Mask for Sale: $1450.00

ENTREPRENEUR: Morris Kaplan | May 02, 2009
Article from: The Australian
SOME might call them crazy for starting a business during a global recession but married couple Scott Coulter and Lindsey Berger are committed to pursuing their dream to create a work-life situation that gives them income and time.

"We didn't so much care about what the business did; we're looking for financial security, the flexibility to have quality time with our children," Scott says. Chartered accountant Lindsey admits it's a bold decision. "An unproven business is a difficult place to be for a financially conservative accountant," she says.

"Unproven" business, Acurest, manufactures what the couple claim as the world's only custom-made Continuous Positive Airway Pressure (CPAP) mask for sleep apnea sufferers. It is widely known that the $750million Australian giant Resmed is the global leader in devices for the condition in which the upper airways collapse, often causing severe sleep disturbance. Scott's assertion is that the Acurest product is the only one on the market that is customised to suit the face. "More than half of all sleep apnoea sufferers give up on their treatment within the first six months due to ill-fitting masks."

Acurest is, in business school jargon, an "early stage" venture. As such it will challenge the couple's entrepreneurial and financial resources to the hilt. "We've only been in operation for a few months but our initial goal is to reach sales of 150 units (at $1450 each) in our first year. Thousands of Queenslanders are suffering from the terrible health effects of sleep apnea so we feel this figure is totally realistic."

For most people the economic downturn has quashed their business ownership dream, but for Scott and Lindsey, both 40, the size of the opportunity remains compelling. With the apnea market worth more than $500million a year, he says the potential for Acurest's mask is enormous. "In terms of market size, we see a potential for unit sales of 8500 per year; an Australia-wide revenue of $12million."

Both previously finance professionals, the couple conducted extensive due diligence after meeting the original inventor of the mask. "We researched thoroughly and took all market conditions and impacts into account when we ran projections on the product," Scott says. "We could see a huge gap in the market."

Lindsey adds: "As the diligent accountant that I am, we sat down and did a 32-page business plan -- probably a bit of an overkill."

The Brisbane couple believe they are ideally placed (geographically) to test the potentially lucrative southeast Queensland market, with more than 200,000 currently living with the serious health consequences of sleep apnea and a further 15-17,000 cases of the condition diagnosed every year from a population base of 3 million.

"Research showed us that sleep apnea sufferers were crying out for a CPAP mask that was actually comfortable, improved treatment results with longer uninterrupted sleep time and leak-free operation and which allowed users to sleep on their sides," Scott says. "They give up on CPAP treatment after just six months because of the issues caused by an ill-fitting mask. Ours is a unique, double-sealed custom design that minimises leakage and ensures constant flow. The mask is made by taking a mould of the face to ensure the ultimate fit."

He says although manufacturing is not one of his skills, he has no doubt he will be able to take the sleep mask to commercially viable production. "It's in my nature to find solutions to problems. I grew up on a farm; you get to know how do a lot of stuff. I've needed to get an understanding of what the manufacturing was going to be so that I could train other people, to discover ways to shorten the process and make it more efficient."

Lindsey says the transition to a small-business owner has thrown up issues. "I didn't want to remain pigeon-holed in a big corporation. Here, you jump in where you need to. I still remember the first phone call from a customer. I was extremely nervous. I've learned to be a good listener."

Many entrepreneurs believe the difference between small business and big business is simply marketing. The couple have some work ahead of them to get their hands firmly on the marketing steering wheel.

"The first stage is really determining whether the market exists," Scott says. "We know that spending money on advertising in an early-stage business requires great care. We understand our demographic but reaching them is the challenge. By the time we are ready to launch in Melbourne or Sydney, we will know the mix of PR, of advertising, online networking, professional referral and so forth, we need to put together to launch ourselves into a new market."

