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For 17 years, Avalon Laboratories Inc. was content to manufacture medical life-support system components that other companies would sell under their own name.

Now with the help of private equity financing, the Rancho Dominguez medical device company is launching a name-brand line of medical tubing, known as cardiopulmonary vascular cannulae, which connects patients to life-support machines.

Avalon’s new tubing product is designed to work with an alternative therapy for patients with severe respiratory failure. Traditionally, patients would be connected to a mechanical ventilator that pumps the lungs full of fresh oxygen and removes carbon dioxide from the blood. But that process can be hard on a weakened lung.

The newer technology, called extracorporeal membrane oxygenation, draws blood out of the body, puts oxygen in the blood and then pumps it back in. This allows the lungs to rest and heal.

“It’s essentially a process that lets people breathe through their blood,” said Robert Foster, Avalon’s founder and chief executive.

The procedure has been used to treat babies for several years, but is rarely used for adults. “We want to a part of this growing technology,” Foster said.

The company plans to launch the first device in this line, called Avalon Elite, later this month.

For now, Avalon’s main sales come from supplying tubing that connects patients to heart and lung machines, and other support devices.

Based on market data, Foster estimates his company, which made 2 million products last year, provides more than three-quarters of all wire-reinforced cannulae in use around the world.

A variety of the company’s tubings are used during surgery and other medical procedures. The tubing can be inserted into a vein to administer intravenous fluids and medicines. Arterial tubings are used to measure blood pressure and to draw repeated blood samples during major operations. Other tubings administer oxygen through the nose.

Foster, an engineer, developed Avalon’s core technology in 1982 while working at his father’s South Bay plastics molding company. A device company representative had come into the shop, looking for medical tubing that could be easily inserted deep into the body during open-heart surgery without kinking.

In response, Foster developed a plastic dipping and layering process that allowed the embedding of a variety of round, flat or straight wire in the tubing.

In the mid-1980s, he bought out his father’s share of the company and spun off the medical device division into Avalon Laboratories.

Avalon now produces more the 600 types of disposable tubings that range in length from 12 to 48 inches. Its chemists have made dozens of different proprietary formulations of vinyl, urethane, and urethane blends to create standard and custom tubings that can cost from $40 to $1,000 depending on the level of sophistication.

Among around 30 companies that contract with Avalon to manufacture some of its designs is California Medical Laboratories in Costa Mesa.

“Making wire-reinforced cannulae is a very cumbersome technology that requires know-how and a big investment,” said Mehmet Bicakai, California Medical’s chief executive. “It doesn’t make sense to compete with Avalon when we can concentrate on customer service and designing custom products.”

Minneapolis-based Medtronic Inc., one of Avalon’s largest customers, acquired Avalon in 1996, but sold it back to Foster in 2002 because the company believed that the market wouldn’t be growing.

“The moment I came back to the plant I realized how much I loved the business,” Foster said. “I also saw some opportunities that Medtronic hadn’t.”

Much of Avalon’s recent growth has come from abroad, particularly in the Middle East, Asia and South America. Foster said the company had 50 percent revenue growth in 2006 and 40 percent in 2007.

Avalon, which opened a second manufacturing facility in Guaymas, Mexico, two and a half years ago, also has a research and development facility in Grand Rapids, Mich.


Pediatric technology

The new product line was born a few years ago, when Foster was approached by researchers from the United Kingdom. They were part of a movement among pediatric pulmonologists to explore life support by means outside the body as an alternative to forcing air in and out of fragile young lungs with a ventilator.

The physicians had combined already available baseball-size pumps to draw spent blood from the body, run it though small oxygenator machines and then pump it back into the patient.

One problem was that the procedure required time-consuming insertion of as many as three tubes. But Foster’s researchers developed a product with a single insertion point. A tube within the tubing brings refreshed blood into the body while the outer tube flows depleted blood via holes on its surface.

While this has become an accepted procedure to treat babies with severe breathing problems, only in the last few years have comprehensive studies been done on its use for adults.

Foster is hoping that new research will help create a market for his product. Two European companies are developing a kit that includes Avalon’s new product.

“These cannulae are a major step forward in refining the technique and making it less invasive,” said Giles Peek, cardiovascular surgery specialist at Glenfield Hospital in Leicester, U.K., and an author of the study comparing the new technology with traditional ventilation.

Peek said a main challenge for promoters of the technology will be to educate physicians accustomed to treating lung patients the traditional way.

“It’s really a case of educating intensive care doctors,” Peek said. “It’s a very well-established procedure.”

While the standard tubings are a modest $230 million market, Foster says next-generation lung-support technology might be closer to $2 billion.

The promise of such technology was enough to encourage American Capital Strategies Ltd., the largest U.S. publicly traded private equity fund, to invest $66 million in Avalon in a debt and equity package in January to fund the rollout of the Avalon Elite line.

“Not only is Avalon’s base business very strong, but as an investor we saw a great commercial opportunity in a proprietary product that enables a life-saving procedure,” said John LeRosen, a senior associate at Bethesda, Md.-based American Capital’s Los Angeles office.

Bringing in outside investors was a big step for Foster, who has always owned 100 percent of his companies.

“But it’s worth giving up some control to be a part of this,” he said. “We’re the go-to guy for cannulae and our mission to enable this new therapy.”

Avalon Laboratories Inc.

Founded: 1990

Core Business: Manufactures

cardiopulmonary vascular tubes that connect patients to heart and lung machines, and other support devices

Employees: 145 in Los Angeles; 155 in Michigan and Mexico

Goal: Develop a niche in supplying medical connectors for new medical technology

Driving Force: Advancement in medical device technology serving heart and lung patients

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