"Modern drugs are expensive to develop; but after just 20 years, a drug can be duplicated by generic drug manufacturers and sold to those who need it for far less money," says Paul Goodwin.

The editor of Cabot China & Emerging Markets Report explains, "That's where Dr. Reddy's Laboratories (RDY) comes in. Founded in 1984 by Dr. Anji Reddy, Dr. Reddy's Labs is the main reason India has gone from a net drug importer to a net drug exporter.

"Dr. Reddy's is a growing global power in the pharmaceutical business, with a lineup of more than 50 products offered in the U.S., more than 160 products marketed in Europe, and more than 200 branded formulations available in India, Russia and other emerging markets.

Novartis (NVS) announced that an advisory committee to the Food and Drug Administration has recommended the approval of the first oral drug to treat remitting multiple sclerosis (MS).

However, just because an advisory committee recommends approval does not mean the FDA will approve the drug, which Novartis proposes to call Gilenia. However, such a move is considered a strong indicator of approval.

AstraZeneca (AZN) is in a race against time to develop new drugs as patent expiration dates are looming for some of its most profitable medicines over the next few years.

The company had hoped that motavizumab -- a medicine that is supposed to help prevent respiratory disease in infants -- would be one of the drugs to issue in a new era of profits by replacing Synagis -- a patented drug that fights the same virus. Unfortunately for AstraZeneca, that may not happen.

Diversified consumer health care products and medical device giant Johnson & Johnson (JNJ), which I first wrote about on May 20, 2009, at a price of $55.87, remains on the mend.

Look for JNJ's 2010 revenue to increase 3% to 4%, boosted by growth in pharmaceutical revenue, despite some sales erosion to generics. Meanwhile, new orthopedic and cardiovascular products should help the company's medical device unit perform adequately in 2010.

Meanwhile, margins should increase slightly, aided by improved manufacturing efficiency, and a restructuring. Further, there's ample room for market share gains internationally, particularly in emerging markets, despite JNJ's already strong international position and performance.

"The stocks on our Validea Hot List are chosen because they meet the investment criteria of numerous "legendary" investors, such as Ben Graham, Warrenn Buffett and Peter Lynch," explains John Reese.

The editor of Validea says, "Sanofi-Aventis (SNY) has been added to our buy list based on our Growth/Value Investor screen which assesses stock based on the strategy used by James P. O'Shaughnessy. The stock passes this screen with a 100% score."

"It's time for income investors to come back to what's historically been a mainstay of diversified portfolios: big pharmaceutical companies. We're adding one of the sector's most durable members to the Income Portfolio, Bristol-Myers Squibb (BMY)," says Roger Conrad.

In Personal Finance newsletter, he explains, "The stock has been a lackluster performer since the 1990s, when it was last a Portfolio recommendation. The company's underlying business, however, has become ever-more valuable.

Late Tuesday, pharmaceutical firm Pfizer (PFE) announced the discontinuation of A4021016, a Phase 3 trial that was examining the effects of figitumumab. Figitumumab is an investigational compound that is used as a first-line treatment in patients with advanced non-adenocarcinoma non-small cell lung cancer (NSCLC).

The study was terminated because it met predefined boundaries for early termination. The Data Safety Monitoring Committee (DSMC) found that the addition of figitumumab to paclitaxel plus carboplatin would be unlikely to meet the primary endpoint of the study.

In her The MoneyPaper, editor Vita Nelson looks to stocks offering dividend reinvestment plans. Here, she highlights Abbott Laboratories (NYSE: ABT) as a featured holding in her model portfolio.

"Abbott is a diversified, multinational, health care firm.The shares have not responded to the recent stock market rallies in part due to the defensive nature of health care stocks.

"Uncertainty regarding health care reform is also a factor in the static share price of recent months. ABT shares are now trading below 11 times 2010 earnings estimates, compared with about 15 for the S&P 500.

