In Public-Private Deal, New York State Invests $225 Million and Athenex Invests $1.62 Billion to Create 1,400 Jobs

In Public-Private Deal, New York State Invests $225 Million and Athenex Invests $1.62 Billion to Create 1,400 Jobs
February 12, 2016
By Mark Terry, Breaking News Staff

In a public-private partnership, the state of New York will invest $225 million in a 300,000-square-foot manufacturing facility for Buffalo, NY-based Athenex, which will also kick in $1.62 billion over 10 years.

Through a partnership with the SUNY Polytechnic Institute, Athenex’s North American headquarters at the Conventus Building in Buffalo will be expanded. The state of New York will build the manufacturing facility in Dunkirk, NY. Athenex has agreed to invest a minimum of $1.62 billion in Western New York in labor, materials and supplies over the next 10 years.

The deal is expected to create 1,400 new direct and indirect jobs, 500 in Buffalo and 900 in Dunkirk. The facility in Dunkirk, which will cost $200 million, will be the High Pharmacy Oncology Manufacturing Facility. Athenex plans to manufacture sterile high potency cancer drugs at the plant.

In Buffalo, the state will invest $25 million to expand and refurbish the sixth floor of the Conventus Building on the Buffalo Niagara Medical Campus. Athenex will invest a minimum of $100 million there and will lease 51,000 square feet of space. Construction already started in August 2015.

“We have been incredibly impressed by Governor Cuomo’s leadership to attract significant new jobs within New York State,” said Johnson Lau, chief executive officer and chairman of Athenex, in a statement. “His commitment to economic development has successfully permeated an impressive ‘Open for Business’ culture we have not see anywhere else.”

Alain Kaloyeros, president and chief executive officer of SUNY Polytechnic Institute, who is a key figure in the Buffalo Billion plan, indicated that many of the jobs created will require advanced degrees and pay six-figure salaries.

At this time, the facility construction has not been approved by the state government. It is currently a proposal in the state budget.

In the state of New York, this project is not unprecedented. The Athenex building would be the third new-build manufacturing plant the state has been involved in. Two others, under the Buffalo Billion plan, are SolarCity’s “gigafactory” in South Buffalo and the 1366 Technologies facility in Genesee County to build solar wafers. Other projects under the Buffalo Billion include a software development hub in downtown Buffalo housing IBM , and a laboratory anchored by Albany Molecular Research, Inc. at Conventus.

Athenex was originally named Kinex Pharmaceuticals. It was founded in 2002 based on research conducted by David Hangauer at the University at Buffalo. The company currently has 10 products under development in its offices in the U.S. and China.

In December 2015, Athenex announced it had acquired Comprehensive Drug Enterprises (DCE), based in Hong Kong. As part of that deal, it acquired a research and development team in Hong Kong and a manufacturing facility in the Fengdu district of Chongqing, China.

In October 2015, it announced an agreement with the Banan District in Chongqinq, China, to build two separate drug manufacturing plants. Banan will pay for the land and construction, and Athenex will equip the facilities.

“This agreement accomplishes several important goals for the Company,” said Flint Besecker, Athenex chief operating officer and board director, in a statement. “First, it allows us to materially expand our existing high potency oncology active pharmaceutical ingredient manufacturing capacity. The existing plant from our recent acquisition of Polymed/Taihao located in Chongqing, China is capacity constructed. The new API plant will be approximately five times larger and add significant capacity.”

The collaboration with the Chinese government also supports the company’s marketing plans in the China market.

Governor Cuomo argues that the investment and the project will assist the region’s transition from low-skilled manufacturing to an advanced-manufacturing economy.

The Dunkirk facility, however, is not planned to be funded through the Buffalo Billion program. It is currently a line item on the governor’s proposed budget. The $25 million for the Conventus building expansion is part of the Buffalo Billion program.

The plan comes with some controversy. Reclaim New York, a nonprofit that pushes for anti-tax, free-market ideas, told The Buffalo News, “Governor Cuomo has really rolled out the red carpet for this Chinese-controlled company by yet again showcasing New York’s version of state-run economics. It’s risky, we can’t afford it, and it’s not a real strategy.”

Which may be true, but the reality is that companies, for better or worse, typically go where cities, regions or states—or even countries—provide incentives to come.

“This one-two punch of Buffalo and Western New York by an established and respected home-grown company like Athenex is another clear sign that Governor Andrew Cuomo’s innovation-driven economic development strategy is powering job creation and revitalization across Upstate New York,” said Alain Kaloyeros in a statement. “For a company that already operates around the world to make the business decision to grow in New York speaks volumes about what Governor Cuomo has built.”

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