When it comes to precision medicine, two companies stand at the forefront: Illumina (ILMN -2.48%) develops the genomic-sequencing systems that help pave the way for precision medicine. And while Roche Holding (RHHBY 0.16%) also develops sequencing systems, its the healthcare giant's development of game-changing drugs that have pushed precision medicine forward even more.

Which of these two stocks is the better choice for long-term investors' portfolios now? Here's how Illumina and Roche compare.

DNA strands

Image source: Getty Images.

The case for Illumina

I'd say the strongest investing argument for Illumina is that no other company creates opportunities in the field of genomic sequencing like it does. Its HiSeq system was the first to cut the cost of mapping a genome to $1,000. Its latest technology, the NovaSeq system, could pave the way for the first $100 genome. 

NovaSeq is good news for Illumina over the short run, simply because the company should sell new systems to existing customers wanting to convert to the latest technology. Over the longer run, though, its potential is even greater. Not only should Illumina take away customers from rivals, it should be able to expand the market to include organizations that aren't anyone's customers today. 

Even though the technology has been around for a couple of decades, genomic sequencing is still in relatively limited use. Many organizations that would love to be able to analyze genomes have been unable to because of the high costs. NovaSeq could change the paradigm.

Illumina generates a little under two-thirds of its total revenue from consumables -- the products its machines use in the course of sequencing genes. The more genomic sequencing that is done, the more money Illumina makes. If NovaSeq delivers like Illumina expects it to, there will be a lot more genomic sequencing going on in the future than there is today. 

Probably the biggest knock against Illumina is that its stock is expensive. Shares currently trade at nearly 40 times expected earnings. However, Illumina has never been a stock that anyone would buy because of its valuation. It's instead the kind of stock that you buy because you think the world of the future will need and demand more of the company's technology. I suspect that argument is just as true today as it was 15 years ago.

The case for Roche

Investors like Roche for a combination of two things: a rock-solid dividend and steady growth from a diversified mix of products. Roche's dividend currently yields 3.18%. With 30 consecutive years of dividend increases, it seems likely the dividend will go nowhere but up.

Roche's steady growth stems from two primary lines of business -- diagnostics and pharmaceuticals. More of the company's growth lately has stemmed from its diagnostics business, led by strong sales of immunodiagnostic and companion diagnostics products. 

The healthcare giant has faced challenges. Rival treatments have taken market share from Pegasys, Tarceva, and Lucentis -- longtime winners in its portfolio of drugs. On the other hand, Roche is getting solid performance from cancer drugs Perjeta and Herceptin as well as autoimmune disease drug Actemra.

More growth should be on the way from newer drugs. Roche launched four in 2016: Cotellic, a treatment for advanced melanoma; lung cancer drug Alecensa; chronic lymphocytic leukemia drug Venclexta; and Tecentriq, which treats bladder and lung cancer. The company also recently won U.S. regulatory approval for multiple sclerosis drug Ocrevus.

And based on sheer numbers, Roche's pipeline stands out as one of the most robust around. The company claims over 140 clinical programs in development across multiple therapeutic categories. 

Better buy

Though Roche should produce more winners from its pipeline, I think Illumina is the better pick. While it faces competition, the company's innovation should allow it to continue prevailing in the marketplace.

I also think that it could see strong growth in Asia. China has declared its intention to become a DNA superpower, and it will need Illumina's technology to make that goal a reality.  

While there's always a chance that Illumina will stumble -- the company created some of its own problems in 2016 -- over the long run, it should remain a winning stock.