Biotech firms bring hope amid tough times
Efforts to develop Westchester County as a biotech hotbed are intensifying as the region's fastest-growing industry continues to add jobs, construction projects and scientific breakthroughs in a difficult economy.
"The goal is to take the stretch of Route 9A from Yonkers right up to the Tappan Zee Bridge and make it Westchester's version of Silicon Valley," said Nathan Tinker, executive director for New York Biotech Association.
Westchester is competing against the "big dogs" of San Diego, Boston and San Francisco, Tinker said. New York, like tech-friendly states North Carolina, Michigan and Texas, is courting a robust biology-based pharmaceutical sector where the fortunes of innovative little companies can change overnight -- if they invent the next hot, new drug. New York is already home to nearly 90 major biotech companies that account for 60 percent of the nation's entire pharmaceutical industry, said Aimee Vargas, mid-Hudson regional director for Empire State Development. The industry's Hudson Valley-based workforce of 10,000 grew by 86 percent in the past decade, commanding an average wage of $107,280 in 2010.
"The more this cluster grows in the region, the more successful we will be in job creation here," said Vargas.
In pitching those biology-focused,tech-driven businesses to either relocate or expand in Westchester, the county is offering tax breaks, grants and other financial incentives while talking up its quality-of-life charms. The pluses also include a highly educated workforce in which 45 percent of people 25 and older are college graduates; proximity to New York City, with its venture capitalists and universities and a glut of available laboratories and office space ripe for renovation that once belonged to downsized corporate giants such as Union Carbide and Ciba Geigy. But the minuses are also considerable: Westchester's aging population, cost of living, lack of shovel-ready facilities and stodgy business culture are hard sells.
After years of setbacks, the county is making gains, said Laurence Gottlieb, Westchester's director of economic development. "Westchester has never had the flexibility of dealing with high-risk, high-reward firms," he said. "In Silicon Valley, they're used to that. In biotech, we can have a full-blown cluster that is a surviving ecosystem."
Defining the revenue potential of the industry is impossible to quantify because many companies are privately owned and not required to report their earnings, Gottlieb said. But he noted that Westchester-based biotech darlings Regeneron Pharmaceuticals and Acorda Therapeutics are both publicly traded companies with combined annual revenue of more than $1 billion in an industry also known as biopharmaceuticals, biopharma and life sciences.
Creating a Route 9A cluster
The county's answer to the California model runs along Route 9A as it winds north near the Hudson River. The highway's crown jewel is 24-year-old Regeneron, which bled nearly $1.3 billion in losses before winning Federal Drug Administration approval in November to begin manufacturing Eylea, a treatment for chronic eye disease in the elderly. Now the company has 300 new job openings between its Westchester headquarters and the factory in Rensselaer. The company employs 1,250 people in Tarrytown, up from 750 in 2009.
"It's very hard in our business to be a company to go from soup to nuts," said Regeneron spokesman Peter Dworkin. "But we are now what they call a fully integrated pharmaceutical company."
The company's expansion has even helped its landlord, BioMed Realty Trust, which paid $100 million in 2004 to buy Landmark at Eastview, a sprawling, 750,000-square-foot industrial park built in the 1950s. Landmark at Eastview was once a major property for chemical manufacturing giant Union Carbide.
When Regeneron considered moving out of New York a few years ago, the county offered $3 million in tax incentives to BioMed, which went on to spend $180 million on upgrades.
Three three-story glass buildings were built for Regeneron, which now rents a total of 600,000 square feet in laboratories and offices that overlook a grassy central courtyard. The complex also has a fitness center, barbershop, conference rooms and café that are shared by a dozen predominantly tech-based tenants, according to BioMed spokesman Rick Howe.
The development was "unusually amenity-rich for us," he said. "Most of our properties are lab and office space, conference room, maybe a small cafeteria or retail space."
Tax breaks and more
Seven miles south on Route 9A in Ardsley, BioMed is renovating a second property, Ardsley Park, in its more usual style. The San Diego-based Realtor paid $18 million for the one-time home of the Fortune 100 drugmaker Ciba Geigy last year and is spending an additional $18 million in improvements to two buildings with 160,500 square feet of offices and labs.
In June, Acorda will relocate from nearby Hawthorne into its 138,000-square-foot Ardsley Park space. The manufacturer of drugs for nervous system disorders, which has 325 employees, needs to move because "we were bursting at the seams," said Acorda spokesman Jeff Mcdonald.
The company secured a multimillion-dollar package of tax breaks, grants and other government incentives from Empire State Development, County of Westchester Industrial Development Agency, New York State Energy Research and Development Authority and Westchester County.
"The incentives are all tied to end points," Mcdonald said, including $1.15 million in IDA tax abatements for the renovation and $200,000 in Energy Research and Development Authority funding toward the purchase of energy-efficient equipment. Acorda is also eligible to receive up to $5.2 million in additional tax credits -- if it creates up to 190 new jobs during the next five years.
Incentives also enticed Baltimore-based Profectus Biosciences in 2009 to relocate its research department to Landmark in Eastview. New York has proved to be more expensive than the company expected, said Jeffrey Meshulam, vice president and chief executive for Profectus. For starters, Westchester County has the highest property taxes in the United States. Plus, "Biotech is very tough to finance, especially these days," he added.
Still, Profectus has stayed because "our brain trust is here," he said. "You can't tell 13 scientists and their families to move. Keeping that team intact is critical. A lot of people have been together for 10 to 15 years."
Growing Westchester's biotech cluster
The sector also desperately needs more funding sources. Cash from private investors is increasingly scarce. In 2011, venture capitalists pumped $3.92 billion into biotech companies, compared with the $6.17 billion they provided in the glory days of 2007, according to VentureSource. Although New York received $1.97 billion in grants last year from the National Institutes of Health, much of it was allotted for leading New York City research institutions such as Columbia University and Mount Sinai Hospital. During 2011, $29.4 million in NIH grants were made to smaller pharmaceutical companies, colleges and research institutions, according to Rep. Nita Lowey (D-N.Y.).
Staying afloat is a struggle even for seemingly stable operations. The Route 9A cluster begins on the Yonkers waterfront with i.park, a 24-acre industrial complex in a renovated Otis Elevator Co. factory that is designed for tech-based tenants. Last year brought the demise of 10-year-old Aureon Biosciences when investors pulled the plug. But 2011 also brought i.park a new tenant, ContraFect Corp., which relocated from Manhattan and now has 31 employees developing a drug to treat hospital infections in a $2 million, 15,000-square-foot space with river views. "It's a wonderful place to work," said ContraFect founder and CEO Robert Nowinski.
What's next for biotech
Over time, Westchester County's industry cluster eventually could cross the Hudson River into Rockland County. Pharmaceutical giant Pfizer has laid off 1,000 employees since 2009 from its 550-acre Pearl River facility, which has 1.4 million square feet of laboratories, much of it available for rent. Further staff reductions are planned through 2017, a spokeswoman said.
Meanwhile in Westchester, the county plans to ground the cluster by creating a nurturing home base for startups at New York Medical College in Valhalla. With $4 million in seed money from the state for its incubator project, the school has begun renovating an on-campus facility that will offer tiny companies affordable leases in a science-friendly setting. The vacant, 120,000-square-foot American Health Foundation building on the college campus is being retrofitted to accommodate 10 tenants, with occupancy possible by next year.
"That's one of the things missing in the Hudson Valley -- incubating lab space," said Mike Oates, president and chief executive of the Hudson Valley Economic Development Corp. "Once we have our incubator, you'll start to see even more interest in the region."