Tickers in this Article: FRX, VRTX, PFE, TEVA
Growth is instrumental to value creation, and the majority of investment decisions made by investors are based upon future growth projections. A business with solid growth prospects will attract attention.

Signs are already pointing to a slowing U.S. economy. It's been nearly three years since the Great Recession was at its peak and despite the turn in the stock market, economic fundamentals remain weak. Growth prospects for many businesses also look less than stellar.

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A Resilient Prescription
Health care drugs usually show no significant demand changes during weak economic cycles. Human health is not cyclical. People age and get sick irrespective of the economy. Drug manufacturer Forest Labs (NYSE:FRX) is a name that should continue to do well in the future. Despite losing patent protection on its blockbuster drug Lexapro in the near future, Forest has many great drugs coming down its pipeline, such as candidates for Alzheimer's and chronic obstructive pulmonary disorder. The stock trades at 11 times earnings, well below most industry multiples.

Vertex Pharmaceuticals (Nasdaq:VRTX) is an $11 billion company with a blockbuster potential hepatitis C drug candidate. The company has no net debt on the balance sheet and commercialization of any of its top candidates would be enough to propel growth for years.

Grandpa's Medicine Stocks
Even the pharmaceutical titans, the one's that have been churning out grandpa's medicines for decades, aren't going anywhere. Pfizer (NYSE:PFE) offers investors both growth and income in the form of a 3.9% dividend yield. Despite the loss of blockbuster cholesterol drug Lipitor to generic form, Pfizer bolstered its pipeline when it acquired Wyeth. Indeed, big pharma names like Pfizer will always be at the mercy of generic threats, but the company has a deep pool of potential candidates and substantial financial resources to further growth.

Even so, generic drug giant Teva Pharmaceuticals (Nasdaq:TEVA) could be an excellent play on the future of generic drug growth. Rising health care costs will push more and more consumers toward generic drug choices. Teva will benefit from the wave of blockbuster drugs going off patent over the next five years. Teva shares trade for $48, down nearly 20% from its high of $57. The shares trade for 13 times trailing earnings and 8.6 times forward earnings estimates. The dividend yield is currently 1.6%.

The Bottom Line
Its a fact of life that humans are living longer. As such, demand for health care will grow over time, no matter what economic cycle the world is experiencing. Valuations look decent for many prescription drug companies. That could be a prescription for success over the next several years. (For more, see Investing In The Healthcare Sector.)

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