Few titans in the pharmaceutical industry can boast of near-term stability in their existing drug sales and favorable prospects in the drug pipeline. Thanks to a couple of recent developments and a focus on research & development (R&D), pharma giant Eli Lilly (NYSE:LLY) is one such firm, and a worthy contender for health-care exposure in Foolish portfolios.

In fact, my bearish counterpart to this round of Dueling Fools recently pointed out that Lilly floats atop the competition in a number of categories and was the recent beneficiary of a favorable patent ruling in regard to Zyprexa, its treatment for schizophrenia and bipolar disorders and by far its largest drug in terms of overall sales. Zyprexa accounted for nearly 29% of total sales last year and continues to do well; its sales were up 10% during the first quarter of this year.

Lilly has four other drugs that posted over $1 billion in sales last year, and it recently acquired biotechnology firm ICOS to gain full control over erectile-dysfunction drug Cialis. Other than that, the firm has over a dozen other existing individual drug and product categories, including an animal health segment that was recently bolstered by the acquisition of privately held Ivy Animal Health. If you're familiar with Idexx Labs (NASDAQ:IDXX), you already know how lucrative health care can be, as animals achieve family-member status in many households.

In terms of the drug development pipeline, I'm no Ph.D, but have read that there are a number of candidates with blockbuster potential. Lilly is in late-stage trials with treatments for non-Hodgkin's lymphoma and it submitted a New Drug Application for treating breast cancer with Evista. It is also partnering with Amylin Pharmaceuticals (NASDAQ:AMLN) to promote Byetta as a treatment for type-2 diabetes.

Lilly expects its activities for the year to culminate in earnings of $3.30-$3.40, excluding certain charges in regard to the ICOS purchase. Based on a current share price of $59.46, that's a forward P/E of just under 18.

Throw in a current dividend yield of 2.9% and Lilly is worth a further look for investors seeking both growth and income potential. Additionally, the larger firms in the pharmaceutical industry have suffered because of concerns over patent expirations of current drugs. There's also the constant threat of generic competition, as firms like Teva Pharmaceutical (NASDAQ:TEVA) grow savvier in litigating drug exclusivity from patent-protected compounds. Share price underperformance can spell opportunity for contrarian-minded Fools.

The pessimism has gone too far in many instances, and value investors such as Berkshire Hathaway are taking the opportunity to build positions in Johnson & Johnson (NYSE:JNJ) and Sanofi-Aventis (NYSE:SNY). Motley Fool Income Investor has already recommended J&J and Lilly. I agree with Inside Value's Pfizer (NYSE:PFE) recommendation, as the company's lagging share price may be missing solid cash flow generation and a high dividend yield due to excessive concern over a weak product pipeline and patent expiration issues.

Fools may be able to find lower P/E ratios and higher dividend yields by looking at Lilly's archrivals, but they may be hard-pressed to find a better combination of a reasonable valuation, respectable dividend, stable existing sales, and bright pipeline prospects. In fact, Lilly leads the industry where it may matter most -- it spends close to 20% of annual sales on R&D to develop and bring new drugs to market.       

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 Pfizer and Berkshire Hathaway are Inside Value selections. Try any of our Foolish newsletters free for 30 days.

Fool contributor Ryan Fuhrmann is long shares 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 Ryan with feedback or to discuss any companies mentioned further.