Bitter Medicine Ahead For Drug Companies

Cutthroat competition and expiring patents may cast a pall

Last year, it was hard to find companies with stronger vital signs than the big drugmakers. The portfolio of 10 big U.S. and British drug stocks followed by SG Cowen Securities Corp. jumped 52% vs. a 26% rise in the Standard & Poor's 500-stock index. And it's easy to see why. With record numbers of new products hitting the market--including such blockbusters as Viagra and Lipitor--drug companies have racked up double-digit sales and earnings growth for the past three years.

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