(MONEY Magazine) – Could your portfolio use a tonic? How about some of the world's biggest and brawniest pharmaceutical companies? Says Kurt von Emster, manager of the $150 million Franklin Global Health Care Fund: "This is a very prosperous time for drug companies." Here's why: New remedies are becoming available for chronic illnesses like osteoporosis; government regulators are moving faster to approve treatments for life-threatening diseases like AIDS; and an aging population needs more medicine. Result: Doctors are prescribing more drugs more often. John Eade, an analyst at Argus Research in New York City, expects the major drug companies to expand their earnings an average of 13% over the next year, vs. 5.1% for the typical company in the S&P 500.

To find the best drug stocks to own now, we asked a dozen analysts to name financially strong, well-run companies that have recently introduced innovative medications and also have some promising curatives in the pipeline. We winnowed the picks down to the following three, all traded on the New York Stock Exchange and profiled in descending order of their projected 12- to 24-month returns:

--Pharmacia & Upjohn (ticker symbol: PNU; recently traded at $41.75; 2.6% yield). If you are chewing Nicorettes to quit smoking or slathering Rogaine on your thinning locks, you already know this company. P&U is the result of a merger last year between Upjohn Co. and Sweden's Pharmacia AB. By eliminating duplicate operations in the wake of the merger, the $7.1 billion P&U, now based in Windsor, England, should be able to save $775 million annually by 2000, says Steven Tighe, an analyst at J.P. Morgan in New York City. He expects the company to improve its operating margins 42% by the end of 1997.

Another plus is that P&U has received Food and Drug Administration approval to market a dozen or so new drugs, including Xalatan, which treats glaucoma, and Camptosar for advanced cancer of the colon or rectum. Another drug in development is Detrusitol, a medication that controls urinary urge incontinence, a condition that affects an estimated 5 million Americans. Says Hemant Shah, an analyst at HKS & Co., a research firm in Warren, N.J.: "There won't be one home run, but a lot of doubles and triples." Tighe sees P&U boosting earnings at an 18.4% annual average pace during the next three years. That earnings power, plus a price/earnings ratio expansion from 19.6 to the industry average of 22.1, should propel PNU shares to $55 within 12 months, for a 34% total return.

--Pfizer (PFE; $78; 1.5%). In the view of Kurt von Emster, the most promising product this $11.3 billion New York City drugmaker has in development is Viagra. It treats impotence, which affects an estimated 10 million to 15 million American men. "Right now there is no simple treatment for impotence, so this could be a substantial franchise," von Emster says. In fact, Viagra is the reason why he believes that Pfizer remains attractively priced even though the stock trades at 26 times next year's estimated earnings, well above the 18% average annual earnings growth rate many analysts expect during the next five years.

David Saks, an analyst at Gruntal & Co. in New York City, agrees that Pfizer's drug lineup justifies the premium. Over the past year, Pfizer has successfully introduced seven new drugs, including Zoloft, the No. 2 antidepressant, with sales of $1 billion, behind Eli Lilly's Prozac, with sales of $2 billion. What's more, in the next five years, the company plans to launch 23 new products, including a treatment that delays the worsening of symptoms of Alzheimer's disease and one that lowers cholesterol. Saks expects these 23 drugs to generate $10 billion in sales by 2004. As a result, he thinks the shares will reach $94 within two years, for a 22% total return.

--Eli Lilly (LLY; $64.75; 2.1%). Prozac, the nation's leading antidepressant, was responsible for 40% of Lilly's revenue growth last year. Though the drug's effect on Lilly's $6.8 billion in revenues appears to be wearing off, with sales up only 15% this year and a projected 12% in 1997, not to worry. Neil Sweig, an analyst at Brown Bros. Harriman in New York City, expects Zyprexa, a schizophrenia drug that Lilly expects to have on the market by the end of the year, to help make up for it. There are about 2 million schizophrenics in the U.S., and they can take Zyprexa as long as they need it with few side effects. Merrill Lynch analyst Richard Vietor estimates Zyprexa to be a potentially $1 billion product for Lilly.

Among the Indianapolis company's other promising drugs in development are Raloxifene to treat osteoporosis, Gemzar to treat pancreatic cancer and Humalog, a fast-acting insulin for diabetes. Kenneth Kulju at UBS Securities in New York City expects the company's earnings to expand an average of 15% annually during the next five years. He sees shares rising to $72 within 12 to 15 months, for a 13% total return. Now, that should perk up anyone's portfolio. --S.S.