The contentious debate over the shape of health care reform has finally drawn to a close, and despite the dire predictions, the industry has emerged intact. In fact, the legislation could present a unique opportunity for health care companies to grow revenues at the fastest pace in decades.

After a year of intense debate and acrimony, Congress has finally finished its work on health care reform. In its final form, the legislation is expected to reduce the uninsured population by 30 million by 2019 through a mandate that will require almost every American to carry health insurance. This individual mandate should boost consumption of health care goods and services substantially.

Although the pharmaceutical industry is on the hook to pay $85 billion into the program over the next ten years, its early involvement in the process and willingness to negotiate won it concessions on stronger patent protections and spared it the pain negotiating directly with the government over prices for federally administered programs.

One name that stands to benefit is Abbott Laboratories (NYSE: ABT), a leading pharmaceutical company that also offers nutritional, diagnostic and vascular products. A diverse product line and strong international business are reason enough to invest in the company, but analysts forecast that health care reform could expand the company’s US revenues by as much as 20 percent over the next decade.

And Abbott Laboratories doesn’t face any major patent expirations; the company’s last major loss came in 2008, when the patent on epilepsy drug Depakote expired. Abbott has coped well with the challenge, reformulating the drug for extended release–a move that should delay any major challenge from generic manufacturers for at least a few years.

The firm’s only major drawback is its weakness in developing its drug pipeline internally. Abbott pursues an aggressive acquisition strategy, buying up smaller firms with promising products and businesses. Its most recent acquisition, STARLIMS Technologies, provides entrée into the medical information technology field, and last year’s acquisitions of Advanced Medical Optics and Visiogen give Abbott a strong presence in the eye-care market, especially the rapidly growing field of LASIK vision corrective surgery. Abbott’s purchase of Belgian pharmaceutical maker Solvay also deepened its drug pipeline while greatly expanding its presence in Europe and emerging markets.

That being said, Abbott does have a strong pipeline of drugs. One of its best candidates addresses Crohn’s Disease and psoriasis. It also has several early- and mid-stage oncology treatments, as well as compounds in immunology, neuroscience, pain management and infectious diseases.

Abbott’s acquisitions and strong growth bumped full-year 2009 earnings up 12 percent from a year ago to $3.72 per share. Revenues grew 4.2 percent over that period. This impressive performance occurred amid a fragile global economy and weak currencies, suggesting that 2010 will be an even better year for the company–especially as its international business continues to grow. Last year Abbott generated more than half its revenues outside the US, and that proportion should increase after the recent acquisition of Solvay.

Although Abbott Laboratories offers strong growth prospects, it would be better classified and as a growth-and-income play; it pays a quarterly dividend of 44 cents, giving the stock a current yield of 3.4 percent.

Why to Buy
ABBOTT LABORATORIES (NYSE: ABT, $52.61)

• Reform boosts consumption of health care products

• Strong pipeline

• No major patent expirations