Big Pharma: 3 To Avoid, 1 To Buy

By Robert Gordon Large, mature pharmaceutical companies have long been Wall Street darlings. But most of the best known and best selling drugs from many of these companies have soon, or will soon, lose patent protection. And with the cost of developing new medications exceeding $1 billion each, these companies are under a great deal of pressure. I will take a closer look at four of the largest domestic drug makers, analyzing how well they have prepared for their futures. Abbott Laboratories (ABT) Abbott has long been among the world’s leading drug makers. That will change, as soon Abbott will not be in the drug making business. It will be spinning off its pharmaceutical division, and retaining the Abbott name for its remaining medical equipment, generic medicine and nutrition business. Abbott stock was trading recently at between $55 and $56 per share, and its 52 week range is from $56.84 to $45.28. Abbott’s price to earnings ratio is 18.5, and it has a market capitalization of $86.6 billion. Its dividend has been increased 38 years in a row, and now stands at a quarterly $0.48 per share, for a yield of 3.5%. Briefly, the pharmaceutical division is fully mature, and…