Merck (NYSE: MRK) has been a solid performer in the health care field for decades. Its share price recently dipped, but that represents a buying opportunity for those who have neglected to add it to their growth portfolios until now.

The share price dropped almost 3 percent in one day after the company reported disappointing earnings earlier this month. The company’s revenue was down because one of its most widely used drugs, the asthma medication Singulair, was facing more competition from generics than it did before. But the price has stabilized, and the initial drop seems to have been an overreaction.

Merck’s revenue in the first quarter of 2013 was $10.7 billion, down from $11.7 billion in the first quarter of 2012. The decline “reflects the challenges of major patent expirations coupled with the impact of currency and other headwinds,” according to Kenneth Frazier, the company’s CEO. He said Merck is responding by “advancing the pipeline in our laboratories and through strategic deals and partnerships.”

New Jersey-based Merck is one of the world’s largest health care companies. It’s best known for producing prescription medicines, but it is also involved in vaccines, biologic therapies, and various consumer products.

Pharmaceuticals are a typical 21st-century product in that market-dominating ideas are everything, since the “marginal cost” of making one more pill is trivial. Merck has an outstanding track record in developing those ideas.

The company’s price-to-earnings (P/E) ratio of 23 is attractive, considering its commanding position in a number of different markets. The corporation produces some of the most well known medicines available today, including Gardasil, Propecia, Vytorin and Zostavax.

Merck has about 51,000 employees in 120 countries with 31 factories worldwide. Its 2009 acquisition of Schering-Plough added to its already substantial market penetration.

The company has some new products coming on-line that have great potential. The market for insomnia medications is currently dominated by Ambien and Lunesta, which work by subduing the brain into sleep; they work with the body’s receptors that reduce neuron activity. Merck is trying to get approval from the US Food and Drug Administration (FDA) for a medicine, known as suvorexant, that is designed to turn off wakefulness by blocking orexins in the brain.

The company says that its approach would not have some of the side effects associated with other insomnia drugs, such as suicidal thought and impaired driving. The new medication appears likely to get FDA approval, although the agency and the company are still determining the safest dosage levels.

Merck is also acting aggressively to improve its position in the lucrative anti-cholesterol market. With the U.S. population aging and health advice focusing more and more on the importance of reducing cholesterol levels, this is an important market segment for any pharmaceutical company.

The most widely used prescription medicine in this field is Lipitor, which is produced by New York-based Pfizer (NYSE: PFE). In fact, Lipitor is believed to be the best-selling drug ever made. But Lipitor lost its patent protection in 2011, and all the big drug companies have been scrambling to get a piece of the pie.

Merck has developed a drug that combines its existing product Zetia, which substantially reduces low-density lipoprotein (LDL, or “bad cholesterol”), with the generic version of Lipitor. The new drug, which will likely be called Liptruzet, has received FDA approval.

New Markets

As my colleague John Persinos pointed out in his March 29 “Stocks to Watch” article, “A Safer Play on the Biotech Bonanza,” economic growth in emerging nations will have a big impact on the pharmaceutical market, as these markets experience a rise in middle class consumers who demand more and better drugs.

Merck has been steadily increasing its presence in countries such as India and China. The latter country has implemented a mandate for universal health coverage that will fuel long-term demand for new drugs. Meanwhile, the corporation’s “Merck for Mothers” initiative aims to reduce maternal mortality in India by getting medicines more widely distributed.

Last month, Merck announced the opening of its new pharmaceutical manufacturing facility in Hangzhou, China. The facility, located in the Hangzhou Economic and Technology Area (HEDA), will package Merck medicines for China and the Asia Pacific region and will become a part of Merck’s global supply chain.

Some investors have been spooked by lawsuits that have been filed by individuals who used the company’s osteoporosis drug Fosamax. Of the millions of people who took the drug, 10 patients have asserted that they suffered femur fractures after taking the medicine.

However, the company has already won five out of seven trials on this issue, even though medical malpractice cases often go against companies at the trial level – injured plaintiffs appear more sympathetic to juries than big corporations – before being overturned on appeal.

Fosamax was approved as a safe medication by the FDA in September 1995 and is still approved today for multiple indications, including the treatment and prevention of osteoporosis in postmenopausal women.

As with all such medicines, the drug was studied in clinical trials, conducted both before and following approval, involving more than 28,000 patients, including more than 17,000 treated with Fosamax.

Merck also has a new product coming out for allergy sufferers. The FDA is currently reviewing the company’s application for two new drugs that would deal with grass pollen and ragweed pollen allergies. Merck’s application is supported by five studies evaluating the efficacy and safety of the tablet in adults with ragweed induced allergic rhinitis.

Merck was one of the world’s three or four leading pharmaceutical companies a decade ago, and it’s still in that select group today. Its recent slight downturn is an opportunity that you should seize.

Thomas Scarlett is an investment analyst at Investing Daily and Personal Finance.