Avalon Gets A Boost

February 1, 2008
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GRAND RAPIDS — Avalon Laboratories Inc., a member of the West Michigan Science and Technology Initiative, just received an infusion of $66 million to accelerate its growth.

The $66 million investment was made by  American Capital Strategies Ltd. of Maryland, the nation's  largest publicly traded private equity fund and one of the largest publicly traded alternative asset managers. The company has a portfolio of life sciences and medical technology companies and typically invests from $5 million to $800 million per North American company.

The investment in Avalon was based on the work Avalon has done over the past four years in Grand Rapids and its "excellent track record" in the medical device industry, according to American Capital Strategies. 

Avalon is a disposable surgical component manufacturer and global supplier of cardiopulmonary vascular cannulae, which are medical devices that hook patients up to heart and lung machines and other support devices. Its eight-member global research and development team works out of Grand Valley State University's Cook-DeVos Center for Health Sciences here. The company has a manufacturing facility in Los Angeles and an international manufacturing facility in Guaymas, Mexico.

Avalon has two customer bases. Customers for Avalon proprietary products are hospitals, critical care physicians and surgeons. Avalon also has an ongoing business with medical device manufacturers around the world for OEM products: The medical device manufacturers do their own R&D and Avalon turns their ideas into finished medical products.

"Avalon holds the leading position in its niche market, supplying over 75 percent of spring-reinforced cardiopulmonary vascular cannulae used globally," said Brian Martin, vice president of American Capital Strategies.

Avalon Laboratories is actually headquartered in Rancho Dominguez, Calif., but based its research and development operation in Grand Rapids in May 2004 and entered into an agreement with WMSTI to locate in the Cook-DeVos Center. All of the new product development work for Avalon products is done here, said Bill Sidor, Avalon's vice president for research and development. He said American Capital's $66 million investment is the largest Avalon has secured to date.

"We set up the global R&D operation here for a couple of reasons," Sidor said. "The talent that we wanted in order to hit the ground running was available to us in Grand Rapids, such as the talent that was available at DLP/Medtronic.

"Second, Michigan has been very important to Avalon for many years. A lot of the products that we manufacture on an OEM basis have been coming into Michigan — quite a bit into the Grand Rapids area, in fact — so there's a supply chain connection here in West Michigan, as well. For those two reasons, as well as the opportunity to work out of the product development center at the West Michigan Science & Technology Initiative, it made sense to locate our R&D operation here."

Sidor is former director of research and development at DLP/Medtronic Cardiac Surgery. He holds seven medical device patents. Avalon's Grand Rapids operation employs primarily product engineers and designers, who work closely with West Michigan's medical community on product design and development.

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