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Will these companies be Australia’s next healthcare giants?

The Australian share market is home to a number of giant healthcare companies. Investors can buy shares in global companies such as CSL Limited (ASX: CSL), Resmed Inc (ASX: RMD), Ansell Limited (ASX: ANN) and Cochlear Limited (ASX: COH).

Blood products group CSL has been a phenomenal stock for investors who bought in back in the mid-1990s for under $1. CSL is currently trading just a little above $70 and has been an incredibly consistent performer for long-term investors.

But are there any companies out there that could be similarly great? Who are the up-and-coming companies in the healthcare space?

Well, there are plenty of listed emerging biotechnology stocks, but I think that until they can demonstrate proven technology and strong operating cash flows they are best avoided by most investors.

Rather, I believe there are some big opportunities in the healthcare technology field. Two companies that are competitors but look to be growing side by side are Hills Ltd (ASX: HIL) and Azure Healthcare Ltd (ASX: AZV).

Azure Healthcare

Azure is an integrated software and hardware provider of nurse call systems with exposure to Australia, the US, Asia and Europe. The nurse call system market appears to be fragmented in Australia, and a recent US study indicated that the software side of the market is growing at 20% annually. Azure recently won a significant contract to provide software for nurse call systems in 100-150 hospitals in the US, which will hopefully provide a solid platform for further expansion in the country. Importantly, in my eyes at least, Azure won this contract over the largest nurse call provider in the US, demonstrating how good Azure’s offering is. The Australian market appears to be some way behind the US and is waiting for a provider to start dominating the market, could it be Azure?

Hills Holdings

Hills Ltd is transitioning from a diversified manufacturer of roofing and clotheslines to a service-based company in the healthcare sector. Hills plans on achieving this by bolt-on acquisitions from which the company can build scale. Hills recently purchased Questek and Merlon; providers of nurse call systems and general health monitoring systems. The companies were significantly smaller than Azure and have inferior offerings (or so I’m led to believe) but are the type of platform that Hills plans on using to grow scale. Azure could well become a takeover target by Hills in time, especially if its US exposure becomes more significant.

Foolish takeaway

Australia has a good history of producing quality healthcare companies. Azure and Hills are addressing the fragmented nurse call system and health monitoring industry in Australia, and Azure offers terrific exposure to the same industry in the US, Asia and Europe. Azure’s market cap is still tiny, at just $62 million, and is expected to be much bigger in five years’ time, with 25% annual revenue growth not out of the question. These two companies, either individually or as one, could be global players in the future.

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Motley Fool contributor Andrew Mudie owns shares in AZV.