Litha Healthcare – the former AltX-listed counter that merged with Myriad Medical last year and subsequently moved to the JSE’s main board – spends a significant chunk of its 138-page annual report explaining itself and strategic plans for its three divisions for the next couple of years. Understandably, as an AltX player, few investors paid attention to it. Now that it plays in the big league it has to be understood better.On the face of it, Litha Healthcare Group [JSE:LHG] doesn’t offer much to investors. It’s largely dependent on its biotech business, which supplies paediatric vaccines to South Africa’s Department of Health through a private public partnership (PPP) in The Biovac Institute and, to a limited extent, the private sector. It’s said it’s not about to declare a dividend (maybe in three years’ time), which makes it less attractive to short-term investors. Nevertheless, we think investors should consider the counter. It’s not yet in the league of Aspen Pharmacare or Adcock Ingram and it certainly can’t be compared to Cipla Medpro. Aside from the obvious fact that pharmaceutical and private hospital groups are defensive stocks, Litha has the making of a potentially successful small cap.While its PPP with Government gives it a guaranteed income, it’s developing capacity to start manufacturing its own vaccines in 2013 to export it to the rest of southern Africa, venturing into a largely untapped market. Having your own manufacturing division takes it out of just being a distributor and will boost its margins. Equally, there’s potential in its pharma business, especially the focus on generic medicines, while its higher margin medical devices division is poised to increase its sales to the public sector. As a company emerging from a merger its 2010 financial figures aren’t comparable. However, you can bet on its long-term potential.