Spokane Journal of Business

A new Hollister-Stier emerges

Former Bayer facility here to take more aggressive tack to product development

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Hollister-Stier Laboratories LLC, which completed its spinoff last month from Bayer Corp., will be much more aggressive than Bayer was here in both introducing new allergy and asthma-related products and in seeking contract-manufacturing roles for other pharmaceutical makers, its CEO, Tony Bonanzino, says.

The Spokane-based company, owned by a group of former Bayer managers here and other investors, also plans to spend $2 million annually to keep its North Side plant state of the art, Bonanzino says.

In this divestiture process, its been clear what I wanted to do, he says.

Bayer Corp., the Leverkusen, Germany-based pharmaceutical giant, closed its sale of the Spokane operation on June 18. Hollister-Stier Laboratories LLC was founded by Bonanzino and others to be the buyer; the name was derived from the operations past. Hollister-Stier Laboratories was founded here in 1921 and sold to Bayer in 1974.

Bonanzino says the new venture will focus on what he sees as untapped potential to push the company ahead. He wants to increase Hollister-Stiers contract manufacturing, an area of potential business Bayer wasnt interested in building, and to establish a regular schedule of new product introductions, something Bayer hadnt done here in years, he says.

Hollister-Stier already has signed contracts with Bayer to make a broad-spectrum antibiotic and sterile solutions that are used to dilute injectable drugs.

The plant, at 3525 N. Regal, makes allergenic extracts, epinephrine kits to counteract dangerous allergic reactions, and a venom extract, all of which Hollister-Stier will market under its own brand name. The plants sterile manufacturing facilities meet U.S. Food and Drug Administration standards, and can be used to manufacture other pharmaceuticals, Bonanzino says.

The area at the plant where sterile injectables are produced recently underwent an upgrade that cost more than $2 million, the latest phase of about $6 million in work that has been done at the plant in the last three years. Now, Bonanzino wants to market that sterile production area to other drug companies that need additional capacity, and to biotechnology startups that need initial production runs for FDA testing.

When small biotech companies develop new drugs, most dont have FDA-approved manufacturing facilities to make the drug to be used in human tests, which are a necessary step in getting approval to bring a new medicine to market, Bonanzino says. Hollister-Stier could produce those drugs for such testing, then vie to become a biotech firms contract manufacturer once the drugs receive approval, he says.

Hollister-Stier also has started forming partnerships with research organizations around the country and in Europe to develop new products the plant here can manufacture. It also will work with local and regional researchers, if possible, Bonanzino says.

We dont have the internal horsepower to do all our own research, so we will actively out-source some product development, he says.

A product a year

Hollister-Stier plans to introduce two new allergy-related products, including one that will be used to diagnose allergies, by the end of 2001, but details on those products arent available yet.

Thats a product a year, and we havent had a new product in 10 years, Bonanzino says.

He says hes confident that the company can meet the ambitious new schedule and sustain it in the future. He adds that Hollister-Stier also is actively looking to acquire and produce products already in the marketplace.

The Spokane plant probably will begin making another product this summer. Hollister-Stier currently sells a dust-control product for the home thats being made for it by a California company. Bonanzino says the Spokane operations new management has decided it would be more beneficial to move that manufacturing to Spokane.

We want to move that in-house by the end of summer, Bonanzino says.

With plans for that move still in the early stages, it isnt clear yet how many employees might be added to handle the additional manufacturing, but he expects only a few new jobs to be created here.

Bonanzino expects some fluctuation in the Hollister-Stier work force, which is about 300 strong now, as the company finds its way on its new path. In April, 20 workers were laid off to trim costs and improve efficiencies during the transitional period. No more permanent layoffs are planned, he says, but about a dozen employees were temporarily idled in June, and another dozen temporary cuts are expected this month.

The temporary cuts were related to the remodeling of the manufacturing area that recently was completed. In anticipation of the project, which while under way curtailed some manufacturing, extra vials of extracts were produced. During the construction, workers kept busy packaging those vials, but now, even though the project is done, manufacturing cant resume until the FDA has inspected the renovated space. So the company laid off the workers until the FDA gives its nod to the upgraded facilities.

Bonanzino says more upgrades, about $2 million worth annually, are expected.

Because the plant is a sterile manufacturing facility, the FDA must approve each improvement project to ensure that sterile environments are protected during construction and that the upgrades meet federal standards, Bonanzino says. He says the FDA review process can take six to eight months.

He says that Hollister-Stier must build a strong awareness of where and how funds are spent, now that it no longer has the financial backing of a multinational corporation. He says Hollister-Stier is developing new budgets and working to trim organizational overhead to ensure its self-sufficiency. The plant has lost money each of the last two years, but expects to finish 1999 in the black. He declines to release revenue figures.

New budgets and lower overhead costs will be just part of what Bonanzino calls a pretty dramatic cultural change, under way at the plant. As part of Bayers international network of facilities, the plant here followed rigid, bureaucratic methods, he says, and now Hollister-Stier will have a more entrepreneurial spirit and new freedoms for employees.

Autonomy, speed of decision-makingyou cant underestimate what that means, Bonanzino says.

  • Anita Burke

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