I’m always on the hunt for the next trillion-dollar mega trends – and the companies that will benefit the most from them. And as American Idol judge Randy Jackson likes to say, “We’ve got another hot one, America!”
In terms of innovation, I’m not exaggerating when I say that this one ranks right up there with other life-changers like the personal computer, mobile phones, e-mail, DNA testing and sequencing, even the Internet.
It will conceivably alter how every last penny is spent on healthcare. And that’s a lot of darn pennies. In the United States alone, we spent $2.4 trillion on healthcare in 2009 – roughly 17% of GDP.
If you have any doubt that sniffing out these opportunities early represents one of the most profitable strategies, consider Intuitive Surgical (Nasdaq: ISRG).
When the firm went public in 2000, investors were clueless about robotic surgery, let alone the company’s market-leading position in the space. In fact, Intuitive had to cut its IPO price by 30% just to attract enough interest and raise a measly $47 million.
Fast-forward to today, though. The robotic surgery trend has exploded and ISRG is up 1,558%.
I don’t think the robotic surgery trend has peaked just yet. But I wouldn’t recommend buying into it this late in the game. Not when another, more powerful mega-trend is unfolding…
‘Imagine…’
Channel John Lennon and “imagine” with me for a moment…
Imagine… a pill with a tiny radio implanted inside it. Once digested, the radio powers up by using electrolytes in your stomach acid and lets your doctor know immediately that you took the medicine.
Imagine… a band-aid sized monitor that tracks seven heart functions and can wirelessly alert your doctor – or call 911 – if a heart attack is imminent.
Imagine… a wireless stethoscope that can be mailed to patients who face a long commute to reach a doctor’s office, or require an exam by a specialist located thousands of miles away.
Okay, stop imagining. These breakthrough technologies actually exist. And they’re just the start…
“There are hundreds of devices [like these] out there waiting in the queue,” says Dr. Eric Topol, Director of the Scripps Institute.
And thanks to the convergence of healthcare and low-cost, ubiquitous wireless technologies, they represent a sea change in the way medicine will be practised.
From ‘doctors without borders’ to ‘medicine without wires’
He’s particularly keen on “ingenious sensors” – non-invasive, disposable devices that can track heart rhythm, blood pressure, respiratory rate, oxygen saturation, blood glucose, brain waves and many more physiological metrics.
And it doesn’t take much imagination to know that this trend – affectionately dubbed “wireless medicine” – isn’t just big. It’s colossal.
For example, the top ten diseases that would benefit from wireless monitoring affect a massive 252 million Americans alone and account for hundreds of billions of dollars in annual costs.
We’re talking about diseases such as Alzheimer’s, asthma, breast cancer, depression, diabetes and heart failure. On a global scale, the market potential would reach billions of people.
So it’s no wonder insiders dub this the most important medical trend for the next 20 years. And why countless technology companies – Verizon, Qualcomm, Microsoft, IBM, Intel and AT&T – are jockeying to get a piece of this healthcare revolution.
Here’s how you can, too…
Go small to go big
Let’s start with what not to do: Don’t try to play the wireless medicine revolution by buying mega-cap stocks (like the ones I mentioned above). They won’t hand us mega profits because they’re already too big.
But that’s not the case with small-cap companies. A trend like wireless medicine can catapult them from $100 million market cap unknowns into multi-billion dollar household names.
Need an example? Consider Intuitive Surgical again. When it went public, it sported a market cap of less than $200 million. Today, it tips the scales at a hefty $13.3 billion.
I’m convinced that the explosion of wireless medicine could easily create similar results for the leading players in the space. And that’s why I’m tracking promising privately-held companies.
My shortlist includes…
• HQ, Inc., which has developed a patented thermometer pill for NASA.
• Epocrates, which turns a doctor’s cell phone into a real-time medical library.
• Zeo, Inc. – a company started by a group of sleep-deprived students at Brown University and which now markets a technology that helps you monitor and improve your sleep.
All could go public in the next few years. That’s why I’m monitoring the SEC filing window to see if/when they file an “S-1.”
I assure you that wireless medicine promises to be the most important healthcare trend for the next 20 years.
And if you want to profit from it, you need to start by identifying compelling small-cap opportunities today.
• This article
was written by Louis Basenese and was first published in the daily investment newsletter Investment U
on 25 February 2010.