To ensure that you have a comfortable retirement, you need to find those investments that are guaranteed to generate a steady stream of profits -- not just for the next 12 months, but long term. One way to find them is to focus on those making the most progress in battling chronic diseases.

Merck (MRK) - Get Report has been a solid performer in the healthcare field for decades. The Kenilworth, N.J.-based company is well-known for producing such widely advertised medicines as Vytorin (cholesterol) and Fosamax (osteoporosis), but it is also involved in developing medicine that physicians will be using to fight life-threatening conditions. A recent therapy has blockbuster potential. Shares of the stock rose slightly in Monday trading.

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Merck and its longtime rival Bristol-Myers Squibb have been among the leaders in producing effective anti-cancer medicines and therapies. Two recent developments indicate that Merck may have moved ahead of Bristol-Myers Squibb in a crucial area.

Last year, The U.S. Food and Drug Administration approved Merck's Keytruda drug for the treatment of patients with recurrent or metastatic cancer. Under the FDA's accelerated approval regulations, this indication for the drug is approved based on tumor response rate and durability of response, meaning that the drug can add years' to people's lives, even those with advanced forms of cancer.

Meanwhile, Bristol-Myers' Opdivo medicine, which is considered the key competitor to the Merck drug, fell short of expectations in a comprehensive study of its use by lung cancer patients.

In a survey, almost half the physician who responded said their perception of Opdivo has changed "significantly" or "very significantly" because of the recent trial failure.

Experts on the pharmaceutical industry now expect a substantial swing toward the Merck product by oncologists. Several top analysts have recently boosted their target price for Merck stock.

In the drug business, market-dominating ideas are everything, since the "marginal cost" of making one more pill is trivial. Merck has an outstanding track record of developing those ideas, of which Keytruda's success is only the most recent.

In addition to generating brilliant ideas in-house, the company has also made shrewd moves to gain control of other potential rivals. Its 2009 acquisition of Schering-Plough increased its already substantial market presence. Now Merck is one of several companies competing to acquire Medivation, a small pharmaceutical company with several important new products.

Medivation has had a series of successes; it is probably best known for its prostate cancer drug Xtandi. Pfizer and Gilead Sciences are also competing to acquire the company, but Merck has the financial resources to prevail.

Merck is also expanding rapidly in the emerging economies of Asia. It has opened a pharmaceutical manufacturing facility in Hangzhou, China. The facility will package Merck medicines for China and the Asia Pacific region and is becoming a key part of Merck's global supply chain.


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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.