NEW YORK ( Karvy) - Here are five pharmaceutical stocks under $2 with the potential for handsome returns based on company developments, a strong sector growth outlook for 2011, and analysts' ratings.

The pharmaceutical sector outlook for 2011 remains strong with support from emerging and recovering economies, according to analysts at IMS Health. Growth levels globally are likely to range between 5% to 7% with industry revenue estimated to touch a maximum of $890 billion. Although products with more than $30 billion of sales are likely to go off-patent in major markets in 2011, the full impact of the loss won't be experienced until 2012.

There are three key growth areas, say analysts. First, Japan, the world's second-largest pharmaceutical market, is likely to grow 5% to 7% in 2011, compared with meager 1% growth in 2010. Second, the U.S. market is forecast to grow at 5%. Lastly, growth in 17 emerging markets is seen between 15% to 17%, an increase of 3% from 2010.

Among these 17 countries, China is slated to be the strongest market with an estimated growth of 25%.

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