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Barack Obama's victory in the Presidential Election means that Obamacare, the Affordable Care Act will exist for good. This brings in both joy and sorrow to the Pharmaceuticals Industry. The reason behind this mixed feeling is that while the overall number of customers will increase, it will also come with a rise in the cost of production. This rise in COP would be mainly because of the recently announced budget cuts of $200 billion in government expenditure on both Medicare and Medicaid. These cuts involve price negotiations with the Pharma companies and reduction in drug subsidies.

Leaving aside the pros and cons of Obamacare, I am suggesting three Pharma stocks that have some strong fundamentals and the capacity to give good results in the future. Although these stocks were volatile last year, I feel that 2013 should be different. Let's have a look at these stocks individually and see what they have to offer.

Abbott Laboratories (NYSE:ABT)

The year started with a spin-off for the company. It detached its proprietary drug segment and formed a new publicly traded company AbbVie Incorporated (NYSE:ABBV). The spin-off is considered as a well-timed strategic move to tackle the possible impact of the Affordable Care Act. Hence, the 4Q12's result was the last time Abbott will ever include the business of its drug segment in its income statements. The quarter's revenue was $10.84 billion which was above the consensus estimate by ~$260 million. The main driver of revenue was Humira, the world's best selling medicine that is now a part of AbbVie. The sale of this medicine had an impressive growth rate of ~24% in the period. The share of "New Abbott" in the quarter's total sale was ~$5.6 billion mainly driven by the Nutritional and Diagnostic segments.

As for the next year, the new product launches, such as XIENCE, ABSORB and MitraClip should drive the growth. Recently, the US FDA approved the company's XIENCE Xpedition stent system. This system is extremely beneficial for people suffering from complex coronary anatomy. The company has already been selling the product in Europe and Asia, and the system has been used in thousands of cases successfully. XIENCE drugs are strong, safe, and backed by successful results in ~45 thousand cases. Another product that can be a success is ABSORB. This is an innovative drug that is used along with XIENCE. Now the company has initiated its trials in the U.S. The drug has been successfully launched in Europe, Asia and some regions of Latin America. The product line of Abbott is robust and it should help the stock to grow after the spin-off.

Bristol-Myers Squibb Company (NYSE:BMY)

Let's face it that 2012 was not an ideal year for the company. The stock remained behind several of its competitors, the company's product pipeline faced setbacks in the form of HCV nuc inhibitor, there were regulatory delays in the approval of Eliquis and Forxiga and many more hurdles hindered its path. But after the declaration of its 4Q12 result, I feel that 2013 should be a better year for the company.

If you have a look at the company's timeline, you can see a lot of new products and studies in it that could help the stock to rise. Let's start with Eliquis, an anti-coagulant drug developed by Bristol-Myers. In December 2012, the drug got approval from the US and Japan authorities for treatment of patients with arterial fibrillation. Eliquis is a key product for the company with sizable sales potential. Additionally, a Phase II trial for its anti-PD-1 in renal cell carcinoma was recently completed. A broader range of proof-of-concept trials validating the study of the immunotherapy beyond melanoma could provide a commercial possibility to the drug. Some top-line results are expected from the study in the next few months.

Apart with this, the company entered into an agreement with Reckitt Benckiser Group (OTCPK:RBGPF) for several of its medicines. Under the agreement Reckitt will pay the company ~$438 million for the three-year deal. It comprises of unshared rights to trade and market some of its medicines. This deal helps the company to increase its focus on the expansion of its portfolio in markets like Latin America and Brazil. Looking at these factors and many other R&D catalysts, I feel that the stock of Bristol can be strong in 2013. I'll go for a buy. However, the company may face some headwinds because of the loss of the lawsuit regarding the patent of Baraclude's composition against Teva Pharmaceutical.

Teva Pharmaceutical Industries Limited (NYSE:TEVA)

"Someone's loss is sometimes somebody's gain." This sentence seems a fit for Bristol-Teva tussel where the loss of the patent lawsuit of Bristol-Myers is a gain for Teva Pharmaceutical. Teva is waiting for the approval of its new drug application for the generic replacement of Bristol's Baraclude. The sale of this drug in the US is expected to be ~$265 million and its generic variant can add ~$80 million to Teva's revenue. Its 4Q12 results came with a glimpse of the future in the form of guidance for 2013. The total revenue and EPS of Teva is expected to reach ~$19.5 billion and ~$1.5 respectively. Optimistically speaking, the expectations can be achieved considering the fact that its star drug, Copaxone is showing good progress. Signs of recovery in Copaxone's sale were seen in the last quarter as it grew ~14% y/y. In 2013, the drug's sale should reach ~$4 billion.

Additionally, Teva has returned more than $2 billion to its shareholders last year. In 2013, the company doesn't plan for any share buybacks, but indicates that ~$1 billion may be paid as dividend. It has already announced an increase of ~15% in the quarterly dividend showing its commitment to give some incentive to the current shareholders while waiting for its longer-term strategy to play out. In the past year, the position of this stock has been volatile, but considering the above factors I see this stock as a long-term Buy.

What's in it for Investors?

Recent legislative reforms have been both good and hard on Pharma companies. It's difficult to have a clear picture about the future of these companies because of the recent budget cuts. Yet, the above discussed companies have a strong upside potential. Abbott and Bristol-Myers with their new product launches and test results in 2013 seem strong. And, the recovering sale of Copaxone and the commitment of its management towards capital allocation strengthen my faith in Teva.

Source: 3 Pharma Stocks You Will Love In 2013