ResMed sleep apnoea empire: Sydney lab to global giant

There is a version of this story where Peter Farrell stays in academia, publishes a few more papers on sleep-disordered breathing, and nobody outside a narrow subspecialty ever hears of him. Instead, the ResMed sleep apnoea story went another way: he founded the company, moved it to San Diego, listed it on the New York Stock Exchange, and built what is now one of the most valuable Australian-origin companies on earth. The Sydney connection gets understated, partly because the company's operational centre migrated to the United States early on and partly because ResMed is the kind of business (relentlessly technical, not very glamorous) that doesn't attract the same attention as a consumer brand. Look closely at ResMed's numbers and the trajectory becomes more remarkable the longer you stare at it.

The ResMed sleep apnoea opportunity nobody was pursuing

Sleep apnoea, the condition where a person's airway repeatedly collapses during sleep, interrupting breathing and fragmenting rest, was understood by medicine long before it was treated well. Continuous positive airway pressure, or CPAP, was demonstrated as a therapy by Colin Sullivan at the University of Sydney in the early 1980s. Sullivan's original device was, by all accounts, not something you'd market to consumers: it was large, loud, and jury-rigged from industrial components. But the principle worked. Pressurised air delivered through a mask could hold the airway open through the night.

Peter Farrell, a biomedical engineer who had trained in part at MIT and worked at Baxter International, saw the commercial gap clearly. When he established ResMed in Sydney in 1989, the company's founding premise was essentially that CPAP therapy needed to be miniaturised, refined, and made accessible to the millions of patients who had no practical treatment option. That sounds obvious now. At the time it was a bet on a condition most people had never heard of.

From Sydney to San Diego: the dual-listing decision

ResMed listed on the Australian Stock Exchange in the early 1990s while simultaneously building toward a New York Stock Exchange listing, which it achieved in 1995. The dual-listing structure, ASX and NYSE, was a deliberate strategic choice rather than an accident of geography. The United States was, and remains, the company's largest single market. American institutional capital was deeper and more familiar with the medical-device sector. Listing in New York gave ResMed access to that capital base and to a valuation framework that understood the growth dynamics of a device company with recurring consumables revenue.

The ASX listing was retained in part as a nod to the company's origins and in part because Australian institutional investors and superannuation funds represented genuine long-term holders. The arrangement has remained in place ever since, which means ResMed operates in two reporting jurisdictions simultaneously. That is an administrative complexity the company has managed without apparent strain.

Moving headquarters to San Diego made operational sense. The company's largest manufacturing footprint, its biggest regulatory relationship (with the US Food and Drug Administration), and its primary customer base were all American. Sydney retained an R&D presence, and Australia remained important to the corporate identity. But the honest read is that ResMed became, in its operational reality, an American-headquartered company with Australian origins rather than an Australian company with American operations. Whether that matters depends on what you're counting.

The CPAP moat: devices, masks and data

ResMed's core business is straightforward to describe and genuinely difficult to replicate. The company makes CPAP and bilevel positive airway pressure (BiPAP) devices, the masks and accessories that interface with those devices, and the software platform (AirView and myAir) that allows clinicians and patients to monitor therapy compliance remotely. Each component reinforces the others.

The device itself is a one-time purchase, typically covered in whole or in part by health insurance in major markets. The mask is a consumable: it wears out, gets replaced, and generates ongoing revenue. A patient who starts on a ResMed device and finds a ResMed mask that fits tends to stay in the ResMed ecosystem. The data platform deepens that lock-in further, because switching devices means switching data infrastructure, which most clinicians would rather not do. It is, when you lay it out, a genuinely well-constructed competitive position, the kind you see described in business school cases about blades-and-razors dynamics, though ResMed would probably phrase it differently.

ResMed's main global competitor for most of its history was Philips Respironics. In 2021, Philips recalled millions of sleep apnoea devices over concerns about sound-abatement foam that could degrade and potentially be inhaled, one of the larger medical-device recalls in recent memory. ResMed gained significant market share as a result, though the company was careful in its public statements not to be seen profiting from a competitor's safety crisis. The numbers spoke for themselves regardless.

