The crowd at last week”™s biotech networking event in Westchester buzzed with the news that OSI Pharmaceuticals Inc. will add its market strength and employee numbers and talent to the county”™s biotechnology industry this year.
The corporate search that had biotech, medical and real estate professionals talking was launched in secrecy last fall behind a code name bestowed by New York state economic development officials. It was driven by a growing company”™s need to consolidate operations and, in part too, by state and local politics and a CEO”™s frustration at the slow pace of biotech development in his metropolitan area. It ended in an economic loss for Long Island and a gain for Westchester County.
OSI”™s recent decision to consolidate its North American operations at the Ardsley Park Science and Technology Center in Greenburgh was hailed by members of the New York Biotechnology Association gathered at The Landmark at Eastview, the expanding life sciences campus on Old Saw Mill River Road in the towns of Greenburgh and Mount Pleasant. Earlier that day, the Westchester County Industrial Development Agency approved a leaseback agreement with OSI for approximately 400,000 square feet in six buildings at the largely vacant Ardsley center. IDA officials also approved a sales tax exemption estimated at $3 million for the project.
OSI expects to close this week on its $27 million purchase of the 43-acre Ardsley property from an affiliate of Purdue Pharma L.P., the Stamford, Conn.-based pharmaceutical company that closed its Ardsley operations in 2005. The office and research complex on Saw Mill River Road was built in 1960-61 for Ciba-Geigy Pharmaceutical Corp., which sold the property in 1994.
Ardsley Park”™s surviving original owner, Ciba Corp., this month announced plans to close office operations and eliminate or transfer 275 jobs at its former North American headquarters at 540 White Plains Road in Greenburgh in the first half of 2010. The Swiss-based specialty chemical company in April was acquired by the German chemical company BASF, which plans to cut 3,700 jobs worldwide by 2013.
A spokeswoman at BASF North American headquarters in New Jersey said the company will continue its laboratory operations on White Plains Road that employ 125 workers. She said office workers not offered reassignment to other BASF locations will receive “generous” severance packages.
In Ardsley, OSI Pharmaceuticals will begin $50 million in renovations and construction soon after this week”™s closing. The company also expects to spend $18 million for furnishings and equipment over the next five years.
OSI Chief Financial Officer Pierre Legault said the company, whose cancer drug Tarceva netted about $1.12 billion in worldwide sales in 2008, will relocate about 200 employees from its Melville and Farmingdale locations and another 150 employees from Boulder, Colo. and Cedar Knolls, N.J. He said the moves will be made “over the next couple quarters.” The company expects to grow to at least 600 jobs “and probably more” by 2012, Legault said. The consolidation is expected to save OSI $15 million annually.
“We explored many different options in multiple areas and states,” OSI spokeswoman Kathy Galante said last week. “We were looking to consolidate all of our sites into one campus. We were happy to be able to remain in New York and Ardsley offered a cluster of biotech companies” within short driving distance, she said, including Regeneron Pharmaceuticals Inc. and Progenics Pharmaceuticals Inc. at The Landmark at Eastview and Acorda Therapeutics Inc. in Hawthorne. “Now you can start to see a good, quality biotech cluster up there,” a big selling point for OSI in its selection, Galante said.
Last October, Westchester County officials received an email from the Hudson Valley Economic Development Corp. in New Windsor about possible sites in the region for an unidentified company looking to consolidate operations at a 500,000-square-foot campus location, county IDA Executive Director Theresa Waivada said. The secret relocation project was code-named “Project Genesis” by Empire State Development officials.
In December, county officials hosted an eight-person team from OSI on a two-day tour of the county. The visitors, escorted by company consultants from Deloitte Touche Tohmatsu, gave only their first names and did not identify their company or its location. “Project Genesis, all first names,” Waivada said. County Executive Andrew Spano introduced the team to representatives from Westchester Medical Center and the New York Medical College.
Last winter, Waivada heard that Ardsley was the second choice on the company”™s list of preferred sites, behind the East River Science Park, a 3.5-acre research and development campus being built in Manhattan. A New York biotech industry leader said the state also faced tough competition from biotech centers in North Carolina, Pennsylvania and San Diego, Calif.
In June, county officials were told the company”™s CEO had visited Ardsley “and fell in love with the site and felt it had everything they wanted to do,” Waivada said. Officials here then were told the Project Genesis company was OSI, based on Long Island.
Salvatore J. Carrera, Westchester County Office of Economic Development director, said the county usually does not “poach” businesses from other areas of the state. “It was touch and go, but they came to us, we did not come to them.”
Carrera credited the state”™s ESDC with putting together an incentive package to keep OSI in the state. “The state”™s the big piece of the project,” he said.
Though details of the financial package have not been released, a spokeswoman for the ESDC said the state’s offer amounts to $1.8 million per year providing the company meets job commitments and capital investments. Sources said the state will assume OSI”™s lease for its facility in the Broad Hollow Bioscience Park on the SUNY campus at Farmingdale.
In an opinion piece published in Long Island”™s Newsday one day after the relocation was announced, OSI Pharmaceuticals CEO Colin Goddard said the company had found “a uniquely cost-effective opportunity in Ardsley.” Among highly competitive out-of-state options, Ardsley “got the edge from a refreshingly dynamic incentive package” from ESDC, Goddard said.
Yet Goddard also blamed Long Island”™s “insular business and political culture” for failing to support the growth of one of the country”™s leading biotech companies and forcing it to uproot after 26 years. The main factor in the decision, he said, was “our disappointing conclusion that a long-awaited biotech cluster ”“ which is essential to creating a viable labor market for our company”™s growth ”“ will not emerge on Long Island anytime soon.”      Â
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With OSI”™s move to Westchester, “The key thing is it brings three of the four largest market cap biotech companies in the state of New York into a five-mile radius,” New York Biotechnology Association Executive Director Nathan P. Tinker said at last week”™s networking event. “I think this makes the idea of building a life sciences cluster much closer to reality.”
At BioMed Realty Trust Inc., owner of the eight-building, approximately 1.2-million-square-foot            Â
Landmark at Eastview, “We are very excited to have OSI come to Westchester,” said Matthew G. McDevitt, BioMed executive vice president. “For us it supports and solidifies that this is a core life sciences market.”
Peter Dworkin, vice president at Regeneron Pharmaceuticals, said it”™s good for his company “to have one of the larger biotech companies move next door to us.” The Ardsley center is about seven miles from Regeneron at the Landmark, where it expects to add 100 employees to its 600-member staff by the end of this year.Â
“Science often requires critical masses,” Dworkin said. “I think it”™s good for this business to have more companies, as well as medical institutions like New York Medical College” in the vicinity. “It”™s cross-fertilization, like a very, very mini-Silicon Valley.”
