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Sunday, Dec 10, 2023

ENTERPRISE: Medical Devices

“If Peter Farrell had his way, Americans wouldn’t think only of koalas as Australia’s most significant import. Instead, they’d also think of ResMed Inc.’s sleep-disorder breathing products.

Fortunately, the Australian-born immigrant has long been breathing the sweet scent of success.

Both Business Week and Fortune magazines ranked Farrell’s company among the fastest-growing small companies in the nation.

Since Farrell founded ResMed in Sydney, Australia, 10 years ago, the publicly traded firm has seen phenomenal growth.

Revenues skyrocketed 108 fold from $816,000 in 1990 to $88.6 million in 1999. Income rose 60.3 times from a 1990 net loss of $276,000 to a $16.1 million profit.

Today, ResMed’s products are sold in 44 countries and are handled by some 508 employees in seven countries, including in San Diego in the United States, Germany, France, New Zealand, Singapore, Australia and the United Kingdom.

In San Diego alone, some 60 employees are busy providing training and answering callers’ queries with regards to their products.

Farrell came to San Diego in 1992 after a local health care firm, Medtronic Inc., offered ResMed space in their facility and financial support. The two firms have since terminated their business relationship, he said.

Despite the success, Farrell, who speaks with a thick Australian accent, is far from reaching his goal.

A Health Concern

If he had his way, the medical community and public would treat issues of sleep-disordered breathing as seriously as tobacco use.

Farrell is creating awareness that obstructive breathing during sleep can lead to stroke and heart disease, and even death.

“There’s no such thing in this country as health care , it’s sick care,” Farrell said during a recent interview in his San Diego-based headquarters.

Only 5 percent of 20 million Americans suffering from obstructive sleep disorders are diagnosed. Farrell and other sleep disorder experts blame the discrepancy on a lack of education and information.

“Physicians don’t know what they are dealing with, because sleep disordered breathing has not been taught in medical school,” Farrell said.

Sleep apnea is especially troublesome, since people themselves are not aware they stop breathing at night.

They often find themselves in a sleep laboratory for diagnosis, because their bed partners can’t take the snoring any longer.

Farrell, a former biology professor-turned corporate executive, is as passionate about scientific studies on sleep disordered breathing as business.

In the 1980s, when few people were aware of obstructed breathing during sleep, Farrell realized the potential for a device developed by Australian professor Colin Sullivan.

Pumping Air

The bedside device, known as a continuous positive airway pressure unit, sends a constant stream of air through a mask into the patient’s nose and throat to keep the airways open. It works like a reversed vacuum cleaner, delivering air to force open the upper airways and help patients breathe, Farrell explained.

Farrell, then a vice president for research and development at Baxter Healthcare Corp. in Japan, funneled $1 million into Sullivan’s project.

In 1988, when Baxter decided to pull out of the respiratory market, Farrell and six colleagues invested $1.5 million to keep the project alive.

The investment paid off early. ResMed booked $1 million in total sales by the end of fiscal 1990.

Presently, ResMed is working on its sixth-generation continuous positive airway pressure unit. Cutting-edge technology demands constant advances, Farrell said.

Today’s machines are electronically sophisticated and equipped with motors that hum , a far cry from the first-generation that sounded like a freight train, Farrell said.

Dr. Stuart J. Menn, co-director of the Pacific Sleep Medicine Inc. clinic in La Jolla, praised ResMed’s devices currently on the market.

He’s presently evaluating whether one of ResMed’s newest products, a fully automated device, is safe.

“People are not yet convinced the fully automated device, named AutoSet, gives a reliable, continuous positive airway pressure,” he said.

But Farrell is already planning his next move. He hopes to get marketing approval for a device combining continuous positive airway pressure and a respirator for heart patients. With 5 million Americans alone suffering from heart disease, the market potential is enormous, Farrell said. He’s spending a lot of money on research to learn about sleep apnea’s role in stroke and congestive heart failure.

Correlation To Heart Disease

So far, it remains to be proven that sleep-disordered breathing causes heart disease, but Farrell remains optimistic. Last week, he met with American Heart Association executives to garner support.

To grow the firm and add more products, Farrell recently injected equity in a sleep diagnostic equipment maker, Iceland-based Flaga hf.

Farrell hopes Flaga’s miniaturized sleep lab will make its way into intensive care units, cardiologists and the home health care market. He foresees the CD player-sized bedside lab will be an additional tool to the traditional sleep labs , only more cost-effective.

“We’re talking billions of dollars here,” Farrell said. “If ResMed was able to reach 3 million patients with the device and sold it for $3,000 each , that’s $9 billion in the United States alone.”

But not everyone shares his enthusiasm. Menn voiced concerns about inaccurate results in the absence of a trained sleep technician and said most physicians are not adequately trained to read and interpret a sleep test.

He said while such technology may be cost-efficient and a good screening device, it wouldn’t benefit patients with serious sleep complaints.

Meanwhile, ResMed’s climb appears certain. Last month, ResMed stock was listed on the New York Stock Exchange. Last week, Forbes magazine ranked it No. 27 on the annual list of the 200 best small companies in the nation.


Peter Farrell, founder of ResMed Inc., which manufactures devices for treating sleep breathing disorders, has no problem smelling the swell scent of success.

Melissa Jacobs

‘Physicians don’t know what they are dealing with, because sleep disordered breathing has not been taught in medical school.”

Peter Farrell

ResMed, Inc.”


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