The software pivot that most people missed

Somewhere around the mid-2010s, ResMed began describing itself less as a device company and more as a digital health company that also made devices. The distinction mattered. Device companies trade at device-company multiples. Software companies, particularly those with large recurring-revenue bases and proprietary datasets, trade at considerably higher multiples.

The acquisition of Brightree in 2016, a software platform for home medical equipment providers, signalled the direction clearly. Brightree wasn't a respiratory device; it was practice-management and billing software for the care-delivery chain that sits around respiratory devices. The logic was that ResMed wanted to own more of the patient pathway, from initial diagnosis through to ongoing compliance management, not just the hardware at the centre of it.

Subsequent acquisitions in the software and digital health space reinforced the pattern. By the early 2020s, ResMed was reporting that its software-as-a-service segment served tens of millions of patients across sleep and respiratory care, home health, and related chronic care. The segment wasn't yet the majority of revenue, but its growth rate was faster than the device business and its margin profile was different.

I'll admit I was sceptical of this framing for a while. "We're not really a device company, we're a data company" is a line that gets used promiscuously by industrial businesses trying to push their valuation multiple. In ResMed's case, the underlying SaaS revenue is real, the customer relationships are real, and the dataset, millions of nights of patient breathing data gathered over decades, is genuinely proprietary. It's not just marketing language, even if the framing flatters the multiple.

The scale of what it became

By the mid-2020s, ResMed had revenue running well above US$4 billion annually, with operations in over 140 countries and several thousand employees globally. Its market capitalisation at various points has placed it among the largest Australian-origin companies by that measure, comparable in scale to the likes of Cochlear, which built a similarly dominant hearing-implant position from an Australian research base, or CSL, which converted a government biotech into a global plasma products giant. The comparison with CSL in particular is instructive: both companies began with a specific, underserved medical need, built the technical capability to address it, and then expanded the addressable market by convincing the healthcare system that their therapy category mattered more broadly than had been recognised.

The sleep apnoea market itself has expanded substantially over the period ResMed has operated. Diagnostic rates have increased as awareness grew, as sleep testing became cheaper and more accessible, and as the downstream health consequences of untreated sleep apnoea (cardiovascular disease, metabolic disruption, impaired cognitive function) became better documented in the clinical literature. ResMed both benefited from that expansion and, through its patient education and advocacy activities, contributed to it. The company has an obvious financial interest in more people being diagnosed and treated, which is worth keeping in mind, but the clinical evidence for the consequences of untreated sleep apnoea is not, by reputable accounts, manufactured.

Mick Farrell and the second generation

Peter Farrell stepped back from the chief executive role in the mid-2010s, handing leadership to his son Mick Farrell, a succession that attracted the occasional eyebrow-raise but has, in the years since, been difficult to argue with on performance grounds. Mick Farrell's tenure has overseen the software pivot, the Philips market-share windfall, and the revenue and market capitalisation growth of the company's most recent phase. Whether the nepotism discount that markets sometimes apply to family successions was ever warranted is, at this point, largely a historical question.

What the ResMed story actually tells us

There's a pattern running through Australia's handful of genuinely world-class medtech and biotech companies (ResMed, Cochlear, CSL) that is worth naming. Each began with a specific clinical insight developed in or adjacent to an Australian university. Each identified a patient population that was poorly served by existing technology. Each spent years building the regulatory, manufacturing, and distribution infrastructure to reach global markets before the category became crowded. And each expanded the definition of the market rather than just competing for share of an existing one. The story of how Cochlear built its empire follows much the same shape.

The companies that look like outliers on the ASX, the ones that sit alongside Australia's other global empires in terms of scale and longevity, tend to share that characteristic. They didn't enter existing markets and compete on price. They identified a problem that was larger than anyone had quantified, built a solution with enough technical depth to be hard to copy, and grew with the category.

ResMed's Australian identity is genuinely attenuated at this point. The headquarters is in San Diego. The primary listing, by trading volume, is New York. The company doesn't particularly lean into the Australian origin story in its investor communications. But the research base, the founding insight, and the early capital formation all happened here, which means the royalty, in terms of what it says about what Australian science and engineering can produce, still belongs to this country. Not everyone would agree that's enough. I reckon it's at least worth counting.

Priya Naidu, Outliers & Global Empires