Merck's blockbuster cancer drug Keytruda generated $16.40 billion in first-half 2026 sales, up 4.2% year-over-year, with expectations for continued growth through 2028 when it reaches peak sales of $35 billion. However, the company faces significant headwinds as biosimilar competition is expected around 2028-2029, which will likely cause sharp sales declines. Merck stock has outperformed the industry year-to-date but currently holds a Zacks Rank #4 (Sell) rating.

With concerns about a potential bear market, the article recommends the Schwab U.S. Dividend Equity ETF (SCHD) as a defensive investment strategy. Based on 2022 bear market performance, defensive sectors like healthcare, consumer staples, and energy outperformed tech-heavy indexes. SCHD holds 102 stocks with minimal tech exposure (9.23%) and heavy weighting in defensive sectors, making it suitable for portfolio protection during economic downturns.

Merck (MRK) closed down 2.39% and underperformed the S&P 500. The pharmaceutical company faces declining earnings projections with consensus estimates showing a 17.83% year-over-year EPS decline for the upcoming quarter and a 70.38% decline for the full fiscal year. The stock carries a Zacks Rank of #4 (Sell) with a Forward P/E ratio of 54.73, significantly above the industry average of 16.15.

Moderna's stock gained over 5% in a week, adding $4.2 billion in market value, driven by positive phase III melanoma results for its cancer therapy intismeran and inclusion in the Nasdaq-100 Index. While the company shows promise in oncology and respiratory vaccines, its 625% YTD rally has resulted in a premium valuation that leaves it vulnerable to disappointment. The stock is rated a Hold, with short-term investors advised to book profits while long-term investors may consider holding for future growth opportunities.

The article compares Moderna and Vertex Pharmaceuticals as investment options for 2026. Moderna is expanding its mRNA platform into RSV and oncology but faces profitability challenges with a $2.8B net loss in FY2025 and 39.2% revenue decline. Vertex dominates the cystic fibrosis market with $12.1B revenue, 32.7% net margins, and $3.2B free cash flow, while diversifying into gene therapy and pain management. The author recommends Vertex for its established profitability and growing pipeline, though acknowledges Moderna's long-term platform potential.

Johnson & Johnson reported Q3 2026 earnings of $2.59 per share, beating consensus estimates of $2.53, though revenues slightly missed expectations at $25.4 billion. Despite outperforming the S&P 500 by 27.4% year-to-date, the company received a Zacks Rank #4 (Sell) rating due to unfavorable estimate revision trends, suggesting near-term underperformance. The Large Cap Pharmaceuticals industry ranks in the bottom 16% of sectors.

Bristol Myers Squibb (BMY) has outperformed the S&P 500 with a 35.8% gain over the past year, driven by strong performance from its Growth Portfolio including Opdivo Qvantig, Reblozyl, Camzyos, and Breyanzi. Recent FDA approvals like Zenbexus and positive pipeline progress offer long-term growth potential. However, the legacy portfolio faces continued generic competition, and much of the near-term optimism appears reflected in current valuations. Analysts recommend a cautious stance with a Hold rating.

Tempus AI (TEM) is strengthening its precision medicine presence through multiple strategic collaborations, including support for Moderna and Merck's cancer therapy commercialization and an extended data partnership with Recursion Pharmaceuticals through 2029. However, TEM's stock has underperformed the industry by 30.6% over the past year and trades at a premium valuation of 6.73X forward P/S versus the industry average of 4.90X, with the stock currently rated a Hold.

The article compares two healthcare ETFs: VanEck Pharmaceutical ETF (PPH) offers lower costs (0.36% expense ratio), higher dividends (1.9% yield), and a concentrated portfolio of 26 pharmaceutical companies with an established 15-year track record. Simplify Health Care ETF (PINK) provides broader healthcare exposure through active management of 58 positions with a unique charitable structure donating profits to cancer research, though it carries higher fees (0.51%) and lower yields (0.8%). For most long-term investors, PPH is recommended for its fundamentals, while PINK appeals to those seeking active management and charitable impact.

Moderna stock has surged over 500% this year, driven by investor enthusiasm about its personalized cancer vaccine candidate. The stock now trades 61% above Wall Street's average price target. While the stock may face near-term pullback after its rapid gains, the company's strong pipeline and long-term growth potential in mRNA-based therapies suggest it remains a solid long-term biotech investment, though scaling personalized vaccines presents manufacturing challenges.

A Dutch patent court ruled that Merck's Keytruda subcutaneous formulation infringes Halozyme's MDASE patent, ordering Merck to cease manufacturing and sales across eight European markets. The ruling does not affect Keytruda's intravenous version. This marks another legal victory for Halozyme against Merck, though the company clarified that its separate ENHANZE technology and licensing business remain unaffected.

Pfizer's oncology revenues rose 3% to $4.17 billion in Q2 2026, representing 27% of total revenues. The company expects Q3 growth driven by newer drugs like Padcev, Lorbrena, and Braftovi-Mektovi, offset by declines in Ibrance and Adcetris. Pfizer is advancing the dual PD-1/VEGF inhibitor PF-08634404 across nine studies including two pivotal phase III trials. The stock trades at an attractive valuation with a Zacks Rank #2 (Buy) rating.