ResMed CEO: Demand Up After Competitor Recall

BIRMINGHAM, Alabama (August 19, 2021)—A surge in demand for sleep and respiratory devices in the wake of a Philips Respironics recall has created “an unprecedented increase in demand” for Resmed devices, the company’s CEO said—but supply chain and freight limitations are making it hard for the company to keep up. Nonetheless, the company could realize $300 million-$350 million in unplanned additional revenue in fiscal year 2022, he said.

“We are working incredibly closely with our global supply chain partners to ensure access to additional supply of the critical components that we need to further increase production of our medical devices,” ResMed CEO Mick Farrell said on the company’s earnings call earlier this month. “During this June quarter, the demand spike was so high that we have been forced to allocate products due to the unprecedented demand and these real-world supply chain capacity constraints.”

Farrell said the company is focusing on the patients with the highest acuity needs first, much as it did with ventilator allocation during the worst periods of the COVID-19 pandemic. The chip and electronic component shortages could last 12-18 months, he said.

“We will continue to coordinate with all of our stakeholders as the situation develops and we begin to open up these supply constraints. We understand this is a frustrating situation for all of our customer groups, including physicians, home medical equipment providers, payers and most importantly, the ultimate customer, the patient,” he said.

Farrell said that, although Resmed is doing everything it can to increase access to its supply of parts, it does not expect to be able to meet all the demand.

“ResMed will not be able to fill the entire supply gap that has been created by this situation caused by a competitor just seven weeks ago,” Farrell said. “They were the No. 2 player to our No. 1 leading market position in almost all of the 140 countries that we compete in worldwide.”

Farrell said the company expects to accelerate the flow of its products significantly starting in the March 2022 and June 2022 quarters, and is focused on getting devices to newly diagnosed patients. The company also just announced the launch of its AirSense 11, its next-generation PAP device.

ResMed reported that its revenue increased 8% to $3.2 billion over the same period last year, and income from operations increased 12%.

“Customers vote with their wallets,” Farrell said. “And right now, they are voting for us, and we plan to keep earning their support.