Globalisation has changed the world, and in the health care sector it’s giving some companies opportunities others can only dream of. Strong competitive advantages help make these three companies look like an investor’s dream.
With just 6% of sales coming from Australia, Ansell (ASX: ANN) is a global healthcare leader. The condom and medical device manufacturer grew net profit to $136.8 million in financial year 2013, up 5.2% on the prior year.
Emerging markets now represent 27% of sales, which were up 34% in the Middle East and Africa and 22% in Latin America and the Caribbean. Acquisitions were recently completed in Europe, North and Latin America. Markets like Brazil, Mexico, India and China offer further growth potential. With a strong product portfolio and growing global presence, the future looks bright.
A second global wonder from down under is CSL (ASX: CSL). It manufactures life-saving medicines as well as influenza and travel vaccines. The company recently announced a net profit of US$1.22 billion for financial year 2013, up 19% on last year. Its core business is the sale and development of blood plasma products and it’s benefitting from growing demand in countries like China and Brazil. Already a global giant, 2014’s forecast profit growth is approximately 10% and with over 88% of the group’s sales revenues generated outside Australia, it looks immune to a predicted slowdown in the domestic economy.
The third global phenomenon is sleep treatment device manufacturer ResMed (ASX: RMD). Medical professionals now increasingly recognise daytime sleepiness or fatigue in people as a consequence of sleep apnea, a breathing disorder that impacts a patient’s sleep quality. ResMed’s products to treat such disorders are sold in approximately 100 countries and there seems no limit to the company’s ambitions.
ResMed’s annual report cites a scientific study that estimates 26% of adults aged 30-70 have some form of treatable sleep apnea. In its main market, the United States, that’s 46 million people alone. Unsurprisingly, the company keeps growing, sales outside the Americas accounted for 44% of revenues in financial year 2013 and net profit jumped an impressive 21%.
An overall trend towards consolidation in the healthcare industry means companies with economy of scale advantages should deliver for investors. Best-in-class reputations and products cement a tempting trio’s investment case.
Quality companies don’t come cheap and all three sport demanding price-to-earnings ratios, with prices approaching 52-week highs. This should not put investors off though — stock prices remain forward-looking indicators and 52-week highs can become 52-week lows on long-term horizons.
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Motley Fool contributor Tom Richardson owns shares in ResMed.