Pick-and-shovel plays can be some of the best investments around. Forget trying to find gold yourself: Sell the equipment to everybody who wants to look, and you can make yourself a tidy profit. So too in the pharmaceutical and biotechnology spaces -- investors who are worried about the risks of specific pipelines and drug candidates can instead look to the industries that service these companies.

While you could argue that clinical research organization specialist ICON (NASDAQ:ICLR) was never beaten down to such a point where it was a real turnaround play, it did have some rough patches, when above-normal cancellation rates throttled short-term growth. Now, though, it seems that the business is back on the right track.

This Ireland-based company reported second-quarter results Tuesday morning, with revenue climbing 11% and reported earnings per share climbing 20%. With tight control of selling, general, and administrative expenses, the company was able to boost its operating margin by more than a full percentage point -- a significant factor in the earnings growth this period.

Booking trends were also strong, as ICON reported $140 million in net new business during the quarter -- roughly 1.6 times reported sales for the period. What's more, the backlog is now up to a solid-looking $633 million.

The biggest downside to this story would seem to be that the sector has already had a pretty good run. ICON is up more than 22% in the last year, while industry big boys Pharmaceutical Product Development (NASDAQ:PPDI) and Covance (NYSE:CVD) are up about 56% and 35%, respectively. Still, though I'm no fan of relative valuation, it looks like ICON could outperform these two by a double-digit amount in share price before reaching relative valuation parity -- assuming that you think that a much smaller company with lower returns on capital deserves parity.

There's certainly money to be made in this space -- witness eResearchTechnology's (NASDAQ:ERES) 70%-plus climb from its lows in early 2005 -- and there should be plenty of growth ahead. After all, companies like AstraZeneca (NYSE:AZN) and Pfizer (NYSE:PFE) want to not only develop more drugs, but do so more cheaply. Careful attention to due diligence and valuation is always important, but this still looks like a winning industry.

For related Foolishness:

Pfizer is a Motley Fool Inside Value recommendation. For more about the Fool's newsletter devoted to undervalued stocks, click here.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).