Hollister-Stier Laboratories LLC, of Spokane, is seeing so much demand for its services that the pharmaceutical manufacturer is contemplating adding a second high-speed production line at its northeast Spokane plant, a project that would cost $15 million to $20 million if it comes to fruition.


Hollister-Stier is studying the anticipated demand for such an expansion, its cost, and the potential construction timeline, and should make a decision whether to go ahead with the project within three to six months, says Tony Bonanzino, CEO of the company.


Right now, demand for the project seems clear: Bonanzino says about 90 percent of next years production capacity on the companys current high-speed line already has been taken. The second lines success, however, would be based on future demand, he says.


We have to basically speculate what our future volume will be in three years, four years, because this project will take three years to complete, Bonanzino says. That includes planning, construction, buying and installing equipment, and obtaining U.S. Food & Drug Administration approval of the facility, he says.


Hollister-Stier also will have to decide how to pay for the project, he says. Options include asking the companys current owners to fund the expansion, finding an outside investor who wants to take an equity position in the company, or borrowing the money, he says. Hollister-Stier would prefer not to exercise the third option so that its debt position remains low, he says.


Bonanzino says its not clear how many jobs the addition of a second production line would create, but adds that the company hired 20 people to staff a second shift on its current production line in September. Currently, Hollister-Stier employs 290, about 50 of whom have been hired in the last 18 months, he says.


Much of the anticipated demand for the second production line will be coming from Hollister-Stiers contract-manufacturing operations, in which it produces, fills, and packages pharmaceuticals for other companies. While Hollister-Stier typically doesnt disclose the names of its clients, Bonanzino says it either has worked for or is negotiating with some of the top pharmaceutical companies in the world.


Hollister-Stier, which made its name manufacturing allergy products, which it still produces, branched out into contract manufacturing after a group of managers acquired the company from its former parent, Bayer Corp., in 1999.


The allergy business continues to grow, but were putting so much emphasis on the contract side right now because the growth potential is so much greater, Bonanzino says.


Making the job of anticipating future demand somewhat easier is that since February, Hollister-Stier has been manufacturing small batches of pharmaceuticals for companies that are engaged in clinical trials of the medicines. Generally, a company that moves from the final clinical trial to initial commercial production of a new drug will elect to use the same production facility because it needs to show the FDA that the drug will be manufactured similarly in both cases, Bonanzino says.


Right now were working with a number of companies that are conducting clinical trials, he says. By 2004, the potential of production becoming approved is fairly good.


At the behest of one of its clients, Hollister-Stier may expand the area of its plant set aside for clinical-trial manufacturing, he adds. The unnamed client is working on the next-generation version of a proprietary medicine and wants to pay for the expansion, as well as bring in its own people to conduct the work, Bonanzino says.


Its so sensitive they want to have an area thats just theirs, he says.


Hollister-Stier would build its second production line in what is now warehouse space at the west end of its 120,000-square-foot facility, at 3525 N. Regal. That would require the company to either build or lease more warehouse space, he says.


Hollister-Stier already has spent nearly $10 million upgrading its plant since it became an independent company in 1999. Its clients have spent an additional $5 million on improvements to the plant during that time, Bonanzino says.


All of that work comes with challenges, such as maintaining a sterile environment while construction is under way, and shifting operations around to make room for the work, he says. In addition, every time Hollister-Stiers scientific or laboratory equipment is moved, it has to be recalibrated and validated by the FDA, he says.


Patrick Jones, executive director of the Biotechnology Association of the Spokane Region, an industry trade group here, says that despite the challenges, Hollister-Stiers continued growth is key to the development of a thriving biotech industry here.


Hollister-Stier is the linchpin to our biotech sectors future success, Jones says. The facility is FDA-approved for biological and pharmaceutical manufacturing, and that is very unusual for a company of its size, he says. Its a very unique operation.


Bonanzino says his most pressing concern right now is to manage Hollister-Stiers growth, ensuring that the company can meet future demand without jeopardizing its present business.


Of late, weve just had a rash of proposals being requested of us (by potential clients), on top of an already full schedule, he says. The signs are all very positive right now.