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Tuesday, Mar 19, 2024

Advanced Bionics Opens New Manufacturing Plant

Advanced Bionics is relocating its manufacturing facility to Valencia and expanding its workforce as its products gain traction and sales grow nearly 50 percent. The company that makes cochlear implants — devices that allow the deaf or near-deaf to hear — saw revenues increase 48 percent this past year to $110 million. The growth means more jobs at the company’s new manufacturing plant in Valencia, where employment should reach 600 by next year, CEO Gerhard Roehrlein said in an interview at the company’s new facility. “We see continued significant year-over-year growth in the coming years,” Roehrlein said. The moves follow some significant challenges and false starts for the company founded by billionaire Alfred E. Mann. A series of product recalls, the latest in 2010, bruised its reputation, while the 2004 sale to Boston Scientific ended badly for the company. After paying $740 million to acquire the company, Boston Scientific returned the company to the management team led by Mann, saying Advanced Bionics took too long to reach profitability and paid too little attention to quality, according to published reports and court documents. The issues surrounding quality emerged after regulators issued warning letters to the company citing violations at its Sylmar facility. The FDA recalls have harmed the company’s reputation, said Dr. Akira Ishiyama, an otolaryngology specialist with the UCLA Health System, who performs the implant surgery. “I have not seen any difference in terms of device performance compared to their competitors, but when it comes to reliability — because they had several issues with the FDA — patients had enough concerns in recent years to select other devices,” Dr. Ishiyama said. “They’ve had to re-establish their reputation.” Swiss hearing aid manufacturer Sonova Holding AG bought the company on Dec. 31, 2009, for $489 million. Sonova should help Advanced Bionics, Dr. Ishiyama said. Under Sonova, Advanced Bionics has spent the last two years upgrading the manufacturing process to ensure safety and focusing on product innovation, Roehrlein said. The transition has not been flawless. The company had another recall in 2010 after two of its implants were found to malfunction, causing pain, loud noises and shocking sensations. The incident was limited to just two devices out of 28,000 manufactured that year, the company said. Advanced Bionics is not the only cochlear implant company to have faced recalls. All three U.S. based manufacturers have had similar issues, according to the Hearing Loss Association of America. Still, the issues have prompted an even greater emphasis on safety and building trust, an idea not lost on Roehrlein. Cochlear implants are electronic hearing devices implanted in the brain above the ear, designed to produce useful hearing sensations to a person with severe to profound nerve deafness. “When you make a choice like this, it’s a lifetime decision built on trust,” Roehrlein said. Sonova — a $1.9 billion business that’s been manufacturing hearing aids for 65 years — will help burnish Advanced Bionics’ reputation as a reliable company, he added. “This is a very solid company…the likelihood that this company will invest in new technologies and will be there many years from now is very high.” New Facilities, Products Advanced Bionics’ new location is a five-story, 144,000-square-foot building located off of the 5 freeway. The company began shifting manufacturing to the new facility earlier this year. By the time the transition is finished later this year, it will have shifted 350 manufacturing jobs from Sylmar and total employment in Valencia will reach 600, up from 550 now. The new facility occupies 25,000 square feet on the second floor of the headquarters building. Workers are covered head to toe in white dust-free garbs, gloves, face-masks and shoe-covers, making the facility look more like a surgical suite than a manufacturing plant. Visitors can watch through windows designed with the company’s youngest customers in mind, but they cannot enter. Since buying the company, Sonova has also put significant investment into product innovation. Its most recent introduction is waterproof technology — Neptune — which the company says is the world’s first swimmable sound processor. Another innovation is a product the company calls Clearvoice, a signal processing algorithm that removes background noise and allows for better speech recognition in crowded or noisy environments. Roehrlein says the market for implants is roughly $1 billion, growing 10 to 15 percent a year driven by the rising number of people who become deaf and growing insurance coverage for the device. The cost is high — on the order of $100,000 over a lifetime of wear with upfront costs averaging $40,000 to $60,000. But rarely do patients pay that out of pocket. Cochlear implants have been around more than 20 years, but the technology and acceptance has grown. When it was first introduced, many opposed their use on the notion that hearing impairment was not a disability, said Nancy Macklin, events and marketing director of the Hearing Loss Association. That’s changed and in recent years, groups welcome the implants and the tremendous difference they can make in the lives of thousands of people, especially children who are born deaf. With some of its difficulties behind it, Advanced Bionics expects to participate in the industry’s growth. It hopes the new products will propel the company ahead of competitors Cochlear and MED-EL, the only other U.S.-based manufacturers. Having Sonova — a company that pumps 7.2 percent of its revenue into research and development — squarely behind the company should help, Roehrlein said. “This whole business is driven by innovation. To be able to invest huge amount of funds into this and push forward the nice ideas our engineers…that’s what we want.”

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