3 small-cap healthcare shares to watch

The Medical Developments International Ltd (ASX:MVP) share price is one of three in the healthcare sector which I believe could have significant long-term upside potential…

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When it comes to Australian healthcare shares, Ramsay Health Care Limited (ASX: RHC) and CSL Limited (ASX: CSL) will often be the first companies that investors consider investing in.

There's no surprises there. These two have deservedly earned a reputation as being amongst the highest quality businesses on the Australian share market over the last decade.

This got me thinking about which shares we might consider in a similar light in another 10 years.

So I picked out three small-cap healthcare shares which I believe have enormous potential. They are as follows:

Bionomics Ltd (ASX: BNO)

Last year Bionomics released extremely positive Phase II trial results for its anxiety drug BNC210. Not only did BNC210 outperform the current standard of care, it exhibited no signs of sedation, memory impairment, addiction, or loss of motor co-ordination. Whilst there is still a long road ahead, with the anxiety treatment market forecast by management to be worth US$18.2 billion in sales by 2020, I think it is worth keeping a close eye on Bionomics.

Botanix Pharmaceuticals Ltd (ASX: BOT)

I was surprised to learn recently that there have been no new developments in the acne treatment market for around 20 years. Whilst the current standard of care is effective, it comes with horrific side effects. Thankfully this exciting dermatology company and its vastly experienced team have developed the BTX 1503 candidate which uses synthetic cannabidiol to treat moderate to severe acne. Phase 1a trials have proven that the product is safe, and a four-week Phase 1b trial later this year will test its efficacy. Considering the acne prescription market is expected to be worth up to US$4.5 billion by 2018, Botanix could have an extremely bright future ahead of it.

Medical Developments International Ltd (ASX: MVP)

Thanks to the growing adoption of this fast-growing healthcare company's Penthrox pain management product, I believe it could be well worth being considered as a buy and hold investment. In the last couple of years the company has expanded the global presence of the green whistle product significantly. I expect this has the potential to result in bumper earnings growth over the next decade.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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