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Tickers in this Article: ABT, JNJ, WYE, TEVA, NVS, SPY
The health of the U.S. economy may be in question, but the need for medical treatment persists. Four of the top-5 selling drugs in the world increased sales from 2006 to 2007. While sales of drugs in the U.S. may be leveling off, demographic trends including the aging of U.S. baby boomers and economic advances of emerging markets, suggest that pharmaceuticals may offer investors an attractive story to follow.

Abbott's Revenue
One pharmaceutical to follow is Illinois-based Abbott Labs (NYSE:ABT). Abbott's revenue is led by its pharmaceutical sales for the treatment of a range of aliments including cancer, HIV, high blood pressure and diabetes. For the first six months of the year Abbott's net sales increased 14.32% to $14.1 billion over the same period a year ago.

Abbott attributes part of its growth in net sales to a weaker U.S. dollar. Net sales to the international markets for the first half of the year grew 23.9% while growth in the U.S. market trailed growing at 4.8%. A closer review reveals that international revenue contributed 54% to Abbott's total net sales during the same time period.

Abbott's Top Seller
Abbott's top selling drug is its rheumatoid arthritis and Crohn's disease fighter Humira. U.S. sales of Humira for the first half of 2008 totaled $927 million, while international sales of the drug eclipsed $1 billion.

The rheumatoid arthritis market alone is forecast to reach about $13 billion by 2011. Two of the world's top-7 selling drugs are focused on rheumatoid arthritis treatment. In fourth position is Wyeth's (NYSE:WYE) Enbrel with sales of about $5.4 billion and in seventh position is Johnson & Johnson's (NYSE:JNJ) Remicade with sales of $4.9 billion. Wyeth and Johnson & Johnson each experienced sales increases of their rheumatoid drugs of 23% and 12% respectively. (For related reading, see Measuring The Medicine Makers.)

Patent Protection
A major problem for pharmaceuticals, besides avoiding recalls and making it through the three stage FDA approval process, is the onslaught of generic drugs produced by companies like Teva Pharmaceuticals (NASD:TEVA) and Novartis (NYSE:NVS). A saving grace for Abbott for the time being is its patent protection on Humira, which isn't set to expire until 2016. The patent on Humira is critical since Abbott's bipolar and epilepsy top seller Depakote is scheduled to lose its patent protection this year.

Resilience
On September 29, the day of the Congressional rejection of the $700 billion bailout, while the broad SPRDs S&P 500 Index ETF (AMEX:SPY) fell -7.84% Abbott stock was down only -3.37%. Since the beginning of the year Abbott is up 4.4%.

Final Thoughts
Drug development is a complicated endeavor for any pharmaceutical company to pursue. For large pharmaceuticals the threat of patent expiration and recalls is always a danger that makes an investment in any one pharmaceutical risky. Abbott has proved that large pharmaceuticals that can avoid major recalls and hold on to patent protection for its top sellers can offer investors a good starting point for a basket of healthcare investments.

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