On the face of it, GlaxoSmithKline (LSE: GSK) and Shire (LSE: SHP) are both very similar; large, globe-spanning pharmaceutical companies with cutting-edge treatments for a range of diseases. But in fact the two companies are taking very, very different paths towards future growth, which makes it incredibly important for investors to understand the differences before committing to an investment in either.

Shire, after a $50bn three-year acquisition spree, is now positioned as one of the world’s foremost makers of treatments for rare diseases, which are classified as those that affect fewer than one in 2,000 people. CEO Flemming Ornskov has staked out this position in the belief that creating treatments for rare diseases will involve less competition from other pharma giants and bring higher pricing power for Shire.

On the other hand, outgoing GSK CEO Andrew Witty has forged ahead with an ambitious plan to de-risk the company’s operations by building up a large and relatively stable consumer health business. After an asset swap with Novartis in 2015, a full 45% of GSK’s revenue comes from selling vaccines and consumer products such as Sensodyne toothpaste and Theraflu cold and flu treatment.

So, we see the diverging paths Shire and GSK are taking, but which will reward investors the most in the coming decades?

Growth from here to infinity and beyond?

Growth investors will likely find Shire the winner as management is targeting $20bn in annual revenue by 2020. After $36bn worth of acquisitions in 2016 alone making comparisons to past revenue is a bit tricky but if we take the $3.45bn of Q3 revenue and annualise that, it comes out to around $14bn in yearly sales. This is obviously an ambitious task, but Shire is already seeing results as legacy product sales increased 13% year-on-year in Q3 and new acquisitions also exhibited strong positive momentum.

This isn’t to say GSK lacks growth potential, because the company did report an 8% year-on-year rise in Q3 sales, even excluding the positive effects of the weak pound. Growth is being driven by a 20% rise in vaccine sales and stunning 79% increase in sales of a series of new drugs just now entering the market. But, even if this level of growth were to continue it would lag behind Shire’s growth targets, which makes the ambitious rare disease seller the winner of this portion of the contest.

A dividend investor’s dream

Income investors will undoubtedly find GSK their favourite, though. GSK’s shares currently offer a 5.45% yield, miles ahead of Shire’s 0.41% return. GSK is targeting relatively stable dividend payouts of around 80p per share for the next two years, but there’s good long-term growth potential as new drugs enter the market and dividend cover is restored to historical levels. Shire is unlikely to increase dividends significantly in the next few years as the company will be focused on whittling down the $23bn of net debt taken on to fund recent acquisitions.

So far it seems very clear that growth investors will prefer Shire, while more conservative investors will lean towards GSK’s stellar income. However, potential Shire investors always need to keep in the back of their mind the increasing political pressure on drug companies’ pricing structures. Were politicians in the US to crack down on astronomical drug prices, Shire’s business plan would face considerable headwinds.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.