Monday, August 8, 2011

Resmed takes market share from Fisher & Paykel Healthcare

I referred to a whisper about Fisher & Paykel Healthcare's [FPH.NZX] lagging share price in a late July post and the cause of it possibly coming from intense competition from Resmed Inc [RMD.ASX] and that investors in FPH would have to wait for some concrete evidence that this was happening when RMD's profit result for the 2011 full year was out.

I hate to say this as a FPH investor but I think the whisper may have some merit to it, at least over the last year.

Resmed's full year profit to 30 June 2011 reveals that it has increased revenue by around 18% and profit up by just under 20%. FPH has increased revenue by around 10% with profit up by around 2%.* in the 2011 full year result. All may not be all dire though because in the fourth quarter its respiratory and acute care (RAC )revenue grew 24% and its obstructive sleep apnea (OSA) products operating revenue grew 17%. The market for these products is clearly growing rapidly but RMD appears to have the slight edge in terms of competition between the two companies which it has added to by aggressively buying companies that it sees has products with a good fit to theirs to gain even more market share. FPH has thus far gained their market share by increasing R & D spending and growing organically.

Resmed has recently concluded a 5 year agreement with Carefusion Inc [CFN.NYSE], a company that has good breathing and sleep technology bought Biancamed, a leading OSA technology leader and on August 1 purchased Grundler GmbH, a developer of innovative medical humidification products. These medical sectors, especially the sleep technology area, are something that FPH has placed alot of faith and research and development on for its future.

Fisher & Paykel is doing well in the sectors that they operate in but their main competitor in the fast growing OSA & RAC sector appears to be going Resmed's way currently and should be a minor niggle to FPH investors. They do have a technological edge though in several newly launched products this year.

With the impact of the Global Financial Crisis 2 (GFC 2) looming and an impact on share prices it might be wise for investors to keep a watching eye on the FPH share price for opportunities.

* Figures in US dollars

Disc I own FPH in the Share Investor Portfolio

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c Share Investor 2011


  1. Hi Darren,
    Thanks for your views on Resmed and FPH. If it weren't for you, I woulda bought FPH at 2.70 a few wks back! (it had huge support at 2.70 at the time)
    I'm curious, do you plan on buying more FPH in light of Resmed improving their market share?
    I'm eyeing FPH very closely...

  2. I was lucky I guess. All market indicators - negative market, lower US dollar - meant that the market was going to price this down. It was more luck the yanks had problems over the w/end. I am betting that FPH products are better than RMD because RMD look to buy to get their innovation while FPH are still able to innovate from within. I will buy soon. The gross div yield is well over 7% on these prices.

  3. There could be another good opportunity to get in lower tomorrow depending on what happens to the DOW Monday. The NZX appears to have gone to town on the sales today if you compare it to the ASX. Almost double the losses thus far.

  4. Well there seems to be some news behind the scene, may be a
    takeover offer,due to the low's of the FPH shares,and certainly
    waiting to hear the commentary at AGM by the management,


  5. Kris, you think there is? If there is a rumour that someone has been sniffing around FPH surely shares would be going in the opposite direction?

    Having said that, the share price is currently a relative bargain for such a quality company and ironically FPH could be a target by Resmed itself(albeit a much bigger target than previous acquisitions)given its recent penchant for growing by acquisition.


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