A new Japanese owner with aggressive global ambitions in pharmaceutical markets has called a halt to a Long Island-based biotech company”™s much-anticipated move to Westchester County this year.
Astellas Pharma Inc., Japan”™s second-largest pharmaceutical company, will not complete the relocation of OSI Pharmaceuticals Inc. to the Ardsley Park Science and Technology Center in the town of Greenburgh. About 55 employees already have made the move from OSI headquarters in Melville to the 43-acre campus on Saw Mill River Road, where OSI already has mounted its corporate logo on a sign on a roadside knoll.
Developer of the cancer drug Tarceva, OSI paid $27 million in 2009 to buy the Ardsley campus vacated by Purdue Pharma Inc. and expected to spend about $95 million in all for the relocation. It planned to consolidate its U.S. operations, which also include facilities at Long Island”™s Farmingdale State College campus, Cedar Knolls, N.J., and Boulder, Colo. Starting in Westchester with 350 employees, OSI last year pledged to state and county economic development officials to grow to at least 600 employees by 2012.
Instead, the new owner will close the Ardsley center and OSI”™s Melville office by June 2011, a spokeswoman at Astellas Pharma US Inc. headquarters in suburban Chicago said. OSI”™s 90-employee research and development facility in the Broad Hollow Bioscience Park on the SUNY campus in Farmingdale will for now remain open, “with long-term feasibility to be determined when our integration planning is complete,” said Maribeth Landwehr at Astellas.
“We understand the impact that these decisions have on the employees, families and local communities,” Landwehr said. “By providing OSI employees with more clarity regarding the timelines of the integration and organizational decisions, we hope to minimize uncertainty.”
The change of plans for OSI was augured in June by a shutdown of most construction work on the site that left hundreds of building trades workers newly unemployed. With the closing next year, about 400,000 square feet of vacant office and lab space in six buildings could return to Westchester”™s largely dormant commercial office market. And, as Greenburgh Supervisor Paul Feiner said in an e-mail message announcing the Astellas decision, “Their presence in Greenburgh would have created more jobs for the community and would have helped boost the local economy.”
Yet even with the closing, municipalities that stood to gain in revenue from OSI”™s presence in Ardsley might not be left empty-handed, if terms of OSI”™s 15-year property tax abatement agreement are upheld. And Greenburgh, said Feiner, already has received about $400,000 in building permit fees from the estimated $50 million renovations project.
Astellas Pharma in June completed a $4 billion cash deal to acquire OSI and strengthen its position as a global leader in oncology therapeutics. Marketing Tarceva, OSI reported $428 million in total annual revenues in 2009 and operating income of $153 million.
OSI CEO Colin Goddard, whose ire and impatience with Long Island officials at their lack of progress in developing and supporting a biotech cluster in part drove OSI”™s choice of Westchester, was pushed out in the hostile takeover. OSI now is a wholly owned subsidiary of Astellas US Holding Inc. Astellas officials in Tokyo this month named a company executive, Naoki Okamura, as OSI president.
Town and county officials expected the construction shutdown that followed the purchase to be temporary during the ownership transition and judged the relocation project was too far along to be aborted. But in a July meeting with County Executive Robert P. Astorino, senior Astellas executives said they wanted to go ahead and tell OSI employees about their change of plans.
“They were gracious and forthcoming,” Westchester County Economic Development Director Laurence Gottlieb said of Astellas management.
Gottlieb speculated that OSI operations would be consolidated instead at a corporate campus being built by Astellas in Glenview, Ill., a Chicago suburb near the company”™s current headquarters. Set for completion in spring 2012, the 425,000-square-foot corporate headquarters will cost approximately $150 million, according to Astellas officials.
Gottlieb said Astellas should have no problem finding a buyer if it puts its Ardsley property on the market. “It”™s great space. There are going to be firms that are going to be interested in that space,” especially biotech companies looking to expand in Westchester, he said. The center will be more appealing to prospective buyers with the renovations already done by OSI, he said.
Astellas might want to find a buyer quickly to assume the PILOT agreement, or payment in lieu of taxes, that OSI negotiated last year with the town of Greenburgh. Greenburgh Assessor Edye McCarthy, who negotiated terms with the company, said the agreement prohibits OSI from filing a tax certiorari in court to challenge its assessed property value, a legal move expected of the owner of a vacant or underutilized property.
She said the OSI property is assessed at $32 million, the base value for PILOT payments. In 2011, OSI”™s first due payment will be $950,000 and will rise with any tax rate increase.
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Gottlieb said the county Industrial Development Agency is investigating whether OSI has any outstanding obligations it agreed to when receiving state and county financial incentives to relocate. The county IDA approved a sales tax exemption on construction materials and equipment for the project valued at $3 million.
A spokeswoman at Empire State Development Corp. said that state agency”™s agreement to pay OSI”™s annual rent of $1.8 million for its 63,500-square-foot lease on the Farmingdale campus ended with the change in relocation plans.
At the Long Island Association Inc., the state”™s largest business organization, officials expect to learn Astellas”™ final integration plans by Sept. 30, said Daniel R. Perkins, LIA vice president for government affairs.
The association and elected officials on Long Island in June asked OSI”™s new owner in Tokyo to reconsider the relocation from Long Island. Perkins said Astellas did not respond to the letter.
“It”™s a net plus for us,” Perkins said of the company”™s decision to keep open its Farmingdale facility. “For Long Island, we consider it a nice gain.”
“This was not really a battle between Westchester and Long Island,” Gottlieb said. “This was about retaining jobs in the state.”
In Westchester, “We”™ve got the hottest biotech cluster in the state,” he said. “We”™re disappointed, but I”™m certainly not disheartened, because of the sheer number of biotech firms who call Westchester home.”
