Internationally sourced revenue is the most rapidly growing segment of annual corporate results. And year-to-year gains in performance track closely to the level of Respironics' presence in its respective world markets. Increasingly, that presence spans a broader range of business activities - manufacturing as well as sales and distribution - while future overseas growth is likely to be characterized by greater control over the processes which guide the company's U.S.-based operations.Respironics' focus on international arenas continued with increased emphasis during fiscal year 1997. International sales rose by more than 50 percent to approximate 27 percent of the overall total. An active acquisition program markedly increased the company's presence - sales, service and production - in Germany while complementing the previously established headquarters operation of Respironics Europe in France. The year also saw the establishment of a new Far East manufacturing facility in the Philippines.
The company's investment in and focus on international markets span both the manufacturing and distribution processes. In 1981, Respironics began to manufacture internationally with the establishment of operations in the Asia Pacific region. The company now has overseas production facilities in Germany, the Peoples Republic of China and the Philippines. Historically, Respironics has reached its international markets through the development of exclusive distributor arrangements in each country. With the acquisition of Stimotron, a direct sales force is now in place in Germany, France and the Peoples Republic of China. Additionally, Respironics' distributors in the remaining countries in the Asia Pacific region and in Latin America as well, continued to aggressively penetrate those markets. Respironics France, which outperformed expectations in fiscal 1997, stands as a good example of the success the company has had in identifying the best long-term strategy and talented personnel capable of accommodating the sharply diverse market climates in the various international markets it serves.
At the close of fiscal year 1997, nearly one-half of all Respironics employees were based outside the United States. By the close of the current decade, it is not unrealistic to project that non-U.S. sales could well approach one-half of the company's total business volume.
| North America | |
| Corporate Headquarters: | |
| Pittsburgh, Pennsylvania | |
| Manufacturing Facilities: | |
| Murrysville, Pennsylvania | |
| Westminster, Colorado | |
| Research & Development Facilities: | |
| Murrysville, Pennsylvania | |
| Westminster, Colorado | |
| Redwood City, California | |
| Winnipeg, Canada | |
| Customer Satisfaction Centers: | |
| Minneapolis, Minnesota | |
| Tampa, Florida | |
| Chicago, Illinois | |
| Houston, Texas | |
| Cleveland, Ohio | |
| Kansas City, Missouri | |
| New York, New York | |
| Atlanta, Georgia | |
| Denver, Colorado | |
| Oakland, California | |
| Los Angeles, California | |
| San Diego, California | |
| Seattle, Washington | |
| Detroit, Michigan | |
| Boston, Massachusetts | |
| Baltimore, Maryland | |
| New Orleans, Louisiana | |
| Phoenix, Arizona | |
| Pittsburgh, Pennsylvania | |
| Europe | |
| Headquarters: | |
| Nantes, France | |
| Manufacturing Facilities: | |
| Herrsching, Germany | |
| Direct Sales & Distribution: | |
| Wendelstein, Germany | |
| Nantes, France | |
| Customer Satisfaction Centers: | |
| Herrsching, Germany | |
| Wendelstein, Germany | |
| Asia | |
| Headquarters: | |
| Kowloon, Hong Kong | |
| Manufacturing Facilities: | |
| Shenzhen, PRC | |
| Subic Bay, Philippines | |
| Sales & Distribution: | |
| Kowloon, Hong Kong | |
| Shenzhen, PRC | |
| Beijing, PRC | |
| Shanghai, PRC | |
| Wuhan, PRC | |
| Guangzhou, PRC | |
Whether involving entire organizations or the marketing rights to a single product, the company's acquisition initiatives support virtually every facet of the Respironics strategic plan. Viewed in aggregate, the process adds products, technology, management talent, market position and avenues to capitalize on production, marketing and distribution synergies while providing expanded career opportunities for both existing and "acquired" company associates.Fiscal 1997's wave of new product introductions was accompanied by acquisition activity which also contributed to the year's revenue and income totals. The second-quarter purchase of LIFECARE International, Inc. - Respironics' largest acquisition to date - added an established organization offering related products and an infrastructure that positions the company to bring additional value to its customers. And the subsequent purchase of Stimotron Medizinische Geräte GmbH addressed a number of marketing, distribution and service objectives in a primary international market.
Regarding LIFECARE specifically, that company's concentration on portable invasive ventilation therapy complements Respironics' market-leading position in bi-level noninvasive ventilation. Further, the addition of LIFECARE's 19 district offices in the United States substantially broadens an existing network of sales and service locations at a time when proximity to the customer has become an increasingly important determinant of market success. And the manufacturing facilities acquired in the transaction - one near Denver and a second in Germany - provide attractive opportunities for future production and distribution activities.
Stimotron, meanwhile, is primarily a distribution organization operating in Germany. Prior to its purchase in February, the company was the exclusive distributor of Respironics products in that country. Those products comprised approximately 90 percent of annual Stimotron sales. The Stimotron acquisition reflects Respironics' philosophy of selecting the best long-term option for distributing its products in every significant market in the world. The purchase also included the added benefit of strengthening the company's direct link to customers in a highly developed marketplace.
Although the acquisition of worldwide rights to market the RinoFlow™ nasal irrigation product was a fiscal 1996 event, Respironics-sourced shipments of the device began in June 1997. Going forward, the company's initiatives will include a focus on educating physicians and other caregivers to the benefits of this new rhinosinusitus treatment option.
Respironics' relationships with its customers go well beyond the realm of product and price, delivery and service. The company views these customer relationships as partnerships spanning a continuous process that begins well before and extends long after the closing of any individual sale. For the company, this process is the focus of continuous monitoring and constant improvement initiatives.Year-to-year improvements in annual results have consistently featured meaningful progress by all of Respironics' core businesses. And despite increasingly competitive pricing environments, market leadership has been maintained through high levels of customer service, successive cycles of technological advances and customer education. The impact of those initiatives was particularly evident in fiscal 1997 as full introduction of the Great Performers™ products, new Monarch® and GEL™ mask designs and the BiPAP® S / T-D 30 Ventilatory Support System contributed to the year's performance. Additionally, post-acquisition sales of LIFECARE ventilators complemented aggressive gains by the company's existing ventilation line to markedly increase that component of Respironics' business profile.
The product expansion efforts which helped shape the year's success reflect the balance both in the company's revenue base and in its strategic initiatives. The Great Performers additions enabled the company to enhance its ability to address the obstructive sleep apnea (OSA) market with a wide array of product options at a broad range of price points. Substantive advancements in mask design further enhanced the company's position in an important market segment which complements both the OSA and noninvasive ventilation markets. The LIFECARE purchase added an established presence in the invasive home ventilation marketplace. In fiscal 1998, the company's product mix will be strengthened further by the year's scheduled introduction of next-generation OSA and ventilation devices.
Respironics' business remained strong in both home and hospital applications and at many points in between. A large majority of annual sales continued to result from the company's homecare products but, to a significant degree, patient populations first encounter those products in hospitals and other clinical settings. Additionally, much of the clinical research and other data-gathering critical to new product development results from close working relationships with the physicians and clinicians who staff those institutions.