Gilead Sciences, Inc. (NASDAQ:GILD) and Johnson & Johnson (NYSE:JNJ) offer investors two very different versions of pharmaceutical growth. Gilead is expanding faster, powered by an HIV franchise that continues to gain momentum, while Johnson & Johnson isn’t growing as quickly, but its portfolio stretches across pharmaceuticals and MedTech, giving it more ways to absorb weakness in individual products.
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Their latest results put that trade-off into focus, making investors wonder whether Gilead’s faster growth is worth its greater concentration, or whether J&J’s diversification makes for the stronger investment case?
Bull Case
Gilead currently has the stronger underlying growth profile, as its second-quarter product sales excluding Veklury increased 10% to $7.6 billion, while HIV sales rose 12% to $5.7 billion. Biktarvy remained the largest contributor, with sales increasing 7% to $3.8 billion, and Descovy jumped 48% to $967 million, while Yeztugo, Gilead’s twice-yearly injectable HIV prevention medicine, generated $232 million compared with $15 million a year earlier.
Growth wasn’t limited to HIV for the company, as its liver-disease sales increased 10% to $877 million, while Livdelzi more than doubled from $78 million to $167 million, and Trodelvy sales increased 26% to $457 million. That performance gave Gilead enough confidence to raise its 2026 outlook, and management now expects product sales of $30.1 billion to $30.4 billion, while product sales excluding Veklury are expected to reach $29.8 billion to $30.1 billion.
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Johnson & Johnson is growing more moderately, but its quarter demonstrated the value of having a broader portfolio. Total fiscal Q2 sales increased 6.6% to $25.3 billion, while its Innovative Medicine business generated $16.38 billion. That performance came despite a steep decline in Stelara, which is facing biosimilar competition, as quarterly Stelara sales fell 55.5% to $740 million.
Other medicines helped absorb the pressure, with Tremfya sales increasing 72.5% to approximately $2.0 billion during the quarter, while J&J still raised its full-year outlook. The company now expects 2026 reported sales of approximately $101.1 billion at the midpoint, up from $100.8 billion previously, and adjusted EPS of $11.68 at the midpoint, up from $11.55. It is significant for investors to note this distinction, as J&J didn’t avoid its loss-of-exclusivity problem but rather delivered companywide growth while one of its major medicines was already experiencing a sharp decline.
Bear Case
Gilead’s (NASDAQ:GILD) faster growth comes with substantial concentration risk. HIV generated $5.69 billion of its $7.63 billion in fiscal Q2 product sales, meaning roughly three-quarters of product revenue came from one therapeutic area. Diversifying the business has also required considerable investment. Gilead recorded $11.2 billion of acquired in-process R&D expenses during fiscal Q2, primarily related to its acquisitions of Arcellx, Tubulis, and Ouro Medicines. The quarter consequently included GAAP and non-GAAP losses per share of $8.45 and $6.75, respectively.
The existing oncology portfolio is also producing mixed results. Trodelvy grew 26%, but Cell Therapy sales declined 14% to $417 million amid competitive headwinds; meanwhile, Yescarta revenue fell 12%, and Tecartus declined 24%. J&J’s diversification doesn’t mean every part of the company is firing equally well either. Its MedTech business generated $8.93 billion in Q2 sales, below the $8.97 billion analysts expected, according to Reuters. The company cited temporary headwinds including inventory dynamics in China affecting Electrophysiology and softer U.S. procedure trends affecting Abiomed.
That matters because part of the appeal of J&J is precisely its ability to draw growth from multiple businesses. If MedTech remains subdued while Stelara continues losing sales, more pressure falls on newer medicines to sustain companywide growth.
Conclusion
Gilead’s (NASDAQ:GILD) base business grew 10%, HIV increased 12%, and several newer products are expanding rapidly, all against a backdrop where management raised its sales outlook. J&J’s advantage is different, as its total sales grew 6.6% even as Stelara revenue fell more than 55%, and management still raised both its sales and adjusted EPS outlooks. That provides tangible evidence of what diversification can do when an important product comes under pressure.
For investors comfortable with concentration, Gilead’s accelerating HIV franchise offers the stronger near-term growth story. But J&J currently offers a broader base from which to absorb individual product setbacks, even though weakness in MedTech remains worth watching. On current operating evidence, the choice for investors comes down to whether investors place greater weight on Gilead’s faster growth or J&J’s ability to spread risk across a much broader healthcare portfolio.
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This article is originally published at Insider Monkey.
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