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Retire rich by investing in Australian healthcare stocks

When looking at companies listed on the ASX, only a handful have successfully managed to grow outside Australia and dominate on the global stage. These companies are predominately found in the healthcare sector and include CSL Limited (ASX: CSL), Cochlear Limited (ASX: COH) and ResMed Inc. (CHESS) (ASX: RMD).

Investors who purchased these three stocks over the past decade have been extremely well rewarded. Furthermore, it is likely these companies will continue to dominate their respective markets for a long time as they are highly leveraged to growing wealth in Asia and an ageing population in the developed world. For investors with a long-term focus, it is highly likely that the share price of CSL, Cochlear and ResMed will be significantly higher in five years. However, for those investors willing to take on extra risk and look at the smaller end of the market, the rewards could be substantial.

Sirtex Medical Limited (ASX:SRX) is an Australian healthcare stock that has huge growth potential and investors are catching on. The share price of Sirtex has climbed by 67% over the past 12 months. It has developed an effective treatment for liver cancer that involves the infusion of radioactive microspheres to target liver tumours. Importantly, the company is profitable, has a strong cash balance and is growing profits year on year. Revenue has increased from $65m in 2009 to $97m in 2013, with dose sales increasing from 3,658 units in 2009 to 7,299 units in 2013. This growth has been reflected in Sirtex’s share price which has consequently increased from $3.35 in 2009 to $17 today.

Investors had expected the results of an eight-year trial to be released before the end of 2014, the trial is critical for Sirtex to encourage wider use of its novel therapy. However, chief executive, Gilman Wong said the results were now expected in the first quarter of 2015. Sirtex’s drug has been seen by many oncologists as a treatment of last resort, but the company’s SIRFLOX trial is looking at the effect of treating liver cancer with SIR-Spheres alongside other accepted “first-line” therapies. A positive result in these clinical trials may encourage oncologists to increase their use of Sirtex. The company estimates that its treatment is currently only used in 1% of the 480,000 primary and secondary liver cancer cases globally each year. Therefore, a successful outcome from the trial would result in huge growth opportunities and also likely send the share price flying.

For those investors willing to take on extra risk, Sirtex is certainly worth adding to your watchlist as the potential rewards could be huge.

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Motley Fool contributor Bradley Murphy owns shares in CSL, Cochlear, ResMed and Sirtex Medical mentioned in this article. 

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