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MELVILLE, NY-Long Island’s largest biotechnology company is leaving for Westchester County, in what some are calling a setback for the island’s ambitions to develop a biotech corridor. Locally based OSI Pharmaceuticals said late Tuesday afternoon that it had signed a $27-million agreement to acquire a 43-acre site in Ardsley, NY with 400,000 square feet of existing office and laboratory space. It will consolidate in lower Westchester County from its operations in Melville and nearby Farmingdale as well as locations in Cedar Knolls, NJ and Boulder, CO, starting later this year.

“The past 10 years has been a remarkable journey as the company has successfully brought its first oncology product, Tarceva, to market and taken the business profitable,” says OSI CEO Colin Goddard in a release. However, he adds, “we will only truly capture the full strategic value of our oncology franchise if we simplify our business by bringing together all the elements of our US operations onto a single site.”

According to published reports, OSI sought to expand at the Broadhollow Bioscience Park on the campus of Farmingdale State University, but ran into roadblocks with approvals to build on state-owned land. In a release, Goddard says the company considered options in “multiple states” before deciding to join the growing life sciences sector in Westchester. An OSI spokeswoman did not respond to GlobeSt.com inquiries by deadline.

Between its headquarters at 41 Pinelawn Rd. in Melville and a comparably sized space at 1 Bioscience Park Dr. in Farmingdale, OSI occupies about 120,000 square feet on Long Island, employing about 200 people here. Total revenues for 2008 were $379 million, up 11% over 2007, according to SEC filings. It has been based on the island since its formation in 1983.

For OSI, the move to Ardsley will mean more than $15 million in yearly operating synergies when the four locations are consolidated, with a total of 350 jobs relocating there. The company says it expects this to be completed by the end of the fourth quarter of 2010. Additionally, OSI says it’s receiving incentives from the state to make the move, and anticipates more such incentives as it expands at its Ardsley site in the next several years.

For Long Island’s biotech community, OSI’s move represents “a serious wake-up call,” Gary Huth, a regional economist for the state Labor Department in Hicksville, told Newsday. The paper also quoted John Maroney, a board member of the Long Island Life Sciences Initiative, as saying that while OSI’s departure did not mean the island’s biotech industry has failed, it was “a setback” for the region. Calls to LILSI for additional comment were not returned by deadline.

An editorial in the paper called the move to Westchester “a profoundly unsettling turn of events” and added, “The Island’s economic future is so tightly tied to the growth of biotech–and other high-tech, job-creating industries–that we can’t afford to lose such an important homegrown firm.” Meanwhile, the life sciences sector in Westchester is strong, with CB Richard Ellis reporting that healthcare represented 18% of the county’s leasing activity in the first half of 2009.

“”the second quarter alone, Northern Westchester Medical leased 35,000 square feet at 480 Bedford Rd. in Chappaqua and the Westchester Medical Group committed to a 31,662-square-foot expansion at 2700 Westchester Ave. in Purchase,” according to a release from CBRE. “Additionally, Memorial Sloan-Kettering is currently in negotiations over additional space in the county for approximately 120,000 square feet.”

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