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.

"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.

"Abbott Laboratories (NYSE: ABT) is continuing its long record of rewarding shareholders," notes Alex Kolb In Zacks Elite, pointing to its 341st consecutive quarter of dividends since 1924.

"Abbott is a global, broad-based health care company that develops, manufactures and markets pharmaceuticals and medical products, including nutritionals, devices and diagnostics.

"The company employs more than 68,000 people and markets its products in more than 130 countries.

"The company recently released new data, showing that a combination of its new TriLipix triglycerides medicine and a low dose of AstraZeneca's Crestor cholesterol drug are better than the individual pills for treating heart problems.

"Long-time healthcare investors can be forgiven their confusion; drug stocks are supposed to be defensive, but many of the largest drugmakers have been pounded," observes Richard Moroney.

Nevertheless, in the blue chip Dow Theory Forecasts, the advisor sees two favorite healthcare and pharmaceutical issues as long-term opportunities: AstraZeneca (NYSE: AZN) and Johnson & Johnson (NYSE: JNJ).

Moroney explains, "Healthcare companies' profits are supposed to remain fairly steady regardless of the economic situation. But hospitals' capital spending fell in the December quarter, and many consumers are putting off medical care because they cannot afford it.

The shares of Dow component Pfizer Inc. (NYSE: PFE) slipped to a fresh 52-week low out of the gate this morning, after the pharmaceutical firm said it was canceling development of two experimental drugs in late-stage trials. Pfizer is scrapping work on esreboxetine, a fibromyalgia treatment, and PD 332,334, a drug for generalized anxiety disorder, because "it was considered unlikely that either compound would provide meaningful benefit to patients beyond the current standard of care."

Currently, Pfizer is fumbling to find a replacement for its successful cholesterol drug, Lipitor, which loses patent protection in 2011. The pharma firm isn't having much luck, though. Two late-stage drugs for pancreatic cancer and for obesity were also recently dust-binned after disappointing study results.

It's been a tough year for many industries -- there's no denying it. Retailers of all stripes, oil companies, construction firms, financials, basic materials companies -- you name it, it's down.

So, are there any safe havens?

Historically, in times of economic uncertainty the pharmaceutical industry, along with consumer staples, is often the "go to" place where, at a minimum, you can count on a nice dividend yield to shield your portfolio from gigantic losses. Not anymore.

In this downturn even stalwarts such as Merck (NYSE: MRK) and Pfizer (NYSE: PFE) trade near their multi-year lows, despite offering generous yields.

What about biotechs? That sector has performed much better.

However, one of my favorite biotech names, Elan (NYSE: ELN), is struggling.

At the start of the year, ELN was looking strong. Its stock was up by 50% by mid-summer. Since then shares have collapsed and now trade in the mid-single digits.

I profiled the company on July 2, with one caveat: If late-stage testing of a new Alzheimer's drug called bapineuzumab doesn't go as planned, then ELN will trade lower.

About a month later, the company announced that the results of a Phase II clinical study showed the drug does safely treat the symptoms of Alzheimer's disease, but the results were not statistically significant, and the 234-person Phase II study would have to be broadened to a much larger Phase III study to be considered for FDA approval.

The shares fell 17% on the announcement, but that was just the start. As is often the case, when it rains, it pours.

"Investors should keep a defensive posture," says Richard Moroney. However, the editor of the blue chip advisory service, Dow Theory Forecasts, see opportunity in two drug stocks that he has just added to his buy list.

"In general, we prefer to let the market's action signal that the point of maximum pessimism has passed before deploying our cash reserves. But we intend to remain engaged, looking for stocks capable of bucking the bearish trend.

"Biogen Idec (NASDAQ: BIIB) produces biotechnology drugs that treat non-Hodgkin's lymphoma and multiple sclerosis. Per-share profits jumped 69% and operating cash flow surged 71% in the September quarter.

"Wall Street expects per-share-profit growth of 9% in 2009 and 7% in 2010, but good news on Biogen's most-promising drug could render those targets conservative.

"At 12 times estimated 2009 earnings, Biogen shares are the cheapest of the six largest U.S. biotech stocks. Biogen is being initiated as a Focus List Buy and a Long-Term Buy.

"AstraZeneca (NYSE: AZN) is being added to the Buy List. The British drugmaker offers an intriguing blend of value and growth potential. A study released this month showed that the company's cholesterol drug Crestor reduced the risk of various heart problems by 44%.

"The study could potentially expand Crestor's addressable market to include millions of new patients, though AstraZeneca is soft-pedaling the potential benefits. AstraZeneca, which earns a Quadrix Overall score of 94 and yields 4.5%, is being added to the Buy List."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

"We've followed Warren Buffett's advice to 'buy American'," says Mark Skousen; his Hedge Fund Trader eyes Johnson & Johnson (NYSE: JNJ) and FPL Group (NYSE: FPL).

"Johnson & Johnson as well as FPL Group are two strong positions in companies that have suffered a few 'hiccups' during this historic panic selling, but are likely to survive and prosper in the next year.

