Resmed Case

Topics: Barriers to entry, Positive airway pressure, Stroke Pages: 6 (1642 words) Published: February 5, 2011
Product Development and R&D strategy, patents

ResMed developed a CPAP device to help prevent OSA in those patients with sleep apnea. 30% of CPAP patients discontinued therapy b/c of the discomfort of having constant air pressure delivered to them. ResMed saw the need to develop VPAP which varied the air pressure during exhalations. Ultimately, they wanted to create AutoSet which sensed and delivered the appropriate air pressure to the patients. However, the patents for this device were not filed in a timely manner. This opened up the doors for competitors (Respironics) to enter this market. ResMed did file a suit claiming that Respironics infringed on their patent. However, Respironics convincingly argue that their devices did not infringe on ResMed’s proprietary device and the court ruled in their favor. ResMed failed to bar Respironics’ entry into the CPAP/OSA market as well as prevent imitation and substitution of their CPAP device. ResMed was aggressive in their R&D (spent heavily), but brought products to market late. They often pursued several simultaneous projects through 3 departments (Mechanical design, electronic development and software development). Examples of these were VPAP to provide therapy to a larger group of OSA sufferers and to expand into other areas of respiratory therapy. They consistently feel behind their Respironics in delivery products to the market.

Market Selection

Selected OSA/SDB market as approx. 2% of population was possible candidates for CPAP therapy. This was ResMed’s initial target market. They started in Australia, but then expanded into other countries such as Germany and eventually to the US. The branched into emphysema, CHF, stoke therapy and other pulmonary diseases. They focused on the facemask market where they were very successful. Also looked to provide an alternative treatment for Cheyne-Stokes respiration.

Market penetration and adaptation

They established sales offices and partnerships with distributors as an entry strategy into the local markets. They eventually purchased the distributor when its sales were the majority of the distributors’ business. This was to help ResMed combat their smaller size. They also established an office in the US to have a local presence. Every country has a different health care system with differing “reimbursement systems, market structures and competitive dynamics.”[1] ResMed approached each market with those differences in mind. Main target market was the US. US market had 40MM people affected by sleep disorders according to the Congressional Sleep Disorders Commission. OSA identified as the largest culprit and that many weren’t properly diagnosed. This study put OSA related products in the spotlight and this market grew almost 500%. This increase in market share would be a tremendous opportunity for those companies who were positioned to take advantage. Unfortunately, Respironics was the first mover in this market and took a commanding market share. Barriers to entry were minimal as a new market entrant would only have to demonstrate to the FDA that the CPAP device complied with guidelines. ResMed was second in the US to Respironics to provide SDB therapy equipment. Respironics holds the majority of the market share in the US. In most other countries, healthcare is usually controlled by a single source (e.g. government) which was very motivated by cost. Germany being one of the exceptions as they were more concerned about the level of care provided and not the costs/reimbursements. ResMed offered the “Sleepkit” which was a product to provide non-sleep specialists medical staff the tools for identifying a diagnosis and a treatment. This was ultimately designed to “increase the flow of patients into payer-dictated paths for CPAP prescription.”[2]

Competitive industry structure and competitive positioning

Porters’ Five forces analysis will help to determine industry structure and...
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