Health care reform's passage by the U.S. Congress put the issue
of health and wellness at the front of American minds this year.
The truth is, though, even if the bill hadn't passed our aging
demographics and rising obesity rates would have made health care a
Now that the bill is law, the U.S. government will spend an
additional $1 trillion on health care. Big Pharma companies haven't
wasted a second trying to edge out competitors in getting a piece
of this pie. They have spent more than $150 million in advertising
to promote health care reform in some form or another knowing full
well that as the number of insured increases so do their
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That's because health care is expensive. If you or a loved one
has ever been sick, I don't need to tell you that. The big costs
usually come from testing and medical procedures, not drugs,
however. Diagnosing problems with invasive surgeries or other
labor-intensive methods requiring hospital stays are incredibly
costly and can bankrupt families. If a doctor is able to prescribe
a pill, however, costs of care go down significantly, as the
patient can take care of himself at home. The doctor is also able
to see many more patients. The increased use of drugs seems to be a
And as more doctors and patients adopt pharmaceutical
treatments, drug companies will make even more money.
As with every investment, there will be winners and losers.
Those drug companies with the right pills at the right time will
obviously benefit most. Here's where I think you should start your
Novo Nordisk A/S
) is an excellently run large pharmaceutical manufacturer. It is
one of the world's leading producers of insulin, which is used to
treat diabetes. And as populations around the world continue to
gain weight, diabetes rates are skyrocketing-sadly-even among
children. According to a recent study reported in
, if current trends continue, cases of type 1 diabetes among
European children younger than 15 will increase 70% by 2020.
This company also makes insulin injection devices and diabetes
education materials. Its products include Levemir and NovoLog
(which mimic natural insulin regulation more closely than human
insulin) and FlexPen, a pre-filled insulin injection tool. In
addition to the company's diabetes drugs, Nova Nordisk also has
products in the areas of blood clotting management, human growth
hormone regimens and hormone replacement therapies.
The company's first-quarter net income rose 23% to $593 million.
Its sales rose 9% to $2.47 billion. Looking forward, Novo Nordisk
expects year-end sales growth of between 7% and 10%, which is up
from its previous guidance of between 6% and 10%. For 2010, the
company is expecting conservative growth in its operating earnings
in excess of 10%. However, the analyst community is much more
optimistic and is expecting its 2010 earnings to rise 20.2%.
NVO is one of my favorite drug stocks right now. I am
recommending this stock to paid subscribers of my newsletter.
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In the small-cap realm, I like
Valeant Pharmaceuticals International
). This company is also one that I'm recommending to my paid
VRX is relentless when it comes to making you look and feel
good. They are dedicated to bringing the newest and best products
to the market, even if it means buying other pharmaceutical
companies to do so. VRX makes approximately 390 prescription and
) drugs in the areas of neurology and dermatology. Valeant's drugs
include: Efudix, for skin cancer; Mestinon, for severe muscle
weakness; and Diastat, for epilepsy.
In early May, the company said its earnings per share (
) were $0.64, beating analysts' estimates of $0.56 by 14%! The
company's revenue also increased 30% from $177.9 million to $232
million. The company additionally revised its 2010 year-end
guidance upward to between $2.65 and $2.90 EPS.
Drugs are where the money will be made this summer and into the
future. That's why I'm recommending that you buy these established
companies with strong product lines and manufacturing
As stated, Louis Navellier was recommending both of these
pharma picks in his investment newsletters to paid