Resmed’s AirFit masks appear to be boosting market share
Last November, Resmed launched its new range of AirFit masks. This led us to wonder if the uptick in growth in Resmed’s second quarter results was due to the new masks. Early indications are that the masks have been well received, and are increasing the company’s market share.
By way of background, Resmed was historically a market leader in masks but its previous mask range achieved relatively modest growth. This was due to a weaker reception by patients to user comfort and technological advances by its competitors.
While it’s early days, anecdotal feedback suggests that Resmed’s new mask range is being well received by physicians and patients. Importantly, it is faring well against Fisher & Paykel Healthcare whose masks have set the standard in recent years and taken meaningful share from the majors.
A key part of our investment thesis with Resmed is its potential to sell a higher number of consumables to its large customer base with these new products. It seems the number of consumables sold per customer has remained steady since the launch, but it will take time for existing customers to switch to the new masks as they’re accustomed to their current, older masks.
Resmed appears to be gaining further share over its major competitor, Philips Respironics, with both masks and flow generators during this quarter. While Respironics launched its DreamStation in late response to Resmed’s Airsense, it seems the Airsense remains a compelling value proposition for both distributors and customers. Resmed hasn’t discounted the prices of its new masks during this quarter, which is further evidence of a strong competitive position.
And finally, the underlying market appears to be growing in the mid-to-high single digits, so it is great for Resmed to be taking share in a rising market.
These anecdotal reports must be taken with a large grain of salt, as they comprise only a handful of participants in a global industry and quarterly assessments can be volatile. But broadly speaking, the trends appear positive.
Montgomery owns shares in Resmed.
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Difficult to confidently forecast an enduring competitive advantage for this business. While masks presumably need to be replaced periodically, to the extent people are able to use their current mask or the cheapest suitable alternative, Resmed might only increase the margin of their profit on consumables to the extent they can convince users to pay up for added ‘features’ of questionable value.
Still, logic aside it seems to work for other items like toothbrushes, toothpaste, and disposable razors.