Patent expirations are forcing Pfizer Inc. (NYSE:PFE) and Johnson & Johnson (NYSE:JNJ) to prove that their newer medicines can replace some of their most successful franchises. Pfizer is simultaneously managing declining COVID-19 revenue and approaching losses of exclusivity, while Johnson & Johnson is already contending with the rapid erosion of Stelara. Their latest results suggest both companies are making progress, but one transition appears further advanced.
Bull Case
Pfizer (NYSE:PFE) is becoming less dependent on COVID-related products. Revenue excluding Comirnaty and Paxlovid grew 5% operationally in fiscal Q2 2026, while launched and acquired products generated $3.2 billion and grew 18% operationally. Several medicines are contributing to that expansion. Padcev revenue increased 23% operationally to $667 million, supported by market-share gains in bladder cancer. The Vyndaqel family generated $1.76 billion, rising 8% operationally, while Lorbrena grew 37% operationally. This broader participation is encouraging because Pfizer needs multiple products and not one replacement blockbuster to offset future losses of exclusivity.
Cost reductions provide another layer of protection. Pfizer (NYSE:PFE) expects approximately $6.7 billion in net savings from its cost-realignment program through 2029 and another $3 billion through its manufacturing-optimization program. Together, management expects the initiatives to generate approximately $9.7 billion in total net savings through 2029, which could potentially support margins while Pfizer (NYSE:PFE) invests in oncology and obesity.
Johnson & Johnson’s (NYSE:JNJ) transition, however, is already producing stronger companywide growth. Innovative Medicine sales increased 7.8% to $16.38 billion, or 6.8% operationally, despite Stelara reducing the segment’s operational growth by approximately 760 basis points. Tremfya has also become central to this transition, as its sales increased 72.5% to approximately $2 billion, which helped offset a 55% decline in Stelara revenue. Growth also came from several oncology and neuroscience products, including Darzalex, Carvykti, Tecvayli, Rybrevant/Lazcluze, Spravato and Caplyta. This breadth makes Johnson & Johnson (NYSE:JNJ) less dependent on a single successor to Stelara.
The company consequently raised its 2026 reported-sales guidance to a midpoint of $101.1 billion and increased the midpoint of adjusted EPS guidance by $0.13 to $11.68. Its MedTech business supplies additional diversification that Pfizer (NYSE:PFE), as a pharmaceutical company, does not possess.
Bear Case
Pfizer’s (NYSE:PFE) underlying recovery remains modest. Although reported revenue rose 3% to $15.03 billion, operational growth was only 1%. The company also recorded a GAAP net loss of $248 million, largely reflecting $4.3 billion of non-cash intangible-asset impairments. Those charges illustrate the risk that some acquired assets may not deliver their originally anticipated value.
Pfizer’s (NYSE:PFE) 2026 guidance includes an estimated $1.1 billion revenue headwind from recent and expected generic and biosimilar competition. Eliquis, Ibrance and Xtandi remain important franchises facing future pressure, while management expects leverage to remain around current levels, or modestly higher, during the loss-of-exclusivity period. Growing products are helping, but they have not yet demonstrated that they can fully replace the combined revenue at risk.
Johnson & Johnson (NYSE:JNJ) is not immune. Replacing Stelara requires substantial growth across multiple medicines, and any slowdown in Tremfya or its oncology portfolio would make the erosion more visible. MedTech also delivered slower operational growth of 3.6%, which suggests that the segment currently provides diversification but is not matching the momentum of Innovative Medicine.
Conclusion
Both companies are investing ahead of their patent cliffs, but Johnson & Johnson (NYSE:JNJ) currently appears better prepared. It is already absorbing a severe Stelara decline while continuing to grow Innovative Medicine, raise guidance, and benefit from a separate MedTech business. However, Johnson & Johnson (NYSE:JNJ) also faces longer-term patent exposure around Darzalex, making continued growth from Carvykti, Tecvayli, Rybrevant, and other oncology products important beyond the immediate Stelara transition.
Pfizer (NYSE:PFE), on the other hand, offers a credible recovery case supported by newer medicines and extensive cost reductions. However, its 1% operational growth and broader loss-of-exclusivity exposure leave more replacement work ahead.
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Disclosure: None. This article is originally published at Insider Monkey.
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