It's not often that a chief executive officer hopes some of his company's future products will put people to sleep.

But for John Miclot, it's a natural next step in an evolving strategy for Respironics Inc.

	Robin Rombach/Pittsburgh Post-Gazette
	John Miclot, right, became Respironics' new CEO Dec. 1, succeeding James Liken, who remains chairman of the Murrysville firm.

The Murrysville company, after all, made its original mark -- and still makes more than half of its revenue -- from devices that alleviate obstructive sleep apnea, technically a breathing disorder that interrupts its victims' sleep.

Miclot, 44, who became CEO Dec. 1, comes to the job as Respironics -- one of a few firms, including Medrad Inc., that has put Pittsburgh on the map as a maker of medical devices -- is performing at the top of its game.

Introducing completely new products rather than merely improving existing ones is a key element of the strategy he plans to deploy to sustain average annual earnings gains in the 17 percent range. "We think there's a real opportunity to expand our sleep initiatives," said Miclot, who succeeded James Liken, who remains chairman.

Miclot noted that Respironics has gained significant knowledge about the physiology of sleep and markets for sleep-related products as part of its market research and research and development efforts.

"Our market research says half of the people we talk to describe themselves as 'problem sleepers'," he said. Their difficulties can range from insomnia -- an inability to get to sleep -- to seasonal affective disorder, which can make its victims sleep excessively.

One possible new product would be a device to help people suffering from seasonal affective disorder, a form of depression that afflicts some people during winter months, when the decline of sunlight is thought to disturb their bodies' production of melatonin, a sleep-related hormone.

At the moment, the only available treatment for those who suffer the malady, commonly known as SAD, entails sitting in the presence of bright lights, usually housed in boxes or panels. The light therapy reduces the brain's secretion of melatonin. But using the existing devices is cumbersome and inconvenient, particularly for people who work.

"We think we might be able to do it [with a device] using other than bright, white lights and do it while a patient sleeps," said Miclot.

Miclot said Respironics also is looking into a number of potential products based on its work in respiratory therapy.

Among them is a misting device that would deliver prescription drugs, such as antibiotics, through the respiratory system, potentially improving the speed at which they work and decreasing the doses needed. Another is a device to replace the cumbersome tanks used by ambulatory patients needing oxygen.

Miclot said Respironics also will remain on the prowl for acquisitions.

It's not that Respironics isn't still enjoying growth from its mainstay products. Industry sales of devices for obstructive sleep apnea, for example, have reached only 2.9 million of a potential 18 million patients in the domestic market, said Liken, Miclot's predecessor.

Moreover, for the past five years, Respironics has enjoyed compounded annual sales growth of 15 percent, while earnings per share have risen 18 percent annually.

The robust performance came after a $370 million merger with Atlanta-based HealthDyne Technologies in 1997, along with changes in Medicare reimbursement for a key product threatened to end Respironics' days as a growth company. Just months after the merger, its profits began to slump.

Cultural differences contributed to the problems, said both Miclot, who came to the company from the HealthDyne camp, and Liken, recruited in 1998 by the Respironics board to put the company back on track.

Liken, who earlier founded a home-care company that was one of Respironics' customers, said Respironics had excellent engineering talent but had lost touch with its customers.

Although it worked to update its products, it wasn't doing so in such a way as to solve key problems faced by customers, such as home-care companies that distribute some of Respironics' devices, or for patients who ultimately use them.

For example, market research showed that home care companies had a difficult time getting patients supplied with devices for treating obstructive sleep apnea to use them. The reason was that they didn't fit comfortably.

Although Respironics offered different facial mask sizes, the choices were confusing, so suppliers typically just ordered the medium-sized models, Liken said.

The company worked to fix the problem by altering masks to ensure snug but comfortable fits, Liken said.

It also mounted programs to educate customers, doctors and others about the pervasiveness of obstructive sleep apnea and its potential health threats, including cardiac problems.

When he assumed Respironics' helm, Liken said he found the company "mentally flat." Despite its entrepreneurial heritage, it also had become "very bureaucratic."

He created a different tenor, holding pep talks while setting firm expectations. Liken also militated against the bureaucracy, in part by overhauling the human resources department. In addition, he allowed managers freedom in implementing strategy.

Miclot, a running enthusiast in his spare time, was one who ran with the opportunity, Liken said.

"John likes to think," he said. "He's very creative and he has an energy level that's very high."

The new CEO, who said HealthDyne tended to be more agile and less "process oriented" than Respironics, said he has no plans to alter that style.

"You want aggressive innovations," Miclot said. "You want solutions that are unique and you want people making decisions in the field."

"If you walk around here and you see a lot of action and noise, I like that."