Good morning fellow, Fools! It's time to check in on the movers and shakers in health care today.

Johnson & Johnson fights back over diabetes trademark

Johnson & Johnson (NYSE:JNJ) announced this morning that it is appealing a decision by a Chinese government agency to revoke the company's trademark for its OneTouch diabetes monitoring product. The market is apparently hopefully the decision will be reversed, with Johnson & Johnson shares up nearly 1% in premarket.

Why is this a big deal? Firstly, China's diabetes market is the biggest in the world and is still growing. Last year alone, diabetes products generated over $17 billion in sales in China. So losing the exclusive rights to the popular OneTouch monitoring system will legally allow copycats to sell their products in literally the best market on Earth. That's why Johnson & Johnson management said they were "shocked" and "very disappointed" with the decision.  

What's my take? Personally, I believe this legal battle is much ado about nothing. The Chinese government is notorious for turning a blind eye to patent infringement and market exclusivity rights, just ask Apple (NASDAQ:AAPL) about it's experience with the iPad in China. In sum, copycats are a way of life in China, and their effect on Johnson & Johnson's bottom line was factored into sales of OneTouch long ago.

Of course, Johnson & Johnson, like Apple, will battle to protect their rights, but it's a non-issue in the bigger scheme of things. 

Sequenom blasting off

Shares of the cutting-edge genetic analysis company Sequenom (NASDAQ:SQNM) are ripping higher in premarket this morning after announcing that the European Patent Office granted the company's patent application entitled "Diagnosing Fetal Chromosomal Aneuploidy Using Genomic Sequencing." The patent protects the company's novel genetic analytical methods for detecting fetal aneuploidy in the European Union, as well as in Liechtenstein, Monaco, Norway and Switzerland.

Should you join the party? Sequenom's fetal diagnostic services are arguably its most important commercial products, with revenues jumping 166% in the third quarter of 2013 compared to a year ago. And this patent helps to ensure that the company will maintain its IP superiority in the space going forward.

Even so, it's important to understand that the company's costs have long been the fly in the ointment. Despite having annual sales of over $150 million last year and shares trading at a measly two times gross sales, Sequenom shares have continued to drop because of increasing costs, resulting in a net loss per share of about $1.

Looking ahead, Sequenom has recently laid off part of its workforce and is restructuring to lower costs. They are also pushing to increase sales of their fetal diagnostic services, which appears to be getting results based on the dramatic increase in revenues for this segment. So I am cautiously optimistic that Sequenom is on the comeback trail. As such, you might want to keep this one on your watch list.

Will these two stocks outperform Johnson & Johnson and Sequenom this year? The best way to play the biotech space is to find companies that shun the status quo and instead discover revolutionary, groundbreaking technologies. In the Motley Fool's brand-new FREE report "2 Game-Changing Biotechs Revolutionizing the Way We Treat Cancer," find out about a new technology that big pharma is endorsing through partnerships, and the two companies that are set to profit from this emerging drug class. Click here to get your copy today.

George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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.

Compare Brokers