ResMed is collaborating with main competitor Respironics to promote sleep disorder therapy for a variety of chronic conditions.

The companies are co-funding a public relations initiative supported by public relations firm Schwartz Communications to generate awareness of the connections between sleep disorder breathing and ailments that include heart conditions, gastro esophageal reflux disease, cognitive dysfunction, morning headaches and nocturia.

ResMed estimates that only 10%-15% of obstructed sleep apnea cases have been diagnosed and treated. "What's been happening in the past is the primary care physician has been sending patients into these medical silos," ResMed CEO Peter Farrell, PhD, said during a fiscal Q4 earnings call Aug. 22.

"This is happening, maybe not in leaps and bounds, but certainly we're seeing traction in all of these medical silos," Farell observed. For example, more urologists are prescribing sleep tests for patients with nocturia.

The awareness initiative builds upon a previously announced collaboration between ResMed and Respironics to generate data on the relationship between obstructed sleep apnea and cardiovascular disease (¹ Also see "Sleep Test Coverage Policy, ResMed/Respironics Talks Could Awaken Market" - Medtech Insight, 3 May, 2004., p. 6).

ResMed also has a strategic alliance with Guidant and cardiac services network MedCath to develop marketing, R&D, and education initiatives on the potential link between heart disease and sleep disorders.

The company contributes to two ResMed Foundations - one in the U.S. and one in Europe - established to support sleep disorder research. ResMed donated $500,000 to the foundations in fiscal year 2005, ended June 30.

During the call, ResMed reported total revenues were up 35% from the same quarter last year to $125.4 mil. Excluding recent restructuring and acquisition expenses, income from operations was up 24% to $30.4 mil., while net income was up 37% to $21.7 mil.

Revenues for fiscal year 2005 were $425.5 mil., up 25% from the previous fiscal year. Excluding the aforementioned expenses, net income increased 29% to $74.2 mil.

ResMed attributes much of its organic growth in FY 2005 to the launch of the S8 continuous positive airway pressure (CPAP) platform and the Mirage Swift CPAP mask.

However, most of the company's overall growth was due to three acquisitions in FY 2005: Dutch distributor Resprecare Medical BV, German distributor Hoefner Medizintechnick, and French ventilator-maker Saime, acquired May 25.

Hoefner and Resprecare contributed approximately $9 mil. to ResMed's revenues for the quarter, according to ResMed. Saime accounted for just over $6 mil. in revenues, exceeding initial expectations (² 'The Gray Sheet' May 9, 2005, In Brief).

Sales in the U.S. and Europe make up a respective 50% and 42% of ResMed's total revenue, with Asia comprising the remaining 8%.

With these recent acquisitions, ResMed is focusing its awareness promotion efforts in Europe. "We're already the number one player in Europe...so our chance in the European market is literally market growth as a whole," CFO Adrian Smith said during the call.

"Clearly, we see Saime as being very important as far as the powers of Europe and Asia-Pacific and the U.S. and Canada and Latin America, but it's not going to happen overnight," Farrell said. "We've got to make sure that we're happy with quality issues."

ResMed's overseas sales have been hindered over the past year by backlog problems at its European plants. The integration of its German operations led to higher employee attrition rates than expected and a slowing of order processing.

Inventory problems also impeded the U.S. launch of the Mirage Swift mask in December. "We did have a struggle catching up," Farrell said. "There was a lot of pent-up demand for the product."

The company reports it sold 95,000 masks in the U.S. in FY 2005, but only 5,000 in Europe. Masks and accessories accounted for 45% of sales in the U.S., but only 12% elsewhere. The company also blames the slow sales in Europe on low reimbursement in Germany.

The firm plans to develop its Asian and Latin American businesses, but Farrell cautioned "we've got to take care of business in Europe before we start pushing the boat too far out too quickly."

ResMed Collaborates With Rival To Raise Awareness Of Sleep Disorders

More from Archive

More from Medtech Insight