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NEW YORK (MONEY Magazine) - After a clinical study found that its powerful painkiller Vioxx seemed to raise the risk of heart attacks, Merck withdrew the drug from the market on Sept. 30.

Then came news that Pfizer's arthritis drugs Celebrex and Bextra also seemed to increase cardiovascular risk. But so far, the evidence against Pfizer's products has been less clear-cut than that against Merck's Vioxx. And so, instead of pulling the drugs from the market, Pfizer has halted advertising and issued additional warnings but continues to sell the two products.

This strategy allows Pfizer to keep the two drugs alive, in the hope that further tests may clear them to some extent.

By contrast, even before Merck received the test results that led it to pull Vioxx, there were signs that the drug might have serious side effects.

In a worst-case scenario, that would increase Merck's liability. No one's sure what the amount will be, but many analysts put the potential toll above $10 billion. Based on what we know now, Merck is more vulnerable.

On the other hand, for risk-tolerant investors, there's a case for Pfizer. The pharmaceutical business is going through a tough time, but it remains one of America's top growth industries. And that will only intensify as baby boomers age and need pills for chronic ailments.

Pfizer is the world's largest drugmaker, with deep financial resources and impressive research capability. Because Pfizer's price already reflects a risk of more bad news on Celebrex and Bextra, the stock costs less than 12 times this year's estimated earnings -- slightly cheaper than Merck, with its P/E of 13.

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