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In a reversal of fortune for Buffalo, Bristol-Myers Squibb will invest $5.5 million to expand manufacturing at its Forest Avenue plant.

The $20 billion, global pharmaceutical giant had all but pulled out of Buffalo three years ago with a restructuring plan that would have shifted skin cream and ointment operations to other facilities. The company even signed a letter of intent in 1998 to sell its Buffalo plant to a Canadian drug company. The deal ultimately fell through.

The decision by Bristol-Myers to invest in Buffalo will retain 283 employees and create 20 additional jobs.

"This company was on its way out several years ago, but local management continued to prove that the Buffalo plant can be productive and now a major U.S. corporation is making a serious financial commitment to the region," said Ronald W. Coan, executive director of the Erie County Industrial Development Agency.

The commitment also positions the drug company as a potential strategic partner for publicly financed drug research which could occur on its campus.

A research consortium led by the University at Buffalo has applied for a $25 million state grant to conduct drug research in leased laboratory space on the Forest Avenue campus. The recent mapping of the human genome is expected to lead to tremendous advancements in pharmaceutical research over the next decade.

Kenneth Dauria, general manager for Bristol-Myers Squibb's Buffalo technical operations, said his company has had ongoing dialogue with the research consortium which includes UB, Kaleida Health, Roswell Park Cancer Institute and Hauptman-Woodward Medical Research Institute.

Bristol-Myers and the research consortium are seeking New York Empire Zone status for the 22-acre campus on Buffalo's West Side, which would provide a flood of new tax breaks for job creation. The state is expected to announce new Empire Zone designations later this year.

The expansion will allow the Buffalo plant to do third-party contract manufacturing for other companies. Within the last year, Bristol-Myers has begun manufacturing some products in Buffalo for Johnson & Johnson and other companies.

"We've really become a center of excellence for skin creams and ointments," Dauria said. "We're aggressively marketing the capabilities of this site to leverage the assets here."

The company will convert 100,000 square feet of warehouse space into new manufacturing lines.

The Empire State Development Corp. announced Wednesday the availability of a $250,000 capital grant and a $150,000 loan for the drug company, which still needs to complete the procedural step of applying for the state financing.

The company is also seeking $412,000 of property tax savings and $80,000 of sales tax savings for the expansion through the Erie County IDA. If the incentives are approved, the renovated building will still generate $221,000 in additional property taxes beyond its current tax bill.

The ECIDA board is scheduled to vote on the Bristol-Myers project at its March meeting.

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