A key player in Long Island's burgeoning pharmaceuticals industry wants tax breaks to modernize one of its three factories in Suffolk County — but won't promise to create jobs, officials said.
InvaGen Pharmaceuticals Inc. and its landlord plan to spend a total of $2.7 million on a new roof, machinery and ventilation systems for 600 Old Willets Path in Hauppauge over 4 1/2 years. The company won preliminary approval for $403,450 in tax breaks over 10 years from the county’s Industrial Development Agency last week.
In return, the drugmaker committed to maintain the factory's 202 jobs despite the coronavirus-induced recession. Employees earn, on average, $61,000 per year, records show.
Still, three of the five IDA board members attending Thursday's virtual board meeting questioned why InvaGen isn’t hiring. Manufacturers of drugs and vitamins remained open during the pandemic's shutdown because their products were deemed essential by New York State, and at least one local player, Nature's Bounty Co. in Ronkonkoma, plans to fill more than 250 new openings.
“This is a leap of faith on our part" in continuing to work with InvaGen, said IDA vice chairman Kevin Harvey. “As we give these [tax] rebates...we are hoping all of what they say comes to fruition because we have to answer to a higher authority, and that’s the taxpayer.”
If the tax incentives win final IDA approval in coming weeks, InvaGen would save $350,666 on property taxes, or 27.5%, over 10 years.
The company’s finance head, Mohit Mundra, said the firm is reluctant to make promises that it may not be able to keep due to the recession. There will be no layoffs at the Old Willets Path factory for the next 10 years and hopefully some hiring once the economy recovers, he said.
“We are not committing to any expansion in jobs,” Mundra told the IDA board on Thursday. “Many businesses in the United States are downsizing…We will maintain the same payroll. When the situation improves then definitely we have plans for the U.S. market,” he said, adding that between 50 and 60 jobs have been created since 2016.
In a letter on Friday, Mundra told the IDA that InvaGen expects to add 10 to 15 employees at the Old Willets Path plant. “Prior to the pandemic, InvaGen was growing at an average rate of five to 10 employees at its three facilities in Suffolk…We expect to see a future return to this kind of growth,” he wrote.
The IDA board voted unanimously to grant preliminary approval for the tax breaks on Thursday. They now will be the subject of a public hearing and final board vote.
InvaGen manufactures generic prescription drugs for depression, inflammation, diabetes and heart disease for pharmacy chains and the U.S. government. It can produce up to eight billion tablets and capsules per year, using ingredients made in India and Taiwan.
Besides the Old Willets Path facility, the company operates from 7 Oser Ave., also in Hauppauge, and 550 South Research Place in Central Islip. The latter facility is receiving a total of $5.8 million in tax breaks over 12 years from Islip Town and the state.
InvaGen was purchased in 2016 by Cipla Ltd. in Mumbai, India, which has annual revenue of $2.4 billion, according to Mundra. A total of 586 people work at InvaGen's three buildings in Suffolk, where robots have been installed for some bottling, packaging and powder mixing.
InvaGen was founded in 2003 and received Suffolk IDA tax breaks the following year, along with another drugmaker, Bactolac Pharmaceutical Inc., for 7 Oser Ave.
At that time InvaGen "said they would create 50 jobs and they now have nearly 600 jobs,” said IDA executive director Anthony J. Catapano. “They have a good track record."
InvaGen Pharmaceuticals Inc. at a glance
What they do: Manufacture generic prescription drugs
Operations: 3 factories in Suffolk County
Ownership: Subsidiary of Cipla Ltd. in India
History: Started in 2003 in Suffolk
SOURCE: InvaGen Pharmaceuticals Inc.