Patents in Merck & Co., Inc. (NYSE:MRK)’s lead pipeline are relatively secure. Januvia is the big earner with sales of $4 billion a year, and it doesn’t lose its patent until 2022 ; Zetia’s is secure until 2017 as is Vytorin . But continued growth in Merck & Co., Inc. (NYSE:MRK)’s second tier product line should offset the next round of revenue losses in 2017.
In addition, emerging markets account for 22% of all Merck & Co., Inc. (NYSE:MRK)’s pharmaceutical sales last quarter, of which China delivered 10% growth and is considered a key market going forward. So looking beyond the revenue loss of Singulair, there is reason for optimism.
Another potential gem in the health care sector, occupying a space at the other end of the market capitalization spectrum to Merck, is Cyberonics, Inc. (NASDAQ:CYBX)
Cyberonics, Inc. (NASDAQ:CYBX) is a small-cap stock with a focus on VNS Therapy treatment for epilepsy. While a relatively niche area, the epilepsy market is expected to rise to $3.7 billion in 2016 . The company also conducts research on obstructive sleep apnea, although no mention was given in its recent call.
The company delivered an earnings beat for the first quarter with a 12% rise in sales . Europe has consistently delivered double-digit growth in revenue and sales, which has been a core reason for its success (bucking the usual trend for sluggish results from Europe). For the first quarter, international sales were up 21% .
While replacement revenue for the quarter was in line with expectations, for 2012 it amounted to 42% of its revenue. Digging deeper, 40% of those replacements were second or more replacements , offering a solid base for repeat customers. Individual unit sales were up 15% from 2012, with 13,000 units delivered in the first quarter . This bodes well for the replacement market to follow.
The company did note that it had added $133 million in revenue over the last five years, which was double the reported revenue for 2008. With double-digit unit sales growth and a healthy replacement market, it’s hard not to see the company not doubling revenue again over the next five years.
Summary
Akamai Technologies, Inc. (NASDAQ:AKAM) has enjoyed consistent (and sizable) growth in its security solutions division as it becomes an ever larger segment of its overall revenue pie; look for this to continue for the foreseeable future. What’s happened at Merck isn’t pretty, but the damage has been done, and it’s now time to look forward and examine the potential in its pipeline. Cyberonics, Inc. (NASDAQ:CYBX) has a successful product and the brand loyalty to go with it — firm foundations for expansion. All three companies could make solid investments over the long term.
The article Next Leaders in Technology and Health Care originally appeared on Fool.com is written by Declan Fallon.
Declan Fallon has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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