CARIBBEAN SPOTLIGHT
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Puerto Rico's Pharma Industry
Is Good Economic Medicine
Is Good Economic Medicine
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roximity to the Americas, a stable work force, a bilingual population and the perception that doing business in Puerto Rico is "just like doing business in the U.S." created an atmosphere for the pharmaceutical industry to thrive on this Caribbean island. The Puerto Rican pharmaceutical industry had its genesis in the late 1950s, took off in the early 1970s and, except for a blip in the mid 1990s, has been on a clear path of rapid growth.
Today, 19 pharmaceutical manufacturers account for more than 30,000 jobs at about 40 facilities on this island of 3.9 million people. The industry's recent spate of expansions has helped mitigate job losses in other sectors. Medical instrument manufacturing has been another major source of employment, accounting for about 11,000 jobs.
Puerto Rico's economy is in flux, having lost approximately 27,000 manufacturing jobs since October 1996. Most were in labor-intensive sectors such as textiles, apparel, leather, canned tuna processing and electronics. While Puerto Rico is subject to the same minimum wage laws as the U.S., hourly earnings average between 65 percent and 80 percent of U.S. rates.
Plentiful, qualified labor at a relatively low cost and the island's tax incentives have enticed pharmaceutical firms to Puerto Rico. Depending on location, companies may qualify for income and property tax deductions of 10, 15 or 25 years in duration.
Carlos Del Rio, vice president of Puerto Rico manufacturing operations for Pfizer Global Manufacturing, says tax incentives were the primary reason Pfizer located in Puerto Rico in the early 1970s. The company has expanded several times since. Del Rio touts the highly qualified labor force as a reason Pfizer's operations have thrived on the island.
"We can get high-quality pros with experience in the industry," Del Rio says. "There's a good supplier base here, too."
Jose Villamil, president of the Puerto Rico Chamber of Commerce (PRCC), believes the private sector should take a more active role in economic development. Traditionally, that has been almost exclusively a government activity in Puerto Rico. To that end, PRCC and the Puerto Rico Manufacturers Association (PRMA) are working with the Puerto Rico Industrial Development Co. To gain a better understanding of private involvement in economic development, Villamil has met with representatives of Enterprise Florida and may use its public-private partnership as a blueprint for future efforts.
"It's useful to familiarize our government officials with what the state of Florida has done," Villamil says.
Abbott Laboratories is building a $350-million biotechnology manufacturing plant in Barceloneta. The project adds more than 100 acres (40.5 hectares) to Abbott's existing Puerto Rico operations and will create more than 200 jobs. This plant, along with Abbott's recent biologics manufacturing expansion in Worcester, Mass., is part of the company's effort to ensure long-term production capacity for commercial biologic products. The new plant expands the pharmaceutical manufacturing capabilities of Abbott Puerto Rico to include biotechnology with the existing technologies of fermentation and chemical synthesis.
"This decision reflects upon the world-class capabilities of our Puerto Rico operations and is a testimony to the talent and skill of our local work force," says Harry Rodriguez, division vice president and general manager of Abbott Puerto Rico Operations.
Eli Lilly's $450-million project in Carolina will manufacture Humalog, its biotechnology product derived from recombinant DNA that is used to treat diabetes. Work is proceeding swiftly on the facility, and the company expects construction to finish by the end of 2004, with product supply planned for the first half of 2005. The expansion of Lilly's Puerto Rico operation is one of the world's largest biotech projects. When the 300,000-sq.-ft. (27,870-sq.-m.) facility is complete, it will employ 450.
Carlos Bonilla, advisor for taxes and government affairs for Lilly's Puerto Rico operations, says Lilly's site selection considerations included the Commonwealth's tax incentive program, availability and educational levels of its work force, political stability, proximity to the U.S. and government policies and attitude toward the pharmaceutical industry.
"No other areas in Puerto Rico were considered since we already had part of the required infrastructure in Carolina," Bonilla says. "Outside Puerto Rico, Ireland was considered."
Amgen is also expanding, building a $450-million bulk manufacturing plant, which will create about 500 jobs, bringing its Puerto Rico work force to 1,000.
Puerto Rico's education system provides plenty of qualified engineers, says an HP executive. "I have no problem hiring engineers," says Iris "Chiqui" Santos, vice president and general manager of ISB.
Santos is president of the new Puerto Rico Techno-Economic Corridor (PR-TEC), which seeks to meld resources from the public, private and academic sectors to promote economic development. Strategies include development of technology parks and industry clusters in Puerto Rico's western region, which has suffered many of the island's recent job losses. Areas of collaboration between PR-TEC participants will include logistics, energy projects, procurement database, best-practices sharing and training.
PR-TEC will seek to take advantage of Puerto Rico's strengths such as its communications system. "Puerto Rico has the best communications infrastructure in Latin America," Santos says.
The Commonwealth is currently soliciting proposals from leading port development firms. Port of Americas will be built on the island's southwestern side in two phases. The first and larger phase, with a price tag of $600 million, will be in Ponce. The second phase, costing $300 million, will be built in Guayanilla. Coinciding with the port development is expansion of the runway at the Ponce airport.
Torres-Caballero, who estimates the port and adjoining free industrial zones will create 20,000 jobs within 10 years, says DEDC is working with CB Richard Ellis to develop and market business parks near the Ponce port. He says Wal-Mart has expressed interest in building a distribution center in one of the parks.
Puerto Rico will experience its first light rail transportation when the first phase of the San Juan Tren Urbano opens this fall in San Juan. The $2-billion project will run 17.2 km (10.7 miles), linking heavily populated areas in an effort to reduce the city's growing traffic problem.
