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Puerto Rico Pharmaceuticals & Healthcare Q4 2006Published by: Business Monitor International Published: Oct. 1, 2006 - 52 Pages Table of Contents
AbstractPuerto Rico's pharmaceutical manufacturing sector exports medicines worth approximately US$100bn at consumer prices each year, but there are concerns that the island's pre-eminence as a global hub for drug production is being steadily eroded. Other sites that are attractive for research-based firms, such as Ireland and Singapore, threaten to undermine the island's international competitiveness. Changes in local tax incentives granted to manufacturers have also weakened industry sentiment. The island's administration has, however, introduced a series of measures in order to offset the impact of the expiry of exemptions and credits available under Sections 936 and 30A of the US Internal Revenue Code in 2007. The added-value biotechnology sector, and the research institutions that support it, are the principal targets of the latest tax incentives. It is estimated that the stock of multinational sector investment in biotechnology product manufacturing is as much as US$3.5bn, due to robust commitments in the field by major producers including Amgen, Eli Lilly and Abbott Laboratories. Officials are planning a new package aimed at companies that have not yet reported a profit, in an attempt to attract more early-stage and emerging biotech firms. A credit on clinical trials was introduced in 2004, and local academic research institutions continue to expand their facilities. However, BMI believes that the long-term future of pharmaceuticals manufacturing in Puerto Rico cannot be guaranteed, with the island likely to face continuing threats in drug development and manufacturing from markets such as India and China. At present, Puerto Rico's proximity to the US mainland is a strong asset, although in the long term the creation of the DR-CAFTA free trade zone represents a further regional threat. Locally, utility tariffs and transport infrastructure problems are reported to be increasing beyond tolerable levels. Additionally, there are limited prospects for the domestic pharmaceutical market. Puerto Rico is amid a severe financial crisis, with the US territory burdened with public debt in excess of US$30bn. Healthcare expenditure, at more than 17% of GDP, is a major drain on an already overburdened and inefficient public financial system. Although the fast-growing generic medicines sector is expected to fall slowly into line with US levels, with sales reaching 15% of the total market in 2010, the prescription sector is likely to increase its share of overall sales to 79% by the end of the forecast period. This will be attributable to the continued dominance of branded medicines in the territory. The market's total value is expected to reach US$2.01bn by year-end 2010. |
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