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The big U.S. drug companies look eerily alike. Pfizer, Merck, Eli Lilly and AbbVie (formerly Abbott) are all expanding revenues between very little and not at all, a pattern that is expected to persist. They have clean balance sheets. Dividend yields are 3 per cent to 3.5 per cent, and dividend payouts amount to 40 per cent or 50 per cent of net profits. The valuations, varying from just over 13 times forward earnings (Merck) and just under 15 times (AbbVie), are the highest in several years – though it should be kept in mind that earnings multiples are hitting multi-year highs across plenty of other sectors.

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