3 Soaring Healthcare Opportunities: Advanced Medical Solutions Group plc, UDG Healthcare PLC And Vernalis plc

Will Advanced Medical Solutions Group plc (LON: AMS), Udg Healthcare PLC (LON: UDG) and Vernalis plc (LON: VER) beat big pharma?

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Pharmaceuticals, healthcare, biotechnology — it’s an attractive investment business.

Most of the money goes into the biggies, like GlaxoSmithKline and AstraZeneca, but there’s a whole host of smaller companies out there with great prospects. And some of their shares have been flying:

Wound care

Look at Advanced Medical Solutions (LSE: AMS), for example. It’s a company with a market capitalisation of around £300m, and it’s in the unglamorous-sounding field of wound care technology. But it’s serious business, and Advanced Medical shares are up 16.5% over the past 12 months to 143p, having put on nearly 250% over five years.

Five years of strong earnings growth lie behind that, though the shares are now on a P/E of over 20 with forecast growth slowing a little. But at results time in March, CEO Chris Meredith told us he was “confident that AMS is well placed to drive growth“.

Not a screamingly cheap share, but it looks like a quality company with some key product strengths.

Boring is good

Then there’s UDG Healthcare (LSE: UDG), a bigger company at around the £1.3m market cap level, which on the face of it appears even less glamorous. Based in Dublin, the firm provides services to the medical industry — sales and marketing, wholesaling, packaging and so on.

And it’s shares have done even better over the past year — at 540p, they’re up 54%.

With double-digit EPS rises forecast for this year and next, we’re still looking at growth pricing and a forward P/E of 23 this year. But it looks like a business that will remain in demand, and its first quarter this year has seen it off to a strong start with trading “well ahead” of last year.

The biggest winner

I’ve saved the highest one-year flyer for last. It’s Vernalis (LSE: VER), the smallest of the three with a market cap of a bit under £270m. Vernalis shares have more than doubled in 12 months to 61p, having been sent soaring by approval on 1 May for its Tuzistra branded extended-release cough treatment, developed in conjunction with Tris Pharma Inc.

CEO Ian Garland called it a “very significant moment in the evolution of Vernalis to a commercial stage speciality pharmaceutical company“, and all eyes are now on getting the new product to market for the coming 2015-16 cough-cold season in the US.

What about valuation? Vernalis is not yet profitable, so there aren’t any meaningful traditional ratios available yet — but it could easily be the most exciting of the three, and is definitely one to watch.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended GlaxoSmithKline. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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