"First, Johnson & Johnson, the health care and pharmaceutical giant, beat expectations in its most recent earnings report. The company's earnings jumped 30% to $3.3 billion on revenues of $15.9 billion. It currently is selling for only 15 times forward earnings -- a bargain price.

"Second,, FPL Group -- known as Florida Power & Light -- is a large Florida utility company that is holding up well. It, too, is a solid company that now is on sale because of the financial crisis.

"Revenues are down slightly to $15 billion, and earnings dropped 40% during the past year. But Florida Power is still profitable, and at 10 times next year's earnings, it should continue to recover.

"We think it is wise at this time to limit our exposure to the markets, and to keep our powder dry by focusing strictly on a few well-financed utilities and consumer product firms.

"Overall, we consider both Johnson & Johnson and FPL Group to be solid companies selling at a substantial discount to their real value."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Leo Fasciocco, who specializes in stocks that have shown technical "breakouts," turns to Abbott Labs (NYSE: ABT) as the latest featured stock in his top notch Ticker Tape Digest.

"Abbott has been acting strong depite market weakness, indicating that money moving into ABT, perhaps as a defensive play.

"ABT has a low beta of 0.14 versus the S&P 500's 1.00. That would indicate that ABT is a low risk play. In any case, the stock is set up nicely for a breakout from an eight-week flat base. With good earnings coming this year, we suggest accumulation of the shares.

"Abbott's products include prescription drugs, coronary and carotid stents, and nutritional liquids for infants and adults.

"The stock's long-term chart shows ABT 'knocking on the door' of a new high. It just needs to get over 61.09. If it can do that it could well draw in more buying.

"ABT is acting strong and is a good spot for institutional money to move into in a difficult market. We suggest accumulation of a partial stake in ABT with further buying to be done on a move over 60.

"Overall, we see ABT as a conservative play with low downside risk. We are targeting the stock for a move to 70 within the next few months."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

In the latest annual survey in Barron's of professional investors Johnson and Johnson (NYSE: JNJ) was rated the world's most respected company," reports Ron Rowland and Brandon Clay.

In Invest With an Edge, the advisors look at the 123-company, which he selects as " a solid healthcare pick in a strong long-term uptrend."

"This New Jersey-based company has come a long way since corner drugstores sold their baby powder. Beginning as a pioneer in sterile medical supplies, they expanded into pharmaceuticals and related consumer products.

"Over the years, they've released ubiquitous brands such as Band-Aid, Rogaine, Listerine, Tylenol, even Splenda. Johnson and Johnson has become a household name.

"However, Johnson & Johnson is a healthcare company with deeper product lines; it is ivided into three segments: Consumer, Pharmaceutical and Medical Devices & Diagnostics.

A graph from the May 2008 issue of Harvard Business Review tells a story about the dumbing down of the global economy.

From an article, Rebuilding the R&D Engine in Big Pharma [subscription required] the graph shows the total shareholder returns for various industries in two time periods: from 1985 to 2000 and from 2001 to 2007. Here are three of the leading sectors from 1985 to 2000 (average annual shareholder returns are in parentheses):

• Pharmaceuticals (20.0%)
• Financials (18.8%)
• IT (17.4%)

Between 2001 and 2007, three of the leading sectors were:

• Energy (15.2%)
• Materials (14.3%)
• Financials (7.0%)

"Although Pfizer (NYSE: PFE) recently posted an 18% drop in its first-quarter earnings, I remain a long-term bull on the shares," notes Nilus Mattive in the income and growth oriented Dividend Superstars.

"Results were hurt by tougher generic competition for the company's blood-pressure drug Norvasc and allergy treatment Zyrtec. Pfizer pulled in $0.41 a share in the quarter, but would have earned $0.61 excluding costs associated with two acquisitions.

"A lot of investors are treating the poor earnings as a death knell for the company, especially since Lipitor - PFE's biggest product - will also lose patent protection in 2010. However, I've watched countless drug stocks go through these cycles before, and I continue to believe it's smarter to buy when things look the worst.

"This is still the world's largest drug company ... it still delivers big, fat dividend checks ... and it is making strong moves to reorganize its operations and focus on new drug development. For all those reasons, I remain positive on the shares."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

For 25 years, Steven Halpern, editor of TheStockAdvisors.com, has surveyed the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is one of 100+ ideas in the Best Stocks for 2008 report.

"My favorite speculative stock for 2008 is Toronto-based Biovail (NYSE: BVF)," says Nilus Mattive, editor of Dividend Superstars.

"The company makes branded and generic drugs that are delivered orally. It used to concentrate on research & development for other companies, but lately it's become more of a fully integrated pharmaceutical concern.

"Some of its products are marketed and sold by other companies -- a good example is its pain medication Ultram ER, which is marketed by Johnson & Johnson.

"Investors have punished Biovail because of development setbacks in BVF-033, one of the company's most promising compounds. The FDA issued a non-approval letter, and more recently said it would not be examining newly submitted data until April. Biovail is also dealing with intensifying generic competition in other product lines.