Today, 19 pharmaceutical manufacturers account for more than 30,000 jobs at about 40 facilities on this island of 3.9 million people. The industry's recent spate of expansions has helped mitigate job losses in other sectors. Medical instrument manufacturing has been another major source of employment, accounting for about 11,000 jobs.
Puerto Rico's economy is in flux, having lost approximately 27,000 manufacturing jobs since October 1996. Most were in labor-intensive sectors such as textiles, apparel, leather, canned tuna processing and electronics. While Puerto Rico is subject to the same minimum wage laws as the U.S., hourly earnings average between 65 percent and 80 percent of U.S. rates.
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Plentiful, qualified labor at a relatively low cost and the island's tax incentives have enticed pharmaceutical firms to Puerto Rico. Depending on location, companies may qualify for income and property tax deductions of 10, 15 or 25 years in duration.
Carlos Del Rio, vice president of Puerto Rico manufacturing operations for Pfizer Global Manufacturing, says tax incentives were the primary reason Pfizer located in Puerto Rico in the early 1970s. The company has expanded several times since. Del Rio touts the highly qualified labor force as a reason Pfizer's operations have thrived on the island.
"We can get high-quality pros with experience in the industry," Del Rio says. "There's a good supplier base here, too."
Jose Villamil, president of the Puerto Rico Chamber of Commerce (PRCC), believes the private sector should take a more active role in economic development. Traditionally, that has been almost exclusively a government activity in Puerto Rico. To that end, PRCC and the Puerto Rico Manufacturers Association (PRMA) are working with the Puerto Rico Industrial Development Co. To gain a better understanding of private involvement in economic development, Villamil has met with representatives of Enterprise Florida and may use its public-private partnership as a blueprint for future efforts.
"It's useful to familiarize our government officials with what the state of Florida has done," Villamil says.
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Alliance Touts Caribbean As Choice For Call Center Outsourcing
A collaboration of telecommunications companies is promoting the Caribbean's potential for call center development. Zagada Markets, Nortel Networks, Proposal Technology Network of California and Telectronic of Chile have formed the Sphaero Alliance to seek a leading role in branding the Caribbean as an outsourcing option to U.S. companies. The alliance has invited call center vendors in Jamaica, Guyana, Dominican Republic, Trinidad, Barbados, Bahamas, St. Lucia and St. Kitts to participate.
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Biotech Expansions Dominate Development
Three huge biotechnology expansions are under way on the island, representing a total investment of more than US$1.2 billion.Abbott Laboratories is building a $350-million biotechnology manufacturing plant in Barceloneta. The project adds more than 100 acres (40.5 hectares) to Abbott's existing Puerto Rico operations and will create more than 200 jobs. This plant, along with Abbott's recent biologics manufacturing expansion in Worcester, Mass., is part of the company's effort to ensure long-term production capacity for commercial biologic products. The new plant expands the pharmaceutical manufacturing capabilities of Abbott Puerto Rico to include biotechnology with the existing technologies of fermentation and chemical synthesis.
"This decision reflects upon the world-class capabilities of our Puerto Rico operations and is a testimony to the talent and skill of our local work force," says Harry Rodriguez, division vice president and general manager of Abbott Puerto Rico Operations.
Eli Lilly's $450-million project in Carolina will manufacture Humalog, its biotechnology product derived from recombinant DNA that is used to treat diabetes. Work is proceeding swiftly on the facility, and the company expects construction to finish by the end of 2004, with product supply planned for the first half of 2005. The expansion of Lilly's Puerto Rico operation is one of the world's largest biotech projects. When the 300,000-sq.-ft. (27,870-sq.-m.) facility is complete, it will employ 450.
Carlos Bonilla, advisor for taxes and government affairs for Lilly's Puerto Rico operations, says Lilly's site selection considerations included the Commonwealth's tax incentive program, availability and educational levels of its work force, political stability, proximity to the U.S. and government policies and attitude toward the pharmaceutical industry.
"No other areas in Puerto Rico were considered since we already had part of the required infrastructure in Carolina," Bonilla says. "Outside Puerto Rico, Ireland was considered."
Amgen is also expanding, building a $450-million bulk manufacturing plant, which will create about 500 jobs, bringing its Puerto Rico work force to 1,000.
Techno-Economic Corridor
Targets Western Development
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Puerto Rico's education system provides plenty of qualified engineers, says an HP executive. "I have no problem hiring engineers," says Iris "Chiqui" Santos, vice president and general manager of ISB.
Santos is president of the new Puerto Rico Techno-Economic Corridor (PR-TEC), which seeks to meld resources from the public, private and academic sectors to promote economic development. Strategies include development of technology parks and industry clusters in Puerto Rico's western region, which has suffered many of the island's recent job losses. Areas of collaboration between PR-TEC participants will include logistics, energy projects, procurement database, best-practices sharing and training.
PR-TEC will seek to take advantage of Puerto Rico's strengths such as its communications system. "Puerto Rico has the best communications infrastructure in Latin America," Santos says.
New Port, Light Rail
Add to Infrastructure
The Commonwealth is currently soliciting proposals from leading port development firms. Port of Americas will be built on the island's southwestern side in two phases. The first and larger phase, with a price tag of $600 million, will be in Ponce. The second phase, costing $300 million, will be built in Guayanilla. Coinciding with the port development is expansion of the runway at the Ponce airport.
Torres-Caballero, who estimates the port and adjoining free industrial zones will create 20,000 jobs within 10 years, says DEDC is working with CB Richard Ellis to develop and market business parks near the Ponce port. He says Wal-Mart has expressed interest in building a distribution center in one of the parks.
Puerto Rico will experience its first light rail transportation when the first phase of the San Juan Tren Urbano opens this fall in San Juan. The $2-billion project will run 17.2 km (10.7 miles), linking heavily populated areas in an effort to reduce the city's growing traffic problem.