SomnoMed confident of sustaining growth


Transcription of Finance News Network Interview with SomnoMed Limited (ASX:SOM) Executive Chairman and CEO, Dr Peter Neustadt

Lelde Smits: SomnoMed Limited (ASX:SOM) is focussed on the design, manufacture and commercialisation of oral devices for sleep related disorders and has operations around the world. I’m Lelde Smits and joining me at ASX Investor Series in Sydney is the Company’s Executive Chairman and CEO, Dr Peter Neustadt. Peter welcome.

Dr Peter Neustadt: Thank you Lelde.

Lelde Smits: SomnoMed and indeed its stock grew fast over the last financial year. What factors do you believe will drive the Company’s growth in the year ahead?

Dr Peter Neustadt: We believe this is only the beginning Lelde. We are active in the area of treating obstructive sleep apnoea, that’s a chronic disease. The number of patients is growing very quickly around the world. It’s primarily lifestyle driven and age driven. And the principle way of treating obstructive sleep apnoea is CPAP, and most patients actually are rejecting CPAP. They have a problem with it and they are looking for an alternative. And that is really behind our goals.

Lelde Smits: The Company has expanded geographically while also having expanded your product offering over the past year. What are your plans for further expansion?

Dr Peter Neustadt: We moved fast to cover the whole of Europe, we’re active in Asia Pacific, Europe and North America. So essentially we are now covering 26 countries, population of over a billion people and we’re bedding this down now. We have enquiries coming from a lot of other countries, from China, from India, from Brazil and so on. And we will look at that next year, but in principle we see us growing globally for a number of years to come.

Lelde Smits: SomnoMed’s record sales results have really excited the market this year. What is your guidance for the year ahead and how many more records are in your sights?

Dr Peter Neustadt: We hope many more records. The guidance for this year is an increase, a growth in our volume of 26 per cent and overall in our revenues, by 25 per cent. Now in volume terms, this means we are accelerating again. Last year our volume growth was around 22 per cent, but the first half of 2013/2014 was growing less than 20 per cent and the second half, was really pushing towards the 25 per cent mark. So we see an acceleration and we of course, expect to achieve our guidance and we see this continuing in the next few years.

Lelde Smits: Who are SomnaMed’s main competitors or new entrants that you may be keeping an eye out on, and what do you believe is the Company’s main competitive advantage?

Dr Peter Neustadt: Most of our competitors are local companies, where globally, there is no other company which operates on the same level and at the same scope. ResMed (NYSE:RMD) acquired a smaller company in France a few years ago and they’re still struggling with it, because it is really quite different to their core business. In terms of future competition, we believe there will be other major medical device companies entering this area. But we’re also quite confident that we can defend our leadership position.

Lelde Smits: Finally Peter longer term, what kind of company are you aiming to create?

Dr Peter Neustadt: Well we want to be a global leader in oral appliance therapy, or what we call a COAT continuous open airways therapy, which is a real alternative to CPAP. And it is for most patients a wonderful change, it is far more comfortable for them, they have a normal life. They don’t have to use a mask pushing compressed air down their airways.

We believe that over the next five years, 10 years, 15 years, SomnoMed will be able to become a substantial company. And essentially in a way, not so different to ResMed and when you look at the first 10 years of ResMed and SomnoMed, there are a lot of parallels. So we believe there’s a long term goal story.

Lelde Smits: Peter Neustadt, thank you for the update from SomnoMed.

Dr Peter Neustadt: Thank you so much for having me here.


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