Farrell likes to say that the world is waking up to sleep, and, since its inception, ResMed has had a compound annual growth rate at the top line of 30 percent and at the bottom line 35 percent. The company, now headquartered in San Diego, has picked up an array of accolades and awards, including being chosen by Forbes as one of the 200 best small companies in America. It has been on that list for 10 consecutive years, based on return on equity, growth in revenues, and growth in net profit after tax.

The potential patient population suggests prospects of further growth. Farrell says, “Our current statistics indicate that the prevalence is up to 30 percent of all adults, if one has hypertension, it’s 45 percent, if you have diabetes, it’s 72 percent, if you have congestive heart failure it’s 70 percent, if you’ve had a stroke or you have transient ischaemic disease, it is 70 percent, atrial fibrillation 50 percent, nocturia, 60 percent, reflux 50 percent, and on and on.”

Treatment with nasal CPAP improves, and in some of Resmed’s more sophisticated devices with the better algorithms, totally cures the underlying disease. “Some of the results we’ve experienced a little short of miraculous,” says Farrell, “like patients being discharged from hospital on a nasal CPAP device, free of congestive heart failure.”

As researchers deepen their understanding of the science of sleep, the more connections they find between sleep disorders and a host of other, serious ailments. Yet physicians in the US and around the world typically miss the diagnosis of sleep apnea even when patients manifest obvious symptoms. “Medicine stops when the lights go out,” Farrell observes. Few physicians have been trained to recognize sleep as an integral component of human physiological and neurological function. Moreover, the specialization of doctors into medical silos, focused almost exclusively on a single organ, system or procedure, makes it easy to miss the patient as a whole human being.

In the near term, Farrell believes, ResMed’s largest competitor is ignorance, and much of the company’s efforts concentrate on educating clinicians to recognize the symptoms of sleep disordered breathing.

Nonetheless, despite his company’s remarkable success, he knows that in a competitive market economy, company performance is not absolute, but basically relative to other firms. As rivals develop technologies to compete, ResMed is placing increasing emphasis on the basics of competitive advantage: lower costs of production, improved quality, superior channel management, improved marketing.

Executives at ResMed have read The Innovator’s Dilemma and deeply understand that they must outperform their growing field of rivals.

“Personally, I tend to be a little competitive,” Farrell observes. “The three most important things in business are execution, execution, and execution. Our technology is at the forefront. We’ve put millions of people on treatment, and we haven’t started. It’s like a marathon, and we’re lacing our shoes. This is billions and billions of dollars, and we’re at the absolute forefront of this technology, and we will stay there.”

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