Friday, November 18, 2022
The continued drive to find promising new prescription drugs recently took an otherworldly turn.
You see, most investors picture drug discovery being done by doctors and scientists who wear white coats and work in pristine labs. And to be fair, that’s still how it happens — most of the time.
But what if I told you that underwater robots were starting to play a role in finding new products for the nearly $1.8 trillion global drug industry.
It’s true. In fact, robots plying the oceans several hundred feet below sea level have recently found a host of new drugs.
This is a perfect example of what I call the “automated world.” And it’s a reminder of how important this new world is becoming.
From software that writes itself, to drones that patrol on auto-pilot, more of our tech-centric world is happening autonomously. And that includes the fascinating way robotic submarines are finding new drugs.
So today, I’ll reveal a powerful way you can invest in this automated world.
The underwater world is an ideal environment for finding new medicines.
Sponges and coral are attached to the seabed, making it impossible for them to escape predators. As a result, they’ve had to create a suite of chemical defenses to protect themselves.
Notably, many of these chemicals don’t exist above the surface. That means viruses and cancer cells we contend with have no defenses against these compounds.
Scientists have already discovered more than 1,000 compounds in the ocean, including ones that fight cancer, viruses, fungi, and inflammation. Fifteen marine-derived drugs are already approved in the U.S., and another twenty-nine are in clinical trials.
But scientists aren’t merely sampling for novel chemicals. They’re going right to the source, checking waters near the seabed for floating bits of DNA. This gives researchers a virtual blueprint for the compounds, so they can create them, and then test them for medical use.
And if the results are promising, this DNA can then be used to manufacture new chemicals. An autonomous-underwater drone that filters seawater for DNA can work on its own for weeks!
This is a prime example of the “automated world” we’re transitioning into. Increasingly, technology is helping us live and work more efficiently, without much human input.
Sure, that includes self-driving cars. But it also includes:
This transition is possible thanks to all the chips, sensors, and lines of code working in the background. And this technology is continuously being improved — just think of your phone or computer, both of which are updated automatically behind the scenes.
Using autonomous-ocean vehicles to find the next blockbuster drug is certainly a thrilling development. Unfortunately, there’s no direct way to invest in this sector.
However, there is a way to invest in the broader field of automated medicine, specifically in drug delivery.
You see, this sector involves software and robots that help medical professionals do their jobs better. It ranges from software that reads patient charts and helps physicians spot and diagnose medical problems, to robots that reduce human error in labeling and filling prescription bottles.
And at the forefront of this sector is a company called Omnicell Inc. (OMCL).
Omnicell is a pioneer in creating autonomous pharmacies. Its goal is to automate all the aspects of running a pharmacy that are menial, filled with paperwork, and, most importantly, prone to human error.
Ideally, this automation enables pharmacists to focus on what they’re actually trained to do: help patients — all while reducing costs and expensive, dangerous errors.
Omnicell does this through a suite of software and hardware solutions that enable pharmacies, hospitals, and nursing homes to track every dose they issue. The process covers everything from packaging and labeling, to prescription pick-up.
The company’s technology conducts automatic checks of any drug interaction between the patient and their conditions, and uses barcodes to make everything in the pharmacy “machine-readable.”
The numbers associated with Omnicell are impressive.
About sixty-three percent of company revenues come from its tracking, labeling, and automation devices. Roughly one-third comes from technical services, and the rest comes from software subscriptions.
Notably, Omnicell’s systems have issued more than ten-million medications. And not a single one has been wrong.
Hospitals, meanwhile, have seen a ninety-percent drop in instances where a pharmacist has to ensure prescriptions are correct. Again, that means they have more time to focus on customers.
Omnicell estimates its total addressable market (TAM) at around ninety-billion dollars. Sure, that’s a relatively small part of the overall drug industry. But it ranks as a large and potentially profitable opportunity for a savvy firm like Omnicell.
Omnicell’s stock got crushed on November 2 after reporting disappointing quarterly results. Wall Street panicked when it saw earnings decline more than forty percent from the same period a year ago.
But this drop was a gross overreaction. Omnicell’s diluted non-Generally Accepted Accounting Principles (GAAP) per-share profits, a great way to look at growth, fell just eight percent.
Now the stock is on sale, meaning we can scoop some up at a steep discount, and get positioned for even higher profits.
I expect Omnicell to achieve enormous success over the long-term. So check out our “Trade of the Week” to see how best to play this opportunity.
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