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Investing Specialists

Three Foreign Pharma Stocks for Your Portfolio

Here are some great companies to buy in this weak environment.

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As recession moves from the United States to Europe, all stock markets are getting whacked. As the editor of Morningstar InternationalInvestor newsletter and manager of its real-money Passport Portfolio, I have been looking for safe havens to invest in. One area that I expect to hold up particularly well is the pharmaceutical industry. Regardless of the economy, people will continue to worry about their health and demand treatments to improve their condition.

Pharmaceutical firms are continually developing new treatments for illnesses. As new treatments become available, patients demand the newest and best treatment. New medicines come with patents that protect the developers from competition. This patent protection provides pricing power even during weak economies, which is why many pharmaceutical firms receive a wide moat rating from Morningstar.

Firms with wide moats are generally able to withstand competition and weak economic conditions better than companies with narrow or no moats. Here are three wide-moat pharmaceutical firms that I own in the Passport Portfolio. They all have solid balance sheets, which is very important in the current credit environment.

Allan C. Nichols has a position in the following securities mentioned above: SNY. Find out about Morningstar’s editorial policies.