Pharmaceutical company Eli Lilly & Co. (NYSE: LLY) is planning to cut 5,500 jobs over the next few years and reorganize into five business units. The company is looking to reduce costs and accelerate how long it takes new drugs to get to market, especially as its top performers see their patents expire. This translates to a workforce reduction of close to 14% – to 35,000. This measure doesn't include new positions in emerging markets with high potential and Japan.

The company hopes to cut as much as possible through attrition and retirements – and it would not indicate how many other positions would have to be cut.

Eli Lilly's goal is to slash its annual cost by $1 billion during this restructuring. The new business units will be: cancer, diabetes, established markets, emerging markets and Elanco, which is its animal health business. This is a change from the existing functional model, which separates U.S. and global marketing for each drug in the company's portfolio. Through the new structure, Lilly says, drug development and marketing will be tied more closely.

After the closing bell rang yesterday, Amgen (NASDAQ: AMGN) announced a second-quarter profit that increased 40% compared to a year ago. The company earned $1.29 per share compared to 84 cents per share a year ago. Not only did the pharmaceutical firm top its previous-year results, but it also outpaced the Street's estimated earnings of $1.16 per share.

Quarterly revenue dropped to $3.71 billion from $3.76 billion a year ago, but AMGN still topped the consensus revenue estimate of $3.58 billion. Total product sales for AMGN increased 1% when taking the impact of foreign exchange out of the equation. Looking ahead, AMGN forecast full-year adjusted earnings between $4.80 and $4.95 per share, far better than its earlier forecast of $4.55 to $4.75 per share and the Street's expected $4.57 per share.

"Stocks are likely in a new downtrend," says Michael Ashbaugh. In Marketwatch's The Technical Indicator, he looks at the S&P's prospects and some drug stocks set to buck the trend.

"The S&P 500 has violated its major moving averages in the closely tracked 900 area. The recent downturn was convincingly bearish, placing the burden on market bulls to reassert the uptrend.

"After finding resistance in the 923 area, the S&P sold off sharply, edging back under its 200-day moving average, which currently holds at 900 and now marks resistance. This is bearish price action.

"India-based Dr. Reddy's Laboratories (NYSE: RDY), a generic-drugs play with solid market positions in India, Russia, the US and Germany," says Asian stock expert Yiannis Mostrous.

In his specialty newsletter, The Silk Road Investor, he explains why he has chosen the firm as his latest "Stock of the month".

"Seventy percent of the firm's growth comes from generic drugs, and the trend there has been favorable. New products, market share gains and a revamp of the supply chain in India should contribute to profitability. The company is also building a proprietary pipeline to supplement it core business.

In a review of the pharmaceutical sector, Chuck Carlson selects his favorite International stocks which also offer direct-purchase plans for U.S. investors.

Here's a look at two of these stocks -- United Kingdom-based AstraZeneca (NYSE: AZN) and Denmark-based Novo Nordisk (NYSE: NVO) -- from his The DRIP Investor, a newsletter focused on long-term, high quality investments.

"AstraZeneca is a leading pharmaceutical firm. The company boasts a portfolio that includes 11 products that generate more than $1 billion each in annual sales.

"Health-care stocks have been volatile of late, as the prospects for significant healthcare reform are impacting the group," notes Chuck Carlson.

In The DRIP Investor, he explains, "Johnson & Johnson (NYSE: JNJ) has not been immune to the weakness. And while these shares could remain under pressure in the short run, the company's prospects are significantly brighter than the typical health-care stock."

"First, Johnson & Johnson's diversified business portfolio, which includes pharmaceuticals, medical technology, and consumer products, should help to smooth out results and cushion declines in any one area.

Pfizer (NYSE: PFE), a pharmaceutical entity whose colleagues include Merck (NYSE: MRK), Novartis (NYSE: NVS), and Johnson & Johnson (NYSE: JNJ), will be reporting first-quarter earnings Tuesday. As one has come to expect, the market believes that the company will be experiencing a decline in bottom-line income. The call is for 49 cents per share versus 61 cents per share in the year-ago period.

That's a drop of 20%. That might not sound so hot, but the good news is that Pfizer has a solid recent track record when it comes to beating earnings expectations. So shareholders might be justified in feeling confident about that aspect of the game.