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Forrest Whittaker was named Chief Executive Officer of Avalign Technologies, Inc., in January 2007. His company-wide responsibility covers the four operating divisions of Avalign: Advantis Medical, Instrumed International, Nemcomed and NGInstruments.
Mr. Whittaker has over 30 years of experience in the healthcare industry, having started as a sales representative with American Hospital Supply in 1977. His prior positions include President and COO, Teleflex Medical, 2003-2006; President, Respiratory Group, Tyco Healthcare, 2000-2003; President and CEO, Paidos Health Management Services, 1993-2000. Prior to his tenure with Paidos, Mr. Whittaker served in a variety of management positions with both Baxter International and American Hospital Supply, including President at the V. Mueller division from 1989-1992.
For the past three years, Mr. Whittaker has served as board chairman of the Lake Forest Hospital Foundation. He presently serves as a trustee for Northwestern Memorial Healthcare System and as a Director of HealthReach, Inc.
Mr. Whittaker received his Master of Business Administration from James Madison University in 1977, and his Bachelor of Science from the U.S. Naval Academy in 1971.
Mr. Whittaker recently shared his perspectives with BONEZONE.
BONEZONE (BZ): Who is Avalign Technologies?
Forrest R. Whittaker (FRW): Avalign Technologies, founded in 2005, is a company with the objective of being a world-class contract developer/manufacturer for orthopaedic/surgical OEMs, providing a total solution—from “napkin drawing” to market launch for a broad portfolio of instruments, implants and delivery systems. We have 100,000 square feet of manufacturing space located in Warsaw, Fort Wayne and Greenwood, Indiana and in Tuttlingen, Germany, with over 500 employees. Over the last five years, we have brought together four companies: Advantis, Instrumed International, NGInstruments and Nemcomed. Advantis designs, tests and manufactures cases and trays for the orthopaedic, EENT, general surgery and spine markets. Instrumed designs, manufactures and distributes German specialty instruments for the orthopaedic, ob-gyn, EENT, general, ophthalmic and cardiovascular markets. NGInstruments specializes in the manufacturing of cutting tools for the orthopaedic market, while Nemcomed focuses on the design and manufacturing of orthopaedic and spine instruments and implants. (See Exhibit 1.) We believe this collection of capabilities positions Avalign to provide the “total solution” that OEM customers are looking for.
Exhibit 1: Avalign Technologies’ Companies
|  |
| Advantis | Instrumed |
 |  |
| Nemcomed | NGInstruments |
BZ: Will Avalign remain four separate companies or are you integrating them to be one company?
FRW: We have been actively integrating the four organizations under one financial and quality system. We also have been taking advantage of the engineering and manufacturing synergies between organizations to enhance the “Avalign Edge.” The sales and marketing functions are integrated, as well, to ensure that branding and customer messaging is consistent across divisions. In short, our objective is to provide the customer with a unified Avalign experience, without compromising the unique competencies provided by each of our companies.
BZ: Are you looking for new acquisitions or are you as complete as you need to be?
FRW: We are always looking for ways to better serve our customers, but we are careful not to grow too fast. Avalign currently has a very solid set of capabilities and we take pride in delivering high quality products, on time, with short lead times. We want to keep it that way, but are always on the lookout for good companies that fit into our “total solution” strategy.
At the same time, we recognize that there will be a lot of consolidation of contract manufacturers over the next few years. The cost of doing business is rising; FDA requirements are becoming more stringent and the investment necessary to implement a robust quality system can be quite substantial. I think there will be a lot of demand in the near future for us to expand and deepen our capabilities.
BZ: You mentioned the “Avalign Edge.”What is your value proposition for OEMs?
FRW: The Avalign Edge is why we put this organization together. Avalign Edge is the cross-divisional offering to the customer that allows us to vertically integrate with them early in the product development process, enabling them to shorten time-to-market timelines and increase revenue generation opportunities. In addition, our engineering and manufacturing resources enable us to grow with the customer while producing continuous manufacturing cost improvements through our commitment to continuous process improvement.
The “Avalign Edge” reflects our ability to add value throughout the entire development-to-production continuum.
BZ: Why would an OEM work with Avalign over another manufacturer?
FRW: Avalign Technologies’ focus is to build customer loyalty. We do accept customer satisfaction, customer loyalty as our mission. Our organization centers on exceeding customer expectations through constant improvement. For example, our customers expect shorter lead times and we made it a priority in 2009. We were able to reduce lead times by 50 percent in two of our businesses. Another difference is our lot acceptance rate of 98 percent. Focusing on our quality systems helped us hit our goals in 2009. We listen to our customers’ needs and make them a priority. Avalign is not perfect, but we have put metrics and processes in place to ensure that we will be as close as possible in our customers’ eyes.
BZ: How did Avalign perform in 2009?
FRW: For everyone, 2009 was a very difficult year. Avalign’s sales performance was mixed. Some businesses grew substantially; some did not. However, when you consider that orthopaedic OEMs in general reduced purchases by 15 to 20 percent, we did better than many of our competitors. We took advantage of this “slower” time to focus inwardly and correct some issues in some of our organizations. We hired two new Vice Presidents of Operations and a Vice President of Quality to prepare Avalign for the growth we are expecting over the next few years. We were able to significantly improve the bottom line strength of the organization, while bolstering our quality systems and production capabilities.
BZ: What do you see in 2010?
FRW: I see a moderate improvement over 2009. The first quarter sales numbers for large OEMs shows an eight to ten percent increase in sales revenue, which is flat with the fourth quarter of 2009. We know procedures are growing, but pricing is heading downward. This will cause OEMs to expect suppliers to reduce product costs and also to reduce supply chain costs.
Quality has become a hot topic for contract manufacturers and OEMs. The orthopaedic OEMs are spending a lot of their time and money on improving their quality systems, and they fully expect their suppliers to keep pace. They will do so by consolidating relationships to a few high-performance suppliers with robust capabilities and congruent quality systems. Avalign is directing all of its efforts toward taking advantage of the market shifts.
BZ: What have you done to position Avalign to take advantage of the changing market?
FRW: I have been a business leader for 30 years, and the one thing that I’ve focused on the most is hiring the very best people for each position. We have hired the best manufacturing, quality, financial and sales leadership in the business to position
Avalign Technologies is a leader in orthopaedic and spine contract manufacturing for the future. We have invested heavily in quality systems and manufacturing equipment to ensure that our product is the best, both from a quality and cost standpoint. We are very excited about our future, and our ability to continually exceed customer requirements.
