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Stocks discussed on the in-depth session of Jim Cramer's Mad Money TV Program, Thursday February 17.

Sell Block: Merck (NYSE:MRK), Bristol Myers (NYSE:BMY), GlaxoSmithKline (NYSE:GSK), Pfizer (NYSE:PFE), Eli Lilly (NYSE:LLY)

Cramer is retiring a once-defensive group of stocks onto the Sell Block; Big Pharma. "This is just one expensive graveyard of stocks." Merck (MRK) seemed to have a promising cardiovascular drug in its pipeline, but when the FDA did not approve it, the stock declined 6.6% and is now down 11%. It is shocking to see a stock decline so much for a drug that is not going to be released in 4-5 years. The problem is not Merck-specific, but could happen to any of the other pharmas.

A huge problem for the industry is the loss of patent protection. A full $15 billion worth of drugs are going to lose this protection in the coming year, spelling a 39% decline in Bristol Myers' (BMY) profits, a 12% decline for Merck, a 34% drop in Eli Lilly's (LLY) profits and a 20% loss for Pfizer (PFE). Even worse, the number will double to $36 billion for 2012.

With these companies having to slash their research and development budgets, there is no way they can recoup the losses to generics of their blockbuster drugs. GlaxoSmithKline is cutting R&D by a third and Lilly, with a 24% reduction in its R&D budget, is not far behind. Companies are increasing prices to try to offset losses, a move which gives generics an even bigger advantage. The FDA has gotten tougher about approvals; 2010 saw the lowest number of drug approvals for three years. The growth and protection is gone from this sector. The only plus is the dividends these stocks offer, but with so little to sustain the yield, even this advantage is doubtful. Cramer would put all Big Pharma stocks on the Sell Block.

CEO Interview: Andrew Damico, IntraLinks Holdings (NYSE:IL), Salesforce.com (NYSE:CRM)

Everyone wants to get on the cloud, and with Salesforce.com (CRM) up 113% since last year and up 530% since Cramer backed the stock in 2008, the cloud keeps soaring higher. Cramer spoke with CEO Andrew Damico of what he calls "the original cloud play," IntraLink (IL), which has been developing its technology since 1996. The company makes it easier for different businesses with different networks to work together and access secure information, especially for mergers, loan syndications and healthcare. The company reported a "bang-up" quarter with a 4 cent earnings beat, revenue up 33% year over year and a 5% growth in gross margins. The stock is up 37% since Cramer recommended it in October.

Andrew Damico described the endless meetings and the reams of paper that were required for M&A meetings before IntraLinks developed its technology. In fact, the company has made it possible for a 45 day reduction in M&A talks and will benefit from the 45% growth in mergers over the past year. The company also assists healthcare companies transmit sensitive patient information and data that has yet to be submitted to the FDA. The company, which once had significant debt, is now looking at a clean balance sheet, and the CEO plans to keep cash flowing, re-invest in the company and perhaps make some acquisitions.

"I think this is your niche, you own it, and that is why you are delivering great results," said Cramer who continues to back the stock.

Stop Being Scared: Caterpillar (NYSE:CAT), Lululemon (NASDAQ:LULU)

Cramer told investors to stop worrying and stop looking for tops just because a winning stock has increased. The sky is the limit for Caterpillar (CAT), and assuming a top is approaching when the fundamentals just keep getting better is a "defeatist" attitude. "Stop scaring yourself out of stocks for no reason," he said. The same applies to Lululemon (LULU) which some assume is a loser because the stock has increased substantially. The problem is, bears were saying this when LULU was lower and it, too, is on the up and up.

Cramer urged viewers to think like winners and not like amateurs and to recognize the incredible bull market for what it is.

Healthcare Buys: Allergan (NYSE:AGN), Express Scripts (NASDAQ:ESRX), MedcoHealth (NYSE:MHS), WellPoint (NYSE:WLP)

With Big Pharma ailing with no cure in sight, the question is what to buy in healthcare, which makes up 16% of the S&P 500. Cramer looks to companies like Allergan (AGN), which, instead of desperately looking for new drugs, is finding new applications for existing drugs and has had success with approvals. Botox now is not just for smoothing wrinkles, but has been approved for migraines and may be used to treat incontinence. Allergan has received approval for its lap bands for a broader range of obese patients, including adolescents. While Big Pharma is cutting research and development, Allergan is aggressively increasing its R&D budget.

While the rise in generics is fatal for Big Pharma, Express Scripts (ESRX) and MedcoHealth Solutions (MHS) profit from the trend, since their job is to keep expenses low for insurance companies. Express Scripts' stock was brought down by a merely in-line quarter, and Cramer thinks Medco is the better play, since it is 13% cheaper, has a better business with real cost savings and a significant buyback. Cramer's one caveat is the company reports on Tuesday, is up big and could sell off. The stock is up 41% since Cramer backed it in August.

Now that it appears that Obama will not be so hard on HMOs, Cramer recommended his favorite HMO play, Wellpoint (WLP) which benefits from its affiliation with Blue Cross Blue Shield. The company has an analyst meeting next Wednesday and the stock has run up in anticipation that it will be a success. He would wait for a pullback before buying.

Cliffs Natural Resources (NYSE:CLF)

Cliffs Natural Resources (CLF) reported a "to die for" earnings number on Thursday: 100% increase in sales, 450% rise in profits after its restructuring. The company can't extract enough of what emerging markets are craving, and its iron ore and coal demand is huge, especially in China. The once-insular company is now a world-class producer of commodities. Cramer expects similar success from other coal and iron plays.

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Source: Cramer's Mad Money - Big Pharma Is One Big Graveyard for Stocks (2/17/11)