, or 7% excluding foreign exchange effects. The human health business grew 8%, driven by oncology, while the Animal Health business saw an 11% sales increase. Key oncology product KEYTRUDA grew 21% to $7.4 billion, fueled by expanded use in both early and metastatic cancers. Lynparza revenue grew 13%, while sales of WELIREG more than doubled. GARDASIL sales decreased 10%, primarily due to a decline in China, though global sales increased in other regions. Merck & Co., Inc. (NYSE:MRK)’s full-year earnings guidance has been adjusted to $7.72 to $7.77 per share, factoring in foreign exchange and business developments. The company remains focused on innovation, dividend growth, and pursuing strategic acquisitions.

On November 19, Merck & Co., Inc. (NYSE:MRK) announced a quarterly dividend of $0.81 per share, a 5.2% increase from its prior dividend of $0.77. The dividend is distributable on January 8, 2025, to shareholders on record as of December 16.

Insider Monkey’s Q3 database shows that Merck & Co., Inc. (NYSE:MRK) was held by 86 hedge funds, compared to 96 funds in the last quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with a position worth nearly $800 million.

Overall MRK ranks 3rd on our list of the best pharma dividend stocks to buy in 2024. While we acknowledge the potential of MRK as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MRK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None. This article is originally published at Insider Monkey.