September 30, 2022


Business&Finance Specialists

The big business of blood

2 min read

Courting controversy

The blood center’s expansion aspirations now extend vertically—in the form of a $750 million proposal with Boston-based developer Longfellow to turn its Upper East Side research facility into a 16-story life sciences hub. The blood center would occupy about a third of the tower, and Longfellow, in exchange for paying for construction costs, would lease the remaining space to academic and startup companies in the life sciences.

If their rezoning application prevails, it will be despite vehement opposition from neighbors and local elected officials, including City Councilman Ben Kallos, who has derided it as a ruse to “print money.”

“I’ve never seen a project like this that is being this hostile to the elected officials,” Kallos told Crain’s in May.

The center has spent roughly $1 million since 2019 to develop and promote the proposal, city lobbying records show.

The center’s ambitions to squeeze more from its site are decades old, former employees said. Richard Bonomo, a former center researcher who patented a process to deactivate viruses in plasma, recalled a “brief flirtation” in the 1980s with selling the building’s air rights to bring in additional revenue. Norman Selby, who was chief operating officer at the time, said it was no more than talk, but he said executives considered Center East an underutilized piece of valuable real estate and posed many ideas on how to better use the space or add to it.

Selby, who was brought over from McKinsey in the late 1980s to lead a financial turnaround at the center, said the nonprofit had to be financially self-sufficient to cover its high fixed costs, especially because little of its revenue comes from monetary donations.

“We had to make money,” Selby said.

The center has long chased alternative revenue streams. Royalties from its researchers’ inventions, like the one Bonomo helped conceive, used to bring in millions in revenue each year. Starting in 2018, that revenue stream dwindled; Mohr, the CFO, attributed the drop to patents expiring. Another of its creations, a software platform for managing blood center operations, spawned the Boss Solutions Group, a consulting and IT spinout, which it sold in 2010 for an undisclosed sum.

The center also invests surplus cash in private-equity funds—which has proved lucrative. The center’s endowment now stands at $380 million. Recent acquisitions helped push its annual revenue from $391 million in fiscal 2019 to $483.5 million the following year.

Mohr said he is prioritizing an expansion of the licensing department to commercialize researchers’ discoveries, a division he said had been deprioritized during the past decade. He also is projecting massive growth in the center’s cell-therapy business.

And the blood center is continuing to push into new markets. Last week it opened a new donor center in Connecticut.