@Aaronfzr Its great to get your take from in "inside".

I am not a medical professional at all.

Throughout the last 12 months or so I have done a little reading, trying to gain some understanding of how these drugs would affect RMD. I saw the larger drops in share price over that period as being a potential over reaction and therefore a possible contrarian trade.

Essentially, I came to the same conclusion that you have. As a result I have bought shares during two of these periods where the SP is hit hard by negative sentiment.

I wonder when this will all stop, but maybe it won't and maybe I should just roll with it and continue to welcome the dips.

Thanks for sharing your experience and opinions from the real world.

It's quite interesting to see the hype and negativity about GLP1s and resmed/OSA therapy. To labour an analogy, its a bit like being worried that green hydrogen will be a threat to EVs. I guess maybe a few vehicles will be retrofitted for hydrogen rather than buying a new EV, but more likely the whole pie will grow with increased focus on the underlying theme of green transportation.

On the other hand, the biggest risk to Resmed is probably commoditisation of the technology. Unlike really high-tech solutions which are intrinsically protected by their complexity and trade secrets (e.g. Cochlear implants), Resmed devices aren't all that high tech. I'm not saying I could build one, but with a couple of engineers I could get a heck of a lot closer to building a CPAP machine than I could a cochlear implant. The fundamentals of the devices aren't all that special. If anything, its a minor miracle that there is only one major competitor, and that Philips managed to slip up so badly and get recalled With what Fisher & Paykal have achieved with high flow humidified oxygen devices, they could probably come up with a CPAP machine if they really wanted to, and so could major ventilator manufacturers like GE, Drager, Mindray, Medtronic and Hamilton. So why haven't they? I think they were caught napping, and before they knew it, Resmed had built such a brand and presence it wasn't worth the distraction from their core businesses.

This implies a couple of things:

• While resmed has a competitive advantage and probably a narrow moat based on their brand penetration, I don't think they can maintain or achieve a wide moat or the pricing power that comes with that
• IF resmed was able to achieve (or attempts to exert) major pricing power and monopoly rents, they are susceptible to being undercut within 3-5 years by a competitor who can throw together a pretty good device and carve out a decent niche while still making good money. This limits just how far resmed's competitive advantage can go based on current technology
• IF resmed is seeking economic rents in the CPAP business, it needs to develop truly proprietary CPAP capabilities
• Operating software that can somehow make the devices more tolerable and comfortable
• Integrate with lifestyle devices (apple watch, fitbits, etc) or implanted medical devices (e.g. pacemakers) to dynamically integrate user physiology data to improve the user experience or outcomes

@Aaronfzr despite having exited $RMD, I actually agree with your assessment.

The combination of existing CPAP market presence, the GLP1-OSA focus and the capability of consurmer wearables to direct undiagnosed patients to sleep clinics, will with high likelihood drive more patient to $RMD.

(As a minor point, $FPH are already active in CPAP for OSA. And with the Respironics setback, I think they might even be the glboal #2? I often drive past the $FPH sleep clinic near the Gabba in Brisy! )

I have been a reasonably long-term investor in $RMD, and in recent months exited. It turns out that this was a premature move, but I have been deploying more capital in the healthcare part of my portfolio towards businesses where I see higher upside potential. Over the last 6 months, I have been gradually shifting my ASX-portfolio to higher growth opportunities... RL starting to look more and more like SM. I also try to limit my exposure to any one sector - and healthcare was getting up to 40% - so I have actually exited $CSL and $RMD.

The one point in your analysis that I'd like to amplify, is that the billions of nights of sleep data that $RMD "owns" will help to shore up it's moat. This will have many uses:

• Fine tuning product design and product use
• Enabling wrap-around services for patients and HCPs
• Support clinical research (witness the real world findings they've already published on GLP-1 - OSA - CPAP outcomes)

Hah, and with regards to my earlier post on AI - you can add $RMD to the list of beneficiaries of AI!

@Aaronfzr "On the other hand, the biggest risk to Resmed is probably commoditisation of the technology."

This is a good point and I agree with this. There's not a great deal of tech in these devices. In my opinion a sign that commoditisation is occuring is these devices can now be obtained at a pharmacy without seeing a respiratory/sleep specialist.

Given ResMed's long history of attractive profitability metrics, I would say they have done a mighty fine job of extracting economic rents from their business model already. Whether that continues to be the case in the face of potentially disruptive developments remains to be seen, but there is little evidence of any impact in the numbers they are posting thus far, and the market has re-rated the stock accordingly after the initial "headline" dumps - the "headline" risk remains, as seen overnight.

dont get me wrong, I think its a great company and I hold in rl. but the moat, such as it exists, isnt in the nature of the devices themselves but in the current brand recognition and market penetration. The devices are the best, but they aren't unicorns, and the competitive advantage can be eroded without continual innovation to remain best in class, which I see as a more important issue than GLP1 agonists. Analysts focused on GLP1s are missing a big part of the picture.

@Aaronfzr I do disagree with you that RMD devices are best in class.

That title goes to Lowenstein a German made and owned device with a Swiss blower in it.

These devices have the highest build quality, are very quiet and have a superior auto-PAP algorithm.

Their flagship device the Lowenstein Prisma 20A retails for about $2,100 in Australia while the ResMed AirSense 11 AutoSet CPAP costs about $1,800. So a difference is price but not huge.

The Lowenstein could be considered the Rolls Royce while the ResMed are the Toyota's.

@Shapeshifter The plot thickens. This is educational for me. I had never heard of them.

Brand recognition is everything.

The Toyota v Rolls Royce analogy makes it easy, even for me, to understand and maybe that's exactly why RMD is seen as the market leader. Readily available information, service, parts etc.

If I was offered a Rolls or a Toyota that I had keep maintained and on the road over time, I'm going to go with the Toyota every time. Even if money wasn't an issue, I'd probably stick with the Toyota (I hope to find out if that's true).

Thanks for adding that depth to the discussion. I think RMD being the Toyota of CPAP machines is an interesting way to look at it.

Thats really interesting, I wasn't aware of that product either, and the example sounds like more of a threat to RMD than GLP1As.

Also an anaesthetist, broadly similar view and also hold RMD