April 25, 2007 in Business

India-based company buys HollisterStier Laboratories

By The Spokesman-Review

At a glance

“HollisterStier Laboratories has contracts to manufacture sterile injectable pharmaceuticals for companies around the globe.

“Jubilant Organosys is one of India’s largest custom medical research and manufacturing services and works on drug discovery and development.

A company based in India has purchased local pharmaceutical manufacturer HollisterStier Laboratories LLC for $122.5 million.

The new owner has pledged to keep HollisterStier and its 450 employees in Spokane, said Anthony Bonanzino, HollisterStier president and CEO.

India’s Jubilant Organosys announced the cash purchase Tuesday. HollisterStier makes allergy-treatment products and has numerous contracts to make sterile injectables for pharmaceutical companies around the world.

Its plant encompasses 150,000 square feet of production space on a 20-acre campus on North Regal, Bonanzino said.

The company is one of Spokane County’s largest manufacturing employers. Washington Gov. Chris Gregoire said while touring its campus earlier this year that HollisterStier shows “the global health industry is not just a Puget Sound phenomenon.”

Jubilant specializes in pharmaceutical research and manufacturing, according to its Web site.

It has more than 3,300 employees at companies in India, the United States, Europe and China, the company said in a press release.

Bonanzino said Jubilant has a hands-off approach to acquisitions and will rely on HollisterStier’s present management team and staff to guide operations and complete a $30 million expansion begun last year.

Jubilant also owns U.S.-based Target Research Associates, a clinical research organization in Berkeley, N.J, and Cadisda Pharmaceuticals of Salisbury, Md.

Since its 2005 purchase by Jubilant, Cadisda has grown from 30 employees to 105 and continues to be operated by the same American management team and staff, said Cadisda’s commercial financial officer.

Said Bonanzino of HollisterStier’s new owner, “they have no desire to put other people in place and no desire to micromanage. They want to leverage different capabilities and provide support. But essentially we’re responsible for running our business and continuing the high success rate we’ve had.”

As part of the purchase, Jubilant will reimburse HollisterStier for about $16 million in remaining expenses necessary to complete its expansion and begin commercial production there next year. The expansion includes a 50,000-square-foot addition to HollisterStier’s plant and a second production line.

Last year, HollisterStier posted about $55 million in revenues, with nearly $11 million in earnings. The company has averaged 40 percent annual growth rates beginning in 2002, Bonanzino said.

Windward Capital Partners, a private equity firm based in New York, has been HollisterStier’s majority owner since 1999.

Bonanzino has long said that Windward would want to recoup its investment in the company at some point by selling its stake in HollisterStier.

“Typically, a group like that holds on to an asset for three to five years,” Bonanzino said.

“But the group stuck with us and we continued to grow for eight years now.”

Last fall, the investors decided to begin looking for a buyer, he said.

HollisterStier was founded in Spokane in the 1920s to make allergy products. Bayer Corp. bought the company in 1974 and owned it until the sale to Windward.

In the coming months, HollisterStier executives will lay out a three-year plan for the company’s new owner.

“We acquired 7 acres last summer and we want to use it all, eventually,” Bonanzino said.

“We want to potentially build a third line and do some other assets on the property. All the discussions have been about ‘How do we grow the company larger in its current location?’

“That’s put us in a position in which we’re here to stay and that’s good for the city,” Bonanzino said.

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