ince 2019, Puerto Rico has landed 10 life sciences investments for new or expansion manufacturing projects, totaling over $630 million and generating more than 2,657 jobs.
Puerto Rico’s bioscience industry accounts for 30% of GDP, and 50% of both manufacturing activity and manufacturing jobs on the island. Twelve of the world’s top 20 pharmaceutical companies and seven of the world’s top 10 medical device companies have located operations in Puerto Rico.
So, what makes this Caribbean island stand out as a place to manufacture?
Daniel Chang, co-founder of Biosimilar Solutions, says that the answer is simple.
“There are three reasons we located to Puerto Rico. One of them is government incentives, the second was the availability of facilities and the third is the availability of talent,” says Chang.
Act 60, Puerto Rico’s incentive code, provides businesses a plethora of tax benefits covering every industry. Invest Puerto Rico notes the following main tax benefits: 4% fixed income tax rate on eligible income; 100% tax exemption on capital gains; 75% exemption on property taxes; 50% exemption on municipal license tax; and a 15-year standard tax exemption grant period (with potential renegotiation for another 15).
Depending on site needs there are three FTZs in Puerto Rico and 95% of the island is considered an Opportunity Zone (established by U.S. Congress in 2017). The Puerto Rico Industrial Development Company (PRIDCO) and Invest Puerto Rico work with investors like Biosimilar Solutions to find ideal sites through their collection of over 1,500 public commercial properties, industrial buildings or land to build on.
As for talent, in the World Economic Forum’s Global Competitiveness 2020 Report, Puerto Rico was found to have the sixth highest availability of scientists and engineers in the world. The island has over 100 universities and colleges, most notably the University of Puerto Rico with 11 campuses.
Affordable Operations, Meaningful Global Impact
In March 2021, Biosimilar Solutions announced a $200 million investment in Aguadilla, Puerto Rico, creating 328 new jobs with plans to be fully operational by 2023. The 270,000-sq.-ft. site is under construction as the company waits for clinical trial results and FDA approval to begin manufacturing.
During a global search for the company’s new site, Ireland, China, Australia and India were contenders due to the low cost of resources. But for Chang, Puerto Rico’s incentives sealed the deal.
“As a startup company we are always looking for ways to expand our money,” he says. “Puerto Rico was one of the few places we looked at that provided an incentive.”
Biosimilar Solutions received three government incentives. For every piece of equipment that the company purchased for operations, the government reimbursed up to 30% of the purchase costs. The company also received 50% back on the costs of infrastructure improvements to the vacant facility. The final incentive was a 50% R&D tax credit, which will last for 15 years.
“If you add all of those up it could potentially mean for every dollar we spend, we could get back 75 cents,” Chang says. “That’s really good. I mean we cannot get that anywhere. Not only that, the cost of doing everything in Puerto Rico is 25% to 30% cheaper than in the States, as opposed to if we were in California or Boston.”