Economists tell us that profits we earn are the rewards for the risks we take. This could explain why some investors spend a lot of sleepless nights worrying about their holdings.
Yet ResMed Inc (ASX: RMD) is one company that is providing solid financial returns while it treats sleep deprivation disorders for millions of people around the world.
Today, ResMed's share price is over $22 and annual growth in the stock has exceeded 30% for the past 3 years. But it wasn't always that way.
From little things…
It is difficult to believe that a company born in a North Ryde garage just 30 years ago could be such a global success story today, but ResMed is just such a phenomenon.
Way back then, founder Peter Farrell had engaged the services of Colin Sullivan, a post-doctoral research fellow from Sydney University, to study the causes and effects of interruptions to breathing during REM and non-REM sleep.
Sullivan had earlier developed the CPAP breathing system, providing continuous positive airway pressure to help treat sleep apnea and other respiratory disorders. After further experimentation and refinement, Peter Farrell took the plunge and formed ResMed (respiratory medicine) to market this revolutionary new product.
With statistics showing that with between 15% and 20% of the world's population suffering from these sleeping disorders, Peter knew there was a huge market for this technology.
Tomorrow the world!
Having rapidly entered the lucrative US market back in 1989, ResMed relocated its headquarters from Sydney to San Diego on the southern California coast.
In 2013, Peter Farrell maintained management stability by handing the position of CEO to his son Mick – also a long-term ResMed employee.
Today, ResMed employs more than 7,500 people worldwide. The company operates in more than 120 countries worldwide and has manufacturing facilities in Australia, France, Singapore and the United States.
The company achieved revenues of US$2.6 billion in the 2019 fiscal year.
Driven by innovation
A litany of new products, continued research and development and innovative additions to the ResMed range have seen the company maintain its market leadership in the face of aggressive competition from some major manufacturers.
While it's beyond our abilities to promise investors a lifetime of uninterrupted sleep, we can say that ResMed shareholders have enjoyed both stability and significant growth from their investment over several years.
Market indicators suggest an ongoing future of 'business as usual' for this dynamic global powerhouse.
