Brian Lawler, my Dueling Fool counterpart, pointed out a number of valid concerns that are likely to drive Eli Lilly's (NYSE:LLY) share price going forward. However, I will argue that they are in fact, as Brian said earlier, "just part of the cost of doing business as a big pharma" firm, and inherent in the industry. And despite the risk, investing in the space can still be worth it.

No doubt, Lilly has some risks. There are generic rivals such as Teva Pharmaceutical (NASDAQ:TEVA) attacking its patent protection on Zyprexa; the constant threat of litigation to wrestle market exclusivity from its other drugs; and product-liability risk. The thing is, I can't think of another pharma giant with considerably less risk. Pfizer (NYSE:PFE) will lose Lipitor to patent expiration in just a few years, Merck (NYSE:MRK) faces years of legal expenses related to pulling Vioxx from the market, and health-care conglomerate Johnson & Johnson (NYSE:JNJ) constantly makes headlines over safety concerns regarding drug-eluting stents or its Procrit drug franchise.

My contention is that Lilly is one of the more stable pharmaceutical giants, and I take its slightly higher valuation as proof that the market is less worried about its current drug portfolio or pipeline prospects. Plus, on a forward basis, Lilly's valuation is more in line with its peers. At 18 times earnings fiscal 2007, Lilly's earnings multiple is below that of Merck, with J&J and Pfizer less of a stretch at 15.5 times and 13.4 times, respectively, as compared to Brian's trailing cash flow figures.

The best approach may be to establish a position in a number of pharma firms, because, in all fairness, it is extremely difficult to predict which drugs will fall to generic competition or be hit with efficacy concerns and increased FDA, consumer, and doctor scrutiny. In fact, one might be tempted to place them in the "too hard" pile as investments that are just too difficult to figure out.

As it turns out, Berkshire Hathaway, which epitomizes the "too hard" philosophy of eliminating investment candidates, has been increasingly venturing into the space, with positions in J&J and Sanofi-Aventis (NYSE:SNY). Another famed value investor, David Dreman, recently purchased Lilly, demonstrating that bringing drugs to market is a worthy business, protected by years of a hefty economic moat.

As with any industry, finding the most compelling opportunity is key. I'm still looking for further proof that Lilly's valuation premium to its peers is fully warranted, but if current trends are any indication, its growth prognosis could lead the industry and qualify as another of my health-care holdings.     

Wait! You're not done with this Duel. Go back and read the other arguments, then vote for a winner.

Johnson & Johnson and Eli Lilly are Income Investor recommendations, while Berkshire Hathaway and Pfizer are Inside Value selections. Try any of our Foolish newsletters free for 30 days.

Fool contributor Ryan Fuhrmann is long shares of Pfizer and J&J but has no financial interest in any other company mentioned. The Fool has an ironclad disclosure policy. Feel free to email him with feedback or to discuss any companies mentioned further.