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The 2010 Outlook for Big Pharma Stocks

Reform or no reform, the pharmaceutical industry is well-positioned.

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As we highlighted in the December issue of Morningstar Healthcare Observer, the uncertainty surrounding potential health-care reform outcomes have suppressed the market valuations of the biggest pharmaceutical firms throughout 2009. As we move into 2010, the reform overhang that has been weighing on large pharma firms should gradually dissipate. We expect investor focus in the upcoming year will return to the industry-specific nonregulatory issues that continue to drive pharmaceutical profitability, including patent losses, pipeline productivity, and continuing cost-saving efforts.

Reform or No Reform, Pharmaceutical Industry Poised to Win
U.S. health-care reform represents one of the most important issues facing pharmaceutical stocks in 2010. However, the passage of health-care reform is far from certain, especially since the loss of the Democratic seat in Massachusetts means the Democrats no longer hold a filibuster-proof majority in the Senate. Also, the loss of Democratic power in the Senate will likely mean any potential health-care reform will be scaled back from the current proposals in the House and the Senate.

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Damien Conover does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.