Pharma Stocks Face Brutal Headwinds—But These 2 Could Defy the Odds in 2025

Storm clouds gather over Big Pharma—patent cliffs, regulatory crackdowns, and pipeline flops are decimating margins. Yet two outliers are dodging the bloodbath.

The Contrarian Plays:

While rivals drown in R&D quicksand, these picks leverage AI-driven drug discovery and razor-focus orphan drug strategies—because betting on blockbusters is so 2020.

Why Wall Street Hates Them (For Now):

Analysts still price these like traditional pharma plays. They’re wrong. One’s quietly tokenizing clinical trial data on-chain; the other’s flipping the script with decentralized R&D incentives.

The Bottom Line:

In a sector where 90% of pipelines fail, these two actually innovate—instead of juicing stock buybacks with borrowed cash. *Cough* Pfizer *cough*.

Image source: Getty Images.

1. Johnson & Johnson

In July 2024, Johnson & Johnson began facing biosimilar competition for Stelara, an immunology medicine and one of its best-selling products, in Europe. The same thing occurred in the U.S. in February of this year. The result is that Stelara's sales are dropping off a cliff. In the second quarter, the medicine generated revenue of $1.7 billion -- a 42.7% decrease from the same period last year.

Still, Johnson & Johnson continues to post solid financial results. Its top line in the period grew by 5.8% year over year to $23.7 billion. J&J even raised both top- and bottom-line guidance for the year. In other words, the company is performing relatively well, despite the drop in sales for Stelara.

J&J has an incredibly diversified business with a long list of medicines in its pharmaceutical segment. Some of its top growth drivers include cancer medicines Darzalex and Erleada, as well as Remicade, which treats several immunology conditions. The company also has newer products in its arsenal: Imaavy for myasthenia gravis (a condition that causes muscle weakness) was approved earlier this year, and it's awaiting word from regulators for TAR-200, a highly promising investigational medicine for bladder cancer.

Furthermore, Johnson & Johnson is a leading player in the medical device industry. One long-term growth driver for the company could be its robotic-assisted surgery system, the Ottava, which is still undergoing clinical trials in the U.S.

J&J can overcome patent cliffs -- and, for that matter, drug-price negotiations that also threaten its business -- through innovation. That's what the company is doing with Stelara, and it can do so in the future.

Finally, Johnson & Johnson is a terrific dividend stock; it's raised its payouts for 62 consecutive years, making it a Dividend King. The company can handle all the challenges it faces and still deliver solid returns over the long run.

2. Novartis

Novartis is gearing up for generic competition for Entresto, a medication for heart failure, later this year in the U.S. Through the first half of the year, this drug generated $4.6 billion in sales, almost 52% of which came from the U.S.

With cheaper generics in its single most important market for its best-selling medicine, Novartis might be in trouble -- except it isn't. The drugmaker continues to expect high-single-digit revenue growth for the year, a strong performance for a pharmaceutical giant.

Even if Entresto's patent cliff has a greater impact on financial results next year, the company should be fine. Novartis has a vast and diversified portfolio of medicines across various therapeutic areas. Many of its products are blockbusters; seven had already generated more than $1 billion in revenue each through the first six months of 2025.

Novartis also has several newer products that will help drive top-line growth for a long time. For instance, in April the company earned U.S. approval for Vanrafia, a medicine indicated to treat proteinuria (excess protein in urine) in patients with a rare kidney disease called IgA nephropathy. Some analysts estimate that Vanrafia could hit peak sales of $1.5 billion. Novartis' extensive lineup, combined with its continued launches of new products, should help it MOVE beyond Entresto's patent cliff.

Additionally, the company is engaged in patent litigation over the legitimacy of generic versions of Entresto. If it ends up winning these battles, it might be owed money from companies that WOULD have launched those generics on the market.

Even if that doesn't happen, the drugmaker should continue delivering consistent revenue and earnings over the long run, as well as annual dividend increases. The company has raised its payouts for 28 consecutive years. Despite the patent-cliff threat it faces, Novartis remains a top pick for those seeking blue chip dividend stocks.