Overlooked Pharma Giants Offer Better Value Than GLP-1 Darlings

The Market’s Narrow Focus

When pharmaceutical headlines dominate financial news cycles, they typically revolve around one dominant narrative. Currently, that story centers on GLP-1 weight loss medications. While this therapeutic class represents a genuine breakthrough, industry observers frequently note that market participants tend to concentrate excessively on trending sectors, creating valuation imbalances across the broader pharmaceutical landscape.

Eli Lilly stands at the epicenter of this trend, having captured significant market share in the GLP-1 space with drugs like Mounjaro and Zepbound. The company’s share price reflects this prominence—its current price-to-earnings ratio sits at approximately 50, compared to a five-year average of 53. What’s particularly notable is that these two medications already account for more than half the company’s revenue, a concentration that introduces vulnerability should competitive dynamics shift.

A Contrarian Perspective on Best Pharma Stock to Buy

For investors seeking best pharma stock to buy opportunities away from the spotlight, Bristol Myers Squibb (NYSE: BMY) and Merck (NYSE: MRK) deserve serious consideration. These pharmaceutical titans maintain fundamentally different business models and valuation profiles.

Merck concentrates its pipeline on cardiovascular conditions, oncology, and infectious disease treatments. Bristol Myers Squibb similarly builds its portfolio around cardiology, cancer therapies, and immunology products. Neither company aggressively pursues the best pharma stock to buy designation through GLP-1 competition. Consequently, investor attention has drifted elsewhere, creating meaningful price inefficiencies.

Comparative Valuation Analysis

The numerical case becomes compelling when examining side-by-side metrics:

Merck’s valuation profile:

• P/E ratio: 13 (trading below its five-year average of 21)
• Dividend yield: 3.4%
• Dividend payout ratio: approximately 45%

Bristol Myers Squibb’s metrics:

• P/E ratio: 17.5
• Dividend yield: 4.7%
• Dividend payout ratio: nearly 85%

Eli Lilly, for reference:

• P/E ratio: ~50
• Dividend yield: 0.6%

This divergence matters significantly. Merck’s conservative payout ratio appeals to income-focused investors prioritizing sustainability, while Bristol Myers Squibb offers substantially higher yield for those accepting elevated payout levels. Both positions represent substantial discounts to the GLP-1 leader.

The Patent Cliff Factor

A critical consideration in pharmaceutical investing involves understanding patent protection dynamics. When drugs lose exclusivity, previously outsized profits diminish substantially—a phenomenon known as the patent cliff. This reality ensures all pharmaceutical companies continuously pursue novel treatments. While Eli Lilly currently dominates headlines, historical precedent demonstrates that leadership positions shift. Novo Nordisk previously held pole position in the GLP-1 race before Eli Lilly surpassed it, underscoring that market dominance remains conditional.

Enduring Competitive Advantages

Bristol Myers Squibb and Merck represent pharmaceutical industry veterans with demonstrated long-term resilience. Their diversified therapeutic portfolios—spanning multiple disease areas rather than depending heavily on any single asset—provide structural advantages during market rotations. These organizations possess the R&D capabilities, regulatory expertise, and global infrastructure necessary to compete effectively across changing therapeutic landscapes.

For investors uncomfortable with the valuation multiples commanded by best pharma stock to buy candidates currently dominating market sentiment, these established players offer compelling alternatives grounded in demonstrated operational excellence and accessible dividend income.