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Medical device company ResMed have posted a revenue increase of 12% in their last quarter, partly affected by the current and continuing recall of CPAP and BiPAP machines made by Philips. However, the quantity of market share that can be captured by ResMed is severely limited by constraints in the supply chain, with a 10% market share expected to be captured from Philips as a result of this recall, based on analysis from February 14th by Needham & Company. The recall was announced by Philips last June, and since then, it has been expanded to to over 5 million devices. In the latest earnings call, the company has said it expects that to finish repairing or replacing the recalled devices will probably take until December this year, although the Needham & Co. analysts added that Philips are unlikely to be able to re-enter the market until 2023. 

ResMed’s CEO, Michael J Farrell, has said at a recent conference: “It’s a big impact on the doctors, the providers, the whole ecosystem. It’s been really tough. I think the hardest hit in an event like this with five-plus million devices affected are the patients.” The Needham & Co. analysts are expecting ResMed to capture as much market share as it possibly can this year, with its revenue growth likely to slow in 2023 as Philips returns as a competitor in the market space. Its still sticking to its projection of bringing in an additional $300m to $350 in revenue fro its fiscal 2022 year, ending in June. During the fiscal first quarter, revenue in sleep and repiratory care showed an increase of $88m, climbing by a further $60m by the end of December’s quarter. The remainder of the increase is forecasted to take place later this year, with ResMed expecting more components to be freed up over the second half of 2022. 

This is a result of the company re-engineering its supply chains and Airsense 10 devices. It has also been urgently calling for needed components from its current suppliers. ResMed also launched their Airsense 11 CPAP machine in in 2021, which is anticipated to be successful in the US. “So all four of those [developments] give us confidence… that we can free up supply for June, September and December,” CEO Farrell said, adding that ResMed has analysed various scenarios where the Philips company makes a comeback either this fall, or, at the latest, March 2023. The CEO did not however seem concerned over the prospect of Philips returning as a competitor, mentioning that his company has a mask attach rate of 60% to Philips-manufactured devices, and that patient welfare would be improved overall as a result.

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