US Top 50 Performing Companies 2008 by BusinessWeek

Gilead Chief Executive John Martin, a PhD chemist by training, challenged his researchers to simplify those cumbersome treatments. And they did. "The first four times we tried to manufacture the drug, we failed," says Martin. "It was a matter of perseverance."

The payoff: Gilead's profits have tripled since 2004, to $1.6billion—a performance that vaulted the drugmaker to the No. 2 position in this year's BusinessWeek 50.

And with the economy sitting on the precipice of what could potentially be a deep recession, it's this kind of management vision and moxie that could spell the difference between the companies that not only survive, but thrive and those that are carried away in the economic undertow. These are companies that, for all of their past successes, are not afraid to alter their business models at the first signs of weakness.

Companies like this year's No. 1 performer, Coach. The handbag maker moved quickly when it understood that its aspirational customers might suddenly hesitate at spending $900 for one of its Legacy handbags. Coach quickly rolled out more affordable lines of bags for as little as $160.

Or companies like Starbucks (SBUX) (No. 16), which, in the face of a renewed push by McDonald's (MCD) to boost coffee sales, announced a sweeping remake of its stores that includes free refills and Internet access for regular customers, and more handcrafted coffee drinks.


While analysts fret those moves could cut profits in the near term, Starbucks CEO Howard Schultz is willing to absorb that hit to "reignite the emotional connection we have with our customers." Will it work? Starbucks isn't going to wait until things get worse before it tries to find a solution.

The companies that make up the BusinessWeek 50 represent our picks as the top performers in each of the 10 sectors that make up the S&P 500.

To select this year's overachievers, we ran the S&P 500 through a proprietary screen that ranks those companies within sectors by two key metrics: return on investment and sales growth over the past three years, and for financial-service firms, their returns on equity and growth in assets.

"There's a market for suppliers that can take over a company's supply chain and run it better, cheaper, and faster, and these companies have shown how to do it," says Chris Zook, head of the global strategy practice at Bain & Co.

"Warren Buffett himself said that it's harder for companies to sustain their growth," says Adrian Slywotzky, a management consultant for Oliver Wyman Group and co-author of the book The Upside: The 7 Strategies for Turning Big Threats into Growth Breakthroughs. "But managing risk well is one way to do it."

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