As @Arizona said, the Resmed price fall was the market reaction to the release of the Phase 3 endpoint results for Eli Lilly’s drug Tirzepatide. As is detailed in the abstract linked below the results showed significant effectiveness in reducing AHI (apnea-hypopnea index) which Resmed’s CPAP product addresses.

Bad news no doubt… or maybe – As was the reaction to Ozempic, the initial first order thinking was CPAP would no longer be needed and Resmed’s market would evaporate as the new drug “solved” the problem. But the high cost of Ozempic and the increased awareness of the problem of sleep aponia lead to increased interest in CPAP and a positive correlation when Ozempic customers also used CPAP, which Resmed announced data supporting last results announcement.

Now we have Tirepatide, as per the links below, it is also expensive, US$13k, especially compared to A$2k a CPAP machine costs as @Bear77 has informed us.

So, I think we are a long way from a terminal issue for Resmed. That said – I wouldn’t consider Resmed a bottom draw stock either. In the medium term the expansion of the market is likely to offset any impact drug treatments may have as alternatives. But in the long run, the price of the treatments will drop (as they come off patent and scale) and probably improve to a point the cost benefit equation is in their favor. In fact, if you live in China, it’s pretty close already!

Phase 3 results abstract:

·        The New England Journal of Medicine (21/6/24): Tirzepatide for the Treatment of Obstructive Sleep Apnea and Obesity | New England Journal of Medicine (nejm.org)

Annual cost of Tirzepatide of US$13,410 ($2,247 per 1% reduction in A1c and $237 per 1 kg weight lost more cost effective than Semaglutide)

·        National Library of Medicine (29/3/23): Short-term cost-effectiveness analysis of tirzepatide for the treatment of type 2 diabetes in the United States - PMC (nih.gov)

Tirepatide annual cost in China of around US$2,000:

·        National Library of Medicine (13/5/24): Cost-utility analysis and drug pricing for tirzepatide for type 2 diabetes in the Chinese market compared with semaglutide - PubMed (nih.gov)

Disc: I own in RL