Let’s give tax incentives to the pharmaceutical industry to bring more good high-paying jobs to Puerto Rico, while also reducing our dependence on China.
The coronavirus is having a profound impact on manufacturing companies around the world. COVID-19 initially crippled supply chains in China, where the virus began – potentially cutting off up to 90% of the key ingredients used in generic drugs. As the virus threatens global supply chains, Puerto Rico’s substantial pharma presence continues to pique the interest of both life sciences manufacturers and U.S. lawmakers seeking to enhance domestic production.
Specifically, our U.S. territory, home to 12 of the world’s 20 top-grossing pharmaceutical companies, is emerging as a viable alternative to Asia for drug makers serving the Americas. Added growth in this sector can be swift in Puerto Rico, as the island already has the demonstrated experience, infrastructure and workforce to perform. Puerto Rico presents one of the most turnkey options for pharmaceutical manufacturing and can be crucial for U.S. recovery efforts. An uptick in drug manufacturing will be even more important once therapeutic treatments for COVID-19 are available and for future medical threats.
In response to COVID-19, the U.S. is beginning to coalesce around the idea of national stockpiles and central inventories for personal protective equipment (PPE), much the way the government oversees financial and oil reserves. A recent Wall Street Journal column noted that “The fallout (of disruptions in timely deliveries) can become acute when supplies aren’t available when demand spikes. This is one of the main reasons the coronavirus pandemic has crippled health-care supply chains.”
Puerto Rico has long served as a medical device and pharmaceutical manufacturing center, and officials believe more can be done to boost the sector even further. Some U.S. politicians have heeded the call to return 1970s-era tax incentives that eliminated federal taxes for profits derived in U.S. territories. As such, our organization, Invest Puerto Rico – the island’s public-private economic development partnership – has planned an aggressive recruitment campaign for life sciences companies in 2020.
Strong Life Sciences Sector
As mentioned, Puerto Rico’s life sciences sector already boasts 12 of the world’s 20 top-grossing pharmaceutical companies (J&J, Roche, Pfizer, Novartis and Merck). What’s more, five of the world’s top 10 selling drugs in 2018 were manufactured on the island (Humira, Eliquis, Opdivo, Enbrel and Xarelto). Internationally, eight of the 15 top-selling biopharmaceutical products are made in Puerto Rico.
Also, in 2019, Puerto Rican pharmaceutical exports totaled more than $44 billion. Of that, $30.89 billion was exported to the U.S. market, while $13.2 billion went to other countries, significantly more than any U.S. state.
In 2019, nine out of Puerto Rico’s top 10 commodity exports to the rest of the world were pharmaceutical or medical device products. That sector makes up 30% of Puerto Rico’s GDP, 50% of Puerto Rico’s total manufacturing and 30% of manufacturing jobs.
Because of our existing base, Puerto Rico has ramped up processes very quickly – tapping into a talented workforce of 90,000 manufacturing employees. Of that, tens of thousands specialize in pharma production. Puerto Rico also offers a network that includes three major university systems with dozens of campuses and specialized schools, including the College of Natural Sciences at the University of Puerto Rico, Rio Piedras, as well as bio-centered technical schools.
Here on the island, we are confident that local and national efforts to consolidate pharma production could be a game-changer, especially with the threat of future “black swan” events. This area can create thousands of direct new jobs, in turn putting the island’s available labor force to work – via skilled, impactful positions as well as create new opportunities for innovation, entrepreneurship and redevelopment.
With a national focus on attracting even more medical supply and pharma manufacturers, Puerto Rico is well-positioned to boost production to unprecedented levels, attract additional manufacturers to the island and reaffirm its position as the essential manufacturing hub in the U.S. Ongoing improvements to Puerto Rico’s existing infrastructure, which will accommodate greater output, are already under development.
Billions of dollars are being reinvested into Puerto Rico’s economy following the recent natural disasters. Prior to the coronavirus, the U.S. Department of Housing and Urban Development (HUD) allocated Puerto Rico nearly $20 billion through its disaster recovery program. We are also able to access $487.3 million made available by the Federal Emergency Management Agency (FEMA) to rebuild the island’s electric grid, roads, bridges and public buildