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Pharmaceutical companies can be great growth plays, especially if the potential investor has an a heightened appetite for risk. I strongly believe that the pharmaceutical sector has at times lived up to the saying "the bigger the risk, the bigger the reward," and these three companies certainly possess very high potential upside. For this screen, I established the following five criteria:

- Minimum Profit Margins Must Be At Least 18.00%

- Minimum Return On Assets [ROA] Must Be 5.00%

- Minimum Return On Equity [ROE] Must Be 29.00%

- Minimum Projected Second Quarter Growth Must Be 170.00%

- Minimum Projected Full Year Growth Must Be 105.00%

Spectrum Pharmaceuticals, Inc. (SPPI) - SPPI trades in a 52-week range of $6.94/share (52 week low) and $17.48/share (52 week high), and is expected to earn $0.33/share on revenue of $65.53 million dollars for the second quarter. I happen to be attracted to SPPI for two reasons. First, the company has demonstrated profit margins of 39.33% over the last 12 months and carries a very nice ROE (49.57%), as well as a decent ROA (14.61%). Secondly, analysts are expecting SPPI to grow at a rate of 175.00% for the second quarter and 114.36% for the year.

Analysis: One of the most important variables moving forward for SPPI is sales growth. If the company can continue to surpass estimates especially when it comes to ZEVALIN, which is a combination cancer therapy, we could see the stock continue to grow at a very consistent pace over the next few years.

Bio Delivery Sciences International, Inc. (BDSI) - BDSI trades in a 52-week range of $0.77/share (52 week low) and $5.19/share (52 week high), and is expected to earn $0.27/share on revenue of $16.72 million dollars for the second quarter. I find BDSI attractive for several reasons. First, the company has demonstrated profit margins of 18.10% over the last 12 months and carries a very nice ROE (29.88%) and ROA (5.24%). Lastly, analysts are expecting BDSI to grow at a rate of 250.00% for the second quarter and 158.50% for the year.

Analysis: I think One of the key catalysts for BDSI happens to be EPS growth. If the company can continue to surpass estimates especially at the levels it has over the last four quarters (by an average of 26.3% per quarter) the last four quarters, we could see the stock continue to grow at a very consistent pace over the next few years.

Questcor Pharmaceuticals, Inc. (QCOR) - QCOR trades in a 52-week range of $24.14/share (52 week low) and $58.91/share (52 week high), and is expected to earn $0.63/share on revenue of $108.91 million dollars for the second quarter.

I happen to find QCOR attractive for two very fundamental reasons. First, the company has demonstrated profit margins of 38.35% over the last 12 months and carries both a very nice ROE (59.92%) and ROA (41.52%). Secondly, analysts are expecting QCOR to grow at a rate of 173.90% for the second quarter and 108.70% for the year.

Analysis: The main variable for QCOR during the second half of 2012 has to be EPS growth. If the company can continue to surpass estimates especially at the levels it has (21.625% on average over the last four quarters), we could see the stock continue to grow at a very nice pace over the next few quarters.

Source: 3 Pharma Companies Expected To Demonstrate Significant Growth During The Second Quarter