ResMed Inc. (ASX: RMD) shares have not had an easy run lately.
The ASX 200 blue chip healthcare stock has fallen heavily from its highs, leaving investors to ask whether this is a warning sign or a buying opportunity.
I think it could be the latter.
ResMed remains one of the strongest global healthcare businesses on the ASX, and I believe its long-term opportunity is still attractive despite what the recent share price weakness might suggest.
Image source: Getty Images
A global leader in sleep health
ResMed is best known for its products that treat sleep apnoea and other breathing-related conditions.
Its devices, masks, software, and connected care tools help patients manage their therapy and allow healthcare providers to support treatment more effectively.
The market opportunity is large.
Sleep apnoea remains underdiagnosed and undertreated around the world. Many people who could benefit from treatment still have not been diagnosed, while others may not yet have started therapy.
That gives ResMed a long runway.
As awareness improves and more people enter the treatment pathway, I think ResMed can keep growing across devices, masks, accessories, and software.
Why I like the business model
One of the things I like most about ResMed is its razor-and-blades style business model.
The device is important, but the ongoing revenue stream is just as valuable. Patients often need masks, cushions, tubing, filters, and other accessories over time.
That creates repeat demand.
This can make ResMed a higher-quality business than a company relying only on one-off product sales. Once a patient is using therapy, there can be an ongoing relationship between the patient, provider, and ResMed's ecosystem.
I also like the margin profile.
Healthcare technology companies with strong brands, specialised products, and global distribution can generate attractive margins when they execute well. ResMed has spent years building trust in a market where reliability and comfort are critical.
What about drug competition?
One concern hanging over the stock is the potential for a drug treatment for obstructive sleep apnoea.
Apnimed has been trialling AD109, and the data has created debate about whether a pill could reduce the need for traditional sleep apnoea devices in some patients.
I think investors should pay attention to this, but I do not think it destroys the ResMed investment case.
A drug treatment may be useful for some people, particularly those who cannot tolerate CPAP therapy or refuse to use it. But sleep apnoea is a broad condition with different levels of severity and different patient needs.
For many patients, devices and masks are likely to remain an important part of treatment.
There is also a practical point. A new drug would still need to prove itself over time across safety, durability, cost, access, and real-world use. Healthcare adoption does not always move as quickly as share prices suggest.
So, while the risk is real, I see it as a manageable threat rather than a reason to dismiss ResMed.
A strong buy?
The share price fall has made ResMed look much more interesting to me.
This is still a global leader in a large healthcare market, with a high-margin recurring revenue model and a long history of innovation.
The company will need to keep improving its products, defending its market position, and proving that new competition will not derail growth.
But I think the market may be underestimating the durability of the business.
Foolish takeaway
I think the current weakness could be giving patient investors a chance to buy a high-quality healthcare business at a more appealing price.
Sleep health remains a large, underpenetrated market, and ResMed still has the brand, product ecosystem, and recurring revenue base to remain a major player for many years.
For long-term investors, I think this fallen ASX 200 blue chip could be a strong buy.
