Foreign Pharma Lures Fund Manager O'Leary

The uncertain future of health care in America is prompting portfolio manager Jim O'Leary to look abroad for drug stocks.

"Foreign pharma is a wonderful place to be," says O'Leary, who oversees the Touchstone International Growth Fund(TAIMX Quote). "American drug companies have no idea what their reimbursements are going to be for 2009 and 2010 due to political uncertainties, but foreign companies already know what their reimbursements are going to be."

International drug stocks have been a boon to O'Leary's $20 million portfolio (see video). His fund is down 15% year-to-date, but that's 2.3 percentage points better than the MSCI EAFE benchmark. Over the past three years, the fund has fallen an average of 13.6% annually, 1.8 percentage points better than the MSCI EAFE. ...