LI makers of drugs, vitamins got a COVID-19 boost

Drug and vitamin makers — the biggest manufacturing sector on Long Island — are expanding because of the pandemic, though their growth is constrained by the region's high costs, experts said.

More than a half-dozen pharmaceutical businesses have announced expansion projects since the coronavirus struck in early 2020. Some are adding office, factory and warehouse space while others are adding employees to make new products.

Industry employment increased by 540 jobs, or 5%, between early 2019 and early this year. Nearly 11,500 people were employed at drug, vitamin and nutritional supplement companies in the January-March quarter.

That represents 17.5% of all factory jobs in Nassau and Suffolk counties, according to the most recent data from the state Department of Labor.

"This is a growth industry that is increasingly important to the region's economy," said John A. Rizzo, chief economist for the Long Island Association business group and a Stony Brook University professor.

Besides stepped up hiring, many pharma and vitamin companies reported increased sales last year compared with 2019 as consumers sought ways for staying healthy as the coronavirus ravaged the country.

Together, the nearly 160 firms had sales of $4.8 billion in 2020, according to a data analysis for Newsday by the Workforce Development Institute in Albany, which co-authored a report about pharma in Nassau and Suffolk in 2019.

Rizzo said, "You'd like to see even more growth, and for Long Island to have a bigger share of the pie. But that's going to require more direct flights to and from Long Island MacArthur Airport [in Islip] so that executives can travel more easily, and tax concessions [from government] to attract some of the larger pharmaceutical corporations [in New Jersey] to have a footprint on Long Island," he said.

The Island's high expense of doing business and a shortage of factory and warehouse space are also challenges, according to the report by WDI and the Suffolk County Industrial Development Agency.

"The costs associated with doing business on Long Island can place our local manufacturers at a competitive disadvantage in the national and global marketplace," the report states. Tax breaks and low-cost electricity "offered by the state, local industrial development agencies and utilities help offset some of these business costs, but are incapable of leveling the playing field entirely."

The report continues, "Vacancy rates for appropriate industrial buildings are at or near historic lows. Companies looking to relocate to or expand on Long Island face an extremely competitive market for limited stock."

Out-of-state poaching

Pharma industry executives and economic development experts said states such as Pennsylvania, Florida and the Carolinas have attempted to recruit local companies, touting their lower taxes, employee wages and energy bills.

Still, the executives said they see enough advantages to doing business in Nassau and Suffolk to surmount the obstacles.

Among the drug and vitamin makers who are expanding is NutraScience Labs in Farmingdale.

"There was an incredible boom last year. … Customers were looking for supplements to boost immunity, help with sleep, ease stress, promote digestion, improve vision and brain activity and, more recently, to get back in shape," said Vincent Tricarico, the company's executive vice president.

NutraScience helps entrepreneurs bring vitamins and other supplements to market by arranging for product formulation, manufacturing, label and package design, fulfillment of orders and product storage. The company has 40 employees and plans to hire an additional five to 10 next year. The jobs will pay between $18 and $25 per hour.

"The [hiring] market is tight, but there are plenty of opportunities for people to find meaningful and steady employment right here on Long Island," Tricarico said, adding that NutraScience relies on current employees to bring in new people.

"There is a work ethic and a commitment to the team [with local people] that is hard to imitate anyplace else" in the United States and that "helps to overcome some of the disadvantages of doing business on Long Island," Tricarico said. He has worked for the company for about 20 years.

NutraScience opened a second facility last month in Hauppauge. The 13,500 square feet of rented space on Motor Parkway, just south of the Long Island Expressway, will be used to store its customers’ finished products before they are delivered to retailers and distribution companies.

Adam Gershenson, the company's director of logistics and fulfillment operations, said it must stockpile customers' products because Amazon and other online retailers have reduced the amount of products that they will store. He said the new warehouse can accommodate more than 700 pallets of merchandise.

"We will be able to provide product storage for our clients and free up space [at NutraScience’s Farmingdale headquarters] for more fulfillment and packaging activity," Gershenson said, adding the company is investing $300,000 to $500,000 in the Hauppauge warehouse.

Other notable expansions

ScieGen Pharmaceuticals Inc.

The manufacturer of generic prescription drugs announced plans in April 2020 to convert warehouse space to production space at 330 Oser Ave. in Hauppauge.

ScieGen chief financial officer Renee Reynolds said it must increase production to fill additional orders. The $15.5 million project will create 106 jobs, she said.

ScieGen and a sister company, vitamin maker Bactolac Pharmaceutical Inc., together have more than 700 employees at eight facilities, all in Hauppauge.

