The global life sciences sector is reeling like the rest of the world from the COVID-19 pandemic even as it’s seeking to treat it. One thing most of the globe seems to agree on? It’s time to reel back some of the industry’s supply chain to the U.S.
Why not reshore to a U.S. territory that’s home to 3.2 million people and a thriving life sciences cluster?
“Companies realize a dollar spent here can go further than anywhere else,” says Rodrick Miller, CEO of Invest Puerto Rico. That’s why 50 pharma and 30 medical device firms manufacture on the island, accounting for half of Puerto Rico’s manufacturing and 30% of its GDP. They have continued to invest and reinvest since Hurricane Maria struck in 2017, and even after tremors struck more recently. Witness Medtronic’s $50 million, 400-job expansion at two sites, or the 2018 attraction of the first Italian medical device firm in Puerto Rico, Copan Industries, which is creating 100 jobs with a $13 million investment in a place Copan CEO Stefanie Triva called “the perfect platform” for taking the company’s microbiology and viral diagnostics products to the world.
Manuel Laboy Rivera, secretary of the Puerto Rico Department of Economic Development and Commerce and executive director of Puerto Rico Industrial Development Corp., says business leaders visiting for the first time may guess tourism accounts for a huge chunk of Puerto Rico’s GDP. When told it’s only 7% while manufacturing is 47%, “you can imagine the surprise on their faces,” he says, though he’d still like to see tourism grow to around 17%.
“Pharma executives tell me their workforce in Puerto Rico is among the most productive on the planet, even in the middle of pandemics, earthquakes and hurricanes,” says Miller. He says the Puerto Rico economy is ready for the post-COVID-19 pivot on two fronts.
“We think there are weaknesses in the U.S. supply chain as it relates to the biopharmaceutical sector,” he says. “We not only have a critical mass of pharma companies, we have the real estate to support them. We have the latent capacity in terms of workforce, assets and know-how. We think it’s the only responsible thing to do as American citizens. We believe we can protect the national market from temporary supply chain disruptions, and with regulations so consumers know they get the quality they deserve.”
But that’s only plank No. 1. As companies and professionals deploy remote working successfully, there’s no guarantee we’re all going back to the way things used to be.
“We think Puerto Rico is well positioned to be a remote working hub,” Miller says. It’s great timing, given new entities such as Parallel 18, Engine 4, the Bravo Foundation and 787 (from Charlotte) arriving on the island in the past few years to foster innovation and entrepreneurship. It’s helping turn a tide that saw Puerto Rico lose 600,000 people since 2010. The banks are better capitalized than ever. And yes, two years after Maria, there is power on the island, even as the territory looks to remake its grid infrastructure — an area many view as another investment opportunity.
Moreover, “in spite of challenges, Puerto Rico continues to have a robust pipeline of talent second to none in terms of quality and preparation,” says Laboy, noting a growing apprenticeship focus. How else could it sustain a $100 billion economy with growing activity in aerospace, tech, banking and finance? “The most important asset is our people,” he says. And for talented individuals wanting to come check it out from the U.S., he notes, “You don’t need a passport.”
Cultivating the Future
In an Opportunity Zone in Mayagüez (more than 95% of the island is an OZ), the husband-and-wife team of Kendell Lang and Lisa Jander have established their first Closed Environment Aquaponics facility to grow tilapia in a low-slung PRIDCO concrete warehouse. Getting there was a years-long exercise in global warm-weather tourism with a purpose, says Fusion Farms CEO Lang.
“Our primary location selection criteria were based on where we could make the maximum impact,” he says. As they explored, their vision evolved into helping create a solution for food insecurity.
“The opportunity to help a location achieve ‘food sovereignty’ became a motivational underpinning of our site selection” Lang says, which ironically drove them to a U.S. territory that’s been seeking sovereignty as a state for a long time. “Puerto Rico is a net importing island with over 90% of the food consumed on the island coming from somewhere else.”
That chimes with the goals of Invest Puerto Rico: “The point of our work is business development with quality jobs and quality investment over time,” Miller says, with the focus on building sustainably, not just grabbing deals.
Sustainable cultivation is what Fusion Farms’ hurricane-protected, climate-controlled facility powered by renewable energy is all about. “Leveraging the natural relationship between plants and fish, Fusion Farms can produce a regular, reliable cornucopia of fresh leafy greens, herbs, vegetables, fruits and fish for local Puerto Rican communities,” Lang explains. “We chose Mayaguez because of the building’s close proximity to the University of Puerto Rico’s Mayaguez Campus, with whom we’ve developed a Cooperative Research and Development Agreement.”
He credits PRIDCO and Invest Puerto Rico with a variety of incentives (low lease rate, no sales tax, solar incentives, Foreign Trade Zone status, training reimbursements), and helping share the firm’s story. “We have been blessed with over 170 investors,” he says. “We are now raising funds for our second and third locations in other parts of the island.” Potential hemp operations may yet emerge in “the not-too-distant” future.
Not too distant. That’s music to the ears of Puerto Ricans ready to see their economy roll. It sounds good to life sciences leaders too, as they look for places to grow that are right in their own backyard.
“Resilience is our biggest competitive advantage,” says Miller. “I’m telling all of my friends who have kids or adult children under 30 that if they want to move somewhere that actually matters, and build a lifestyle for themselves and their families, Puerto Rico is the place to go.”
This Investment Profile was created under the auspices of Invest Puerto Rico. For more information, visit www.investpr.org.