The primary market arises where people go to their GP who may refer them to a sleep clinic. They may then be referred to a respiratory specialist and prescribed CPAP therapy. The clinic may become a referral source. "Our market are people who have been diagnosed, sitting in their suburban homes plugging into these masks every night for their treatment and hating it," Scott says. "Trying desperately to stay compliant yet knowing that they go to sleep with it on but by 3am they throw it off."

He says recent initiatives including him spending time on online forums, message boards, blogs, which attract sufferers, are proving useful. "People are asking why there isn't a customised solution."

Scott says the price point is a constraint. "This will change over time as we get economies of scale in manufacturing. Then we will increase our market share because we'll move beyond that smaller 10 per cent of the market who can't use the off-the-shelf product into the much broader market who will be attracted to a custom-fit version."

He claims that competing products at about a quarter the price generally last 12 months, while the Acurest product has a three-year life. "Resmed have done us a favour. Their product is small, medium or large. That's where we come in with a niche customised product. We're a sub-set of the market. Their products don't work for everyone. We're targeting the 5-10 per cent of that total market."

A billion dollar baby

OBSTRUCTIVE sleep apnea (OSA) is big business. Resmed is an $750 million Australian business; Fisher Paykel and the Philips-controlled Respironics each has revenues in the hundreds of millions.

Estimates of sufferers range from 3 to 15 per cent of the population, typically slightly more men than women.

Scott Coulter of Australian company Acurest estimates that 1 million people suffer in Australia -- many of them not diagnosed. It is estimated that in the US alone there are 18-20 million sufferers of moderate or severe OSA, of which only 15-20 per cent have been diagnosed.

Resmed's success arose from its innovative products that proved to be more portable and less noisy than previous devices, allowing patients to incorporate the treatment into their lives more easily. It was 69 per cent smaller than its predecessor.

The design work that went into achieving the reduction in size was significant and enabled the company to penetrate markets internationally.

In south-east Queensland there are 15-17,000 sleep studies performed annually; sleep clinics however are more concentrated there than in other parts of Australia. Coulter says "The majority of sleep studies result in a diagnosis of OSA. We have used a conservative estimate of around 10,000 new diagnoses in our region (one-seventh of the total population), so I would estimate 50-70,000 diagnoses per year Australia-wide."

Sleep clinics have continued to expand and grow in number, as have the suppliers of CPAP equipment. There are also a host of alternative treatments, ranging from herbal remedies, breathing techniques to mandibular splints.

The normal requirement is for a mask (cost $150-$350) to be renewed every year. A new machine ranges in cost from $1000 to $2500. Resmed (with about half the market) alone sell about 30,000 machines each year in Australia. Based on these numbers, the value of the sleep apnea market in Australia annually is estimated at $500m including medical consultations, sleep studies and equipment purchase/rental -- as a rough estimate.

Poor compliance constitutes a substantial problem in the treatment of sleep apnea with CPAP. Several authors assume an average non-compliance rate of 50 per cent (Fietze & Baumann, 1999). The key point is that a large proportion, up to half of patients, give it away or only use it sporadically.

mkaplan@bigpond.com

http://www.theaustralian.news.com.au/bu ... 46,00.html

Kiralynx wrote:Wow. Add in the cost of the air fare to Australia, plus a place to stay while you're being fitted, and that better be one dilly of a mask!

ww wrote:I tried a different approach. I bought a small UMFF and wore the darned thing until now my FACE has conformed to the shape of the mask and I don't have leaks anymore!!!!!!!

ww wrote:Although I do not like Respironics masks, they have a couple that can be molded to your face. They are heavy, but that is a step in the right direction!

I tried a different approach. I bought a small UMFF and wore the darned thing until now my FACE has conformed to the shape of the mask and I don't have leaks anymore!!!!!!!

rested gal wrote: ........... I just have serious doubts that "custom molded to your face" is the answer. ...........

"I just have serious doubts that "custom molded to your face"

Karla1958 wrote:are you a real person or just a spammer person? ..... If it were a real place with real masks why isn't there a photo of one of these custom made masks?