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November 2, 2022
2 Min Read
Image courtesy of Piotr Swat / Alamy Stock Photo
As Philips continues to work through its massive recall initiated 15 months ago impacting ventilators and sleep apnea devices, ResMed continues working to keep up with excess demand for CPAP (continuous positive airway pressure) devices created by the competitor's recall.
As of October 25, Philips said it had produced 3.95 million repair kits and replacement devices globally, and had shipped 2 million in the United States.
"We aim to complete the repair and replacement program for the majority of registered patients by December 2022. While we are making progress, we realize that for patients waiting for a repaired or replaced device, progress can’t come fast enough," Philips said on its website.
Medtech analysts covering the space continue to be all ears during ResMed's quarterly earnings calls for any and all information related to how the smaller competitor is managing excess demand – and how quickly ResMed is growing during the ongoing situation created by the Philips recall.
"They say they may be back in January, but I'm not optimistic they'll actually be back [in January] given all the issues that are there for them," ResMed CEO Mick Farrell told analysts during the company's fiscal first quarter 2023 earnings call last week.
ResMed's first-quarter revenue increased by 5% to $950.3 million during the quarter, which represents an increase of 9% on a constant currency basis.
Also last week, Philips said is cutting about 5% of its workforce, or about 4,000 jobs, amid declining sales, supply chain issues, and the recall. The situation with Philips is dire because it is now facing a net loss of $1.31 billion compared with a year-ago profit of $2.93 billion. The company said the layoffs would save about $296 million a year.
While Farrell only sees the information publicly available about the Philips recall, he said ResMed management does run various scenarios based on estimations of when Philips might return to the sleep apnea market, whether that be in January 2023, July 2023, or even later in 2023.
"And as I look at that I think about our ability and what we can do, and every quarter we're going to increase production ... there are scenarios where we can get to the full industry demand in calendar year 2023," Farrell said. "A lot of things have to come together for that to happen ... but we're doing everything we can to get closer and closer to that."
He added that as he starts to look at scenarios through 2023, he thinks potentially "the supply and demand curves could crossover for us and the other players in the industry as well."
That said, Farrell misses going head-to-head with the larger medical device company.
"I want them back," he said. "I love the competitive game, you know, I love beating them in the game of who's got the smallest, quietest, most comfortable, and most cloud-connected device that lowers costs and improves outcomes, and we were doing that in 2019."
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