Contract Pharmacal Corp.

The drugmaker, one of Long Island’s largest, is making improvements to one of its 11 operations in Hauppauge. The $1.4 million project involves upgrades to the warehouse and laboratory at 250 Kennedy Dr.

The work will add 25 jobs to CPC’s workforce of 1,360 people, said chief financial officer Eric Antman. Records show the rapidly growing company employed only a third as many — 450 — in 2010.

CPC produces generic prescription drugs, over-the-counter medicine, vitamins and hemp supplements.

Allegiant Health

The Deer Park company has purchased a nearby warehouse to replace one in Hauppauge and plans to add equipment to its factory and research lab at 75 North Industry Ct.

Allegiant vice president Debra Porti said it has seen an increase in online sales of its nutritional supplements and over-the-counter medicine, such as low-dose aspirin, cough and cold remedies, sleep aids and laxatives. She said the $11 million expansion would create six jobs on top of the current 130.

The proximity of the new warehouse to Allegiant’s headquarters and plant — about 500 feet separate the two buildings — will make the operation more efficient, Porti said when the project was announced in December.

American Regent Inc.

The manufacturer of liquid medicines that are injected into humans and animals opened a 33,500-square-foot headquarters in Melville last year, bringing under one roof work that had been "spread across several buildings in eastern Suffolk County," said then-CEO Ken Keller.

American Regent, formerly called Luitpold Pharmaceuticals Inc., announced plans in April 2020 to hire seven people for the new office and 38 for its Shirley factory. The company is a unit of the Japanese pharmaceutical giant Daiichi Sankyo.

New products, services spur growth

The diversity and scope of these expansion projects demonstrates that "employment in the pharmaceutical sector, unlike other [manufacturing] sectors, continues to grow on Long Island. … There are excellent employment opportunities from high school through doctoral degrees," said Imin Kao, executive director of Stony Brook University's Manufacturing and Technology Resource Consortium, or MTRC. It provides grants and technical assistance to local factories.

He said the industry's rapid growth over the past decade has made it "a priority for MTRC" assistance.

Pharma and vitamin makers shed fewer jobs during the pandemic's height than manufacturers overall. Employment in pharma shrank by 268 jobs, or 2.4%, between 2019 and last year while manufacturing in general lost 5,374 jobs, or 7.6%, in the same period.

"The pharmaceutical industry escaped relatively unscathed" and has since recouped all the lost jobs, said Shital Patel, an economist and labor market analyst for the state labor department in Hicksville.

"Entry-level production occupations and warehouse jobs in the [pharma and vitamin] industry offer a good opportunity to enter into jobs with more stability, better benefits, and generally better working conditions, and require little experience or on-the-job training" than other occupations, she said.

Besides adding facilities and employees, firms are expanding by offering new products and services.

ECS Therapeutics in Hauppauge was certified in May as using the highest manufacturing standards to produce hemp products. The certification by NSF International in Ann Arbor, Michigan, gives the local company a competitive advantage in the crowded marketplace for CBD supplements, said president Gerard McIntee.

"Everybody in the CBD industry isn’t going through the qualifications that we went through to earn certification, which is why CBD is often referred to as the Wild West of the supplement industry," he said during a tour of ECS' office, factory and warehouse at 415 Oser Ave.

The NSF certification, along with a machine that produces supplements in liquid capsules, presents ECS with the opportunity to make products for other businesses and to expand its product line. "Our manufacturing capability opens up a whole new area for us to do a tremendous amount of business," McIntee said.

He and his wife, Kathy, founded ECS in 2018 after receiving questions from customers of a sister business, MediNutritionals Research LLC, which sells vitamins and other supplements. Both companies sell only to physicians, chiropractors, nutritionists, massage therapists and other health care professionals.

ECS and MediNutritionals struggled initially during the pandemic because their customers stopped seeing patients for fear of contagion.

"But our online dispensary saved us and the doctors because we could ship directly to the patients if their doctor had an account with us," said Kathy McIntee, vice president of both companies, which together have 14 employees. "We took in a ton of orders, so 2020 turned out to be a good year."

She said ECS and MediNutritionals plan to add employees and are looking for a production worker and a warehouse/production manager. There will be part-time jobs as well.

"Long Island has a concentration of supplement manufacturers, which means there are ancillary support services readily available to meet our needs," Kathy McIntee said. "This concentration has also created a pool of people with supplement manufacturing experience at all levels" who can be recruited to fill job openings.

She added, "It's costly to do business on Long Island, but there are positives as well."

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.