Diabetes is one of the fastest-growing market segments within healthcare, thanks in no small part to the out-of-control obesity epidemic. The bright side is that the standard of care for this common metabolic disorder has been steadily improving with the advent of numerous game-changing therapies and medical devices over the past few years. Best of all, this innovation boon is showing no signs of slowing down.  

Which diabetes stocks are poised to benefit from this ongoing innovation bonanza? AstraZeneca (AZN 2.65%), Eli Lilly (LLY -0.01%), and Medtronic (MDT 0.72%) are three names that these Motley Fool healthcare contributors think are worth keeping tabs on this month. Here's why.

A female doctor testing the blood sugar level of an elderly female patient.

Image Source: Getty Images.

A steady growth play

George Budwell (AstraZeneca): AstraZeneca's diabetes franchise often gets lost in the mix from an investing standpoint. That's not altogether surprising, given the company's rapidly growing footprint in oncology and well-established competitive position in the respiratory space. However, there are several good reasons investors shouldn't overlook this key component of the company's overall value proposition.

First and foremost, Astra is presently the fifth-largest diabetes drugmaker in the world. While that may not sound particularly exciting from a value-creation standpoint, Astra is on track to haul in an impressive $2.6 billion in diabetes drug sales this year, even though it's a lower-tier player in this market. Better still, Wall Street expects the company's anti-diabetes product sales to rise at a compound annual growth rate (CAGR) of no less than 4% over the next five years. That's a respectable level of growth for a franchise of this size. 

How will Astra keep its diabetes franchise headed in the right direction? The big-ticket item is the company's type 2 diabetes medicine Farxiga (Forxiga in the EU). Astra's current goal is to expand Farxiga's label to include diabetes patients who are at risk of heart failure. If the company can tack on this high-value indication -- and all signs indicate that this is a good possibility -- Farxiga's sales should eventually top $2.7 billion as soon as 2023.

This emerging megablockbuster won't boost Astra into the upper echelon of diabetes drugmakers, but it should provide yet another solid growth driver for the company in the years ahead. And that's arguably a great reason to keep tabs on this developing story right now. 

A nimble diabetes giant

Keith Speights (Eli Lilly): There's no question that Eli Lilly qualifies as a giant in the diabetes industry. The drugmaker posted revenue of $5.1 billion in the first quarter, with well over half of that total coming from its diabetes franchise. But Lilly has proven to be a nimble giant, with its stock soaring 37% last year.

Granted, the company's shares are lagging behind the overall market so far in 2019. However, Eli Lilly still is a stock to watch, in large part because of its progress in diabetes.

Type 2 diabetes drug Trulicity remains a big winner for Lilly, as does its long-acting basal insulin Basaglar. There are several diabetes developments for investors to look forward to in the near future that could also boost Lilly's fortunes.

The company awaits U.S. and European approval for adding cardiovascular-outcomes data to its Trulicity label. It hopes to win approvals in Europe and Japan for ultra-rapid Lispro for type 1 and type 2 diabetes. In addition, Lilly is waiting on Food and Drug Administration (FDA) approval for its first connected device, a pre-filled insulin pen, as well as nasal glucagon.

But Lilly isn't just focused on diabetes. The company is a leader in immunology, neuroscience, and oncology, too.

Two new products to especially keep your eyes on are migraine drug Emgality, which won FDA approval in September 2018. Lilly's acquisition of Loxo Oncology could also give the company a great new cancer drug. The company expects to file for approval of LOXO-292 in the U.S. later this year and in Europe soon afterward.

A company of "firsts"

Sean Williams (Medtronic): Though there may be highfliers to be found among diabetes drug and device makers, the top diabetes stock on my watchlist is pretty much always device-giant Medtronic.

With Medtronic, it's all about firsts. In 2016, the company debuted the very first closed-loop artificial pancreas: the MiniMed 670G. A protruding needle that slips under the skin continuously measures glucose levels for type 1 diabetics. These measurements are then relayed to an insulin pump that delivers insulin on an as-needed basis to the patient. The MiniMed 670G is a major step forward for type 1 diabetics in that it should dramatically reduce hypoglycemic events, which can be even more dangerous than a high-blood-sugar event.

Just how important has the 670G been to Medtronic's top-line performance? Prior to the introduction of the 670G, the company's diabetes unit was growing at a low-single-digit rate. Since the introduction of the device, diabetes unit sales have regularly grown at a high-single-digit or even double-digit percentage, with nearly all of its unit growth coming organically.

Another recent first for the company was the introduction of its Guardian Connect glucose-monitoring system. With each passing year, Medtronic is leaning more on technology to make the lives of its patients easier. The Guardian Connect works with a patient's smartphone to help map out their daily blood-sugar peaks and troughs, helping the patient track -- and presumably better regulate -- their glycemic balance.

Ultimately, the diabetes market is a numbers game that's working in Medtronic's favor. As the global population increases, so do the number of diabetes patients who could benefit from a continuous glucose-monitoring system. That makes Medtronic a pretty safe bet to continue growing its diabetes segment at a healthy clip.