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ResMed’s New CEO Aims to Grow Global Sleep Apnea Market

Mick Farrell, the new CEO of San Diego’s ResMed Inc., thinks the market is ripe for growth for his company’s devices that treat sleep-related breathing disorders. In an interview, he weighed in on the direction he plans to take the company, which was founded by his father, Peter Farrell, in 1989. Mick Farrell took the helm of ResMed on March 1.

ResMed had 2012 revenue of about $1.4 billion. The publicly traded company employs about 4,000 globally and 400 in its San Diego headquarters. The company touts that it has changed the lives of seven million people around the world with its various devices that help patients breathe better while sleeping. About one in 15 Americans suffer from sleep apnea, the disease most commonly treated with ResMed devices.

But he comes with years of leadership experience within ResMed: Mick Farrell became president of the Americas division in 2011, responsible for sales and commercial operations. Under Mick Farrell’s direction, the company grew its sales in the Americas division — which accounts for about 55 percent of the company’s revenue — by more than 30 percent.

He joined ResMed in 2000 and was senior vice president of the sleep strategic business unit from 2007 to 2011. Before that, he held the positions of vice president, marketing for the Americas and vice president of business development.

You’ve been CEO of ResMed a little over a month. How does your new role differ from the other positions you have held at ResMed?

When you step into the role of leading a large company like ResMed, the complexity does go up exponentially. But it’s exciting and a huge opportunity: I oversee more revenue, more patients and more employees. I went from managing $700 million in revenue to $1.4 billion, and went from working the four time zones in the Americas to working 24 time zones. But in this role, it also becomes changing 4 million lives to 7 million lives.

What’s your vision for the company’s growth strategy in your first year as CEO?

In the short term, we’re going to stay absolutely laser focused on sleep-disordered breathing. We believe we are less than 10 to 15 percent penetrated into the U.S. market. And if you look at Asia Pacific, Latin America and Europe, about 95 percent of the market is untouched. As it stands, the market is growing at about six percent each year. Our challenge is to grow ahead of that curve, in the double digits. It’s a great opportunity for us with literally tens of millions of patients around the world. Our job is to get to them.

And after that? What are your longer term plans for ResMed?

Our medium- and long-term strategies include branching out into other conditions, like congestive heart failure and chronic pulmonary disease. COPD is the third leading cause of death in the western world, even more so than stroke — but it’s not talked about at the same levels as cancer or heart disease. Our challenge there is to grow into that market by raising awareness. The business opportunity in that market is in the hundreds of millions if we go after the U.S. and Asia Pacific regions.

Would you say you’re approaching an existing market, or creating new market opportunity?

Well, we’re certainly not just accepting market growth. We’re creating market growth. Driving market growth. We’ve done it for the past 24 years.

How, then, would you say you’re creating a market for your breathing devices?

We have a multipronged attack: The first thing is in developing new, life-changing technology. We put eight percent of our revenue into research and development. But we’ve really invested in global education and awareness — we offer continuing medical education credits to physicians, and have a long-running PR campaign.

Think of a cocktail party conversation. Ten years ago, if you asked “what’s sleep apnea?” only two out of 10 people might have the answer. Now that number is closer to seven or eight out of ten. And we’re not just talking about Mick Farrell cocktail parties — we have statistical data on this. People are becoming aware of the problem. Now the challenge is to turn that education and awareness into action.

The Senate recently voted to repeal the Affordable Care Act’s medical device tax. Has ResMed been active in lobbying for a removal of the 2.3 percent tax on medical devices?

We’ve been heavily involved with industry associations who are lobbying to have the tax repealed. We’re showing the reality to senators what happens when you disproportionately tax a particular segment of your business community. It just seemed to be an unjust and disproportionate tax. We’re happy to see the Senate has taken some action here. But we’re waiting for the final results — for things to actually change in practice.

Last December, ResMed announced it was considering moving out of California, looking to Texas because of its more favorable business climate. Is ResMed still considering a headquarter shift?

The board did a review a few months ago, and we’ve decided to keep our global headquarters here in San Diego. But we wanted to send a message to both the local and statewide governments that the idea of just increasing taxes on companies is not a good thing.

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