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Puerto Rico to 'opportunistically pursue' biologics to regenerate industry

By Dan Stanton+

04-Dec-2013
Last updated on 04-Dec-2013 at 12:18 GMT2013-12-04T12:18:25Z

The Puerto Rican Government has laid down plans to regenerate its drug manufacturing industry by pursuing opportunities in biologics.

The Caribbean island of Puerto Rico once attracted a glut of drug manufacturers with its promises of relatively cheap labour and triple tax exemptions. However, in the last few years the island has fallen into recession, accumulated a $70bn debt and seen a drop in manufacturing jobs to 75,000 from 160,000 in 1996, the Washington Post reported last week.

Along with patent expirations and global network over-capacity, such conditions have affected pharma operations with Pfizer and Merck & Co. both announcing plans to shutter small molecule API sites recently.

In its Economic Roadmap , published late last month, the Puerto Rican Government said it intended to re-energise its life science manufacturing industry. While it stated it would “defend traditional Pharma base” manufacturing, it added the Government would “pursue innovative opportunities,” specifically biologics.

According to the report, biopharma manufacturing represents 25% of Puerto Rico’s GDP employing 17,000 people. “Most new products in innovation pipeline are biologics” it said, and thus the country intends to “opportunistically pursue” biologics and biosimilars.

2,600 jobs in biomanufacturing are estimated to be added by 2017, and the report also mentions recent progress with Eli Lilly’s $200m investment in an insulin plant and continued expansion of Bristol-Myers Squibb’ biologics facility in Manati .

Rising Tax, Rising Utilities

One factor that may put off new investments are rising tax rates as Puerto Rico attempts to manage its debts, with a 4% excise tax levied on offshore affiliates of manufacturing operations recently reinstated.

However, the Puerto Rico Industrial Development Company (PRIDCO) remains positive with executive director Antonio Medina Comas telling Biopharma-Reporter.com: “PRIDCO has worked openly with companies to find different options that could help them compensate the effect of this tax, which was a necessary measure of our government to address the fiscal situation of Puerto Rico.”

Furthermore, utility costs are an issue: Justin Vélez-Hagan, executive director of The National Puerto Rican Chamber of Commerce, wrote in Forbes recently that electricity costs on the Island were double the average of the rest of the US.

Medina Comas told us the Government has set clear strategies and projects - including a natural gas diversification strategy - that should help reduce the energy costs in the coming years.

Competitive Edge?

When asked whether companies may choose to look at other biopharma hubs with greater financial incentive and government support, such as Singapore or Ireland, he said:“The protection of our industrial base is a key element of our industrial development strategy and important efforts are being executed to secure Puerto Rico's competitiveness in this area.

“We provide a value proposition in terms of human capital, infrastructure, incentives and legal framework that no other jurisdiction can provide.”

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