Is ResMed Still a Buy in the Era of GLP-1 Therapies for Sleep Apnea?

The rise of GLP-1 receptor agonists like Eli Lilly's Zepbound has sparked a seismic shift in the treatment landscape for obstructive sleep apnea (OSA), particularly for patients with obesity. These drugs, which have demonstrated remarkable efficacy in reducing apnea-hypopnea index (AHI) scores and promoting weight loss, are increasingly being integrated into sleep medicine. However, for investors evaluating ResMed (RMD), the question remains: Can the CPAP giant maintain its dominance in a market where pharmaceutical alternatives are gaining traction?

The Clinical Promise of GLP-1 Therapies

GLP-1 therapies, such as tirzepatide, have shown groundbreaking results in clinical trials. The SURMOUNT-OSA study revealed that tirzepatide significantly reduced AHI events per hour and achieved greater weight loss compared to placebo, marking a milestone in OSA treatment. In 2024, the FDA approved tirzepatide for moderate-to-severe OSA in adults with obesity, a move that has positioned GLP-1 drugs as a complementary tool rather than a replacement for CPAP. Experts emphasize that while these therapies address obesity-a key driver of OSA-they do not eliminate anatomical or other contributing factors, ensuring CPAP remains the gold standard.

Strategic Resilience: ResMed's Dual-Pronged Approach

ResMed's strategic resilience lies in its ability to adapt to evolving treatment paradigms. The company has proactively embraced combination therapies, advocating for the integration of CPAP with GLP-1 medications to maximize patient outcomes. According to ResMed CEO Mick Farrell, the adoption of GLP-1 drugs has paradoxically boosted CPAP initiation rates, with patients on these therapies 10.5% more likely to start positive airway pressure therapy. This synergy suggests that GLP-1 therapies may enhance, rather than undermine, demand for ResMed's core products.

Innovation in product design further cements ResMed's competitive edge. The launch of the AirFit F40 mask, which prioritizes comfort and fit, addresses a longstanding barrier to CPAP adherence. By improving user experience, ResMed is countering the challenge of patient non-compliance, a critical factor in sustaining long-term revenue streams.

Market Dynamics and Long-Term Outlook

While GLP-1 therapies pose a theoretical threat, their real-world adoption is constrained by cost, side effects, and patient persistence. Analysts at William Blair note that these drugs are unlikely to replace CPAP but will instead serve as an adjunct, particularly for patients with obesity-driven OSA. Moreover, the current CPAP penetration rate-estimated at 15% or less in many markets-leaves ample room for growth, even with the rise of pharmaceutical alternatives.

ResMed's market share has also benefited from Philips' ongoing recall crisis, which has disrupted the sleep apnea device market and created a vacuum ResMed is well-positioned to fill. The company's focus on early diagnosis and home-based treatment options aligns with broader industry trends, ensuring it remains at the forefront of OSA care.

Why ResMed Remains a Buy

Despite the emergence of GLP-1 therapies, ResMed's dominance in sleep health solutions is underpinned by its adaptability, innovation, and market leadership. The company's proactive stance on combination therapies and its commitment to patient-centric design position it to thrive in a hybrid treatment model. For investors, the current valuation-discounted by macroeconomic headwinds-presents an attractive entry point. With OSA prevalence projected to rise due to aging populations and obesity trends, ResMed's role as a cornerstone of sleep apnea management is unlikely to diminish.

In conclusion, while GLP-1 therapies represent a disruptive force, they also create opportunities for ResMed to expand its influence. By leveraging its strengths in CPAP technology and embracing complementary treatments, the company is poised to deliver sustained value for shareholders in the years ahead.