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Return on investment from the healthcare field, and pharmaceuticals in particular, are struggling to match those from growth industries that emerged from the recession stronger than before. I believe this calls for a time tested approach to investing in healthcare: Specialization. 'Big Pharma's' attempts to be providers on all fronts in medicine is not working, and is in fact creating new entry points for specialist healthcare firms. One example with real potential is in the foot care segment, which is seeing privately held Heel-That-Pain going up against the biggest names in foot health solutions.

Heel pain is one of the most common ailments seen in the foot. Bruising, inflammation, swelling, and calcium deposits are among the leading causes of heel pain, and are frequently caused by overuse. Most heel pain is treatable with rest, simple exercises, and readily available supports and orthotics, and rarely requires surgery or medication. This is bad news for Big Pharma, which relies largely on blockbuster medications to make margin, though that is not preventing some of the biggest names in the industry from trying.

Approaches from Big Pharma

Pfizer (NYSE:PFE) recently introduced apixaban (Eliquis) in the European Union. Pfizer developed Eliquis, a drug meant to prevent clotting following elective orthopedic surgery, in partnership with Bristol-Myers Squibb (NYSE:BMY). A decision on approval for Eliquis in the U.S. is expected in March 2013 following final review by the FDA, which voiced concerns over data management in the original drug trials.

Pfizer badly needs new blockbusters following the loss of its patent on longstanding profit driver Lipitor last year. In that light, Pfizer is developing several new drugs meant to treat the type of chronic pain that can characterize heel and other injuries, including Eladur, currently in Phase 2 trials, and tanezumab, also in Phase 2. It is also collaborating with CollPlant Holdings in the development of "an orthopedic product for the repair of compound fractures," using Pfizer's renowned protein work and CollPlant's human recombinant collagen product. If successful this could help both companies against generic competitors, but as compound fractures in the foot are relatively rare, Pfizer's presence in this major market would still be lacking.

Johnson & Johnson (NYSE:JNJ) has a similar drug to Pfizer's Eliquis, called Xarelto. For now, Xarelto is the only such drug approved by the FDA. The Johnson & Johnson company Depuy also markets several orthopedic solutions meant to at least partially address the needs of heel pain patients. These solutions include chronOS Bone Graft Substitute, which can be used to fill in bony voids or gaps in the heel and other extremities, and products supporting ankle fusion and replacement surgeries, primarily in cases involving arthritis where undue pressure is put on the heel causing secondary symptoms.

Johnson & Johnson has a slight advantage against its competition in over the counter heel pain, as many of its products are widely recognized. This includes Bengay topical solution for minor joint and muscle pain, its Johnson & Johnson branded line of ankle and foot supports and compression systems, and in the U.K. its Compeed line of footcare solutions. However, this does not make Johnson & Johnson the most thought-of brand for those suffering from heel pain; its presence in this market is virtually incidental to its presence in other markets, and its advertising to podiatric consumers remains slim. Some of its most relevant products to heel pain consumers, including Tielle and Regranex, were sold to One Equity Partners in the 2008 divestiture of the Johnson & Johnson company Ethicon's Professional Wound Care unit.

Merck's (NYSE:MRK) current drug pipeline does not reveal any drugs particularly promising for foot and heal pain, though its odanacatib MK-0822 drug for osteoporosis could help sufferers of this disease who are experiencing heel pain as a result. Merck's biggest presence in the foot and heel pain industry is its Dr. Scholl's line of insoles and orthotics. However, Merck's focus is firmly on its drug pipeline, not on its podiatry solutions, which is unfortunate, given the potential of this market.

The blind eye Merck and others are turning towards the heel pain market is leading to opportunities for niche companies focusing solely on this growing segment of the consumer products industry. According to the Illinois Podiatric Medical Association, 75% of Americans will experience some type of foot or heel problem during their lifetime, yet at the same time podiatrists are up to four times less likely to make use of expensive inpatient methods of treatment than other physicians. This indicates that the approach of Johnson & Johnson and Pfizer in developing drugs to treat chronic pain and the after effects of surgery are unlikely to make a profit in this market. One company, however, sees this major opening and is making major inroads into the heel pain industry.

How a Private Company Could Change the Industry

Heel-That-Pain started offering its patented Heel Seat product in 2001. The product differs from others on the market in that it not only relieves existing pain but works to treat the cause of heel pain by correcting misalignments and supporting pressure points in the foot, preventing further recurrences caused by various disorders including plantar fasciitis, ligament tears, heel spurs, and simple chronic pain from overuse. This unique approach is lauded by consumers and has potential investors excited as Heel-That-Pain's success with the Heel Seat enabled it to expand into other closely related product lines, such as insoles and splints. By focusing on its competency in heel pain, Heel-That-Pain is remaining a niche company while growing its revenue sources and building distribution channels with distributors as it works to increase production to meet demand.

This type of niche building is needed in pharmaceuticals and medical supply, and I believe that the increased reach presented to smaller companies by new advertising methods as well as the new economies of scale available to such niche providers brought about by increasingly available and inexpensive manufacturing technology could change the face of these industries entirely. Clearly, without patent protection on past blockbusters, which are being introduced fewer and further between, big pharma is challenged to keep up in today's markets. Investors willing to dig deeper into general market research and form a specialty in medical investing might find opportunity with new names like Heel-That-Pain when the next wave of IPOs hits the market.

Source: 3 Big Pharma Stocks Targeting The Lucrative Heel Pain Market