Farrells’ Sleeping Giant Expands In Sandyford
ResMed has been quite the success story for Dr Peter Farrell and his son Mick Farrell. Based now in San Diego, ResMed started out in Australia, where Peter Farrell saw the opportunity to acquire from his employers Baxter the rights to technology and devices relating to CPAP treatment.
CPAP stands for continuous positive airway pressure, a treatment for obstructive sleep apnea (OSA). ResMed went public in 1995 and the Farrells’ venture has been incredibly successful. Revenue in the year to June 2022 was $3.6bn and net profit was $780m.
Mick Farrell took over from his dad as CEO in 2013, and Peter Farrell now oversees the Farrell Family Foundation, which distributes millions of dollars annually to worthy good causes down under and in the US.
ResMed’s success centres on sleep, or the lack of it. The upper airway in the human body is held open by active contraction of upper airway muscles. Normally, during REM sleep and deeper levels of non-REM sleep, upper airway muscles relax and the airway narrows. However, some individuals are prone to temporary collapses of the upper airway during sleep, called apneas.
With these breathing events, the individual subconsciously arouses from sleep, causing the throat muscles to contract, opening the airway. After a few gasping breaths, blood oxygen levels increase and the individual can resume a deeper sleep until the cycle repeats itself.
While OSA awakenings impair the quality of sleep, the individual is not normally aware of these disruptions. Four decades ago, the primary treatment for OSA was a surgical procedure to create a hole in the patient’s windpipe. ResMed’s CPAP alternative is a mask, which involves breathing in air from a device and breathing out through an exhaust port in the interface. It’s not a comfortable solution but demand is obviously growing.
ResMed estimates that one in eight adults suffer from moderate to severe sleep apnea and that under 20% of people with OSA have been diagnosed or treated. This matters because sleep apnea is associated with a number of cardiovascular and metabolic diseases.
ResMed also makes ventilators which aided the 37% uplift in turnover from FY19 to FY22. The company’s gross margin is a handsome 57%, and shareholders were rewarded with $245m in dividends in FY22. Now taxpayers are assisting the firm to double its software and technology team in Sandyford, with 70 new jobs promised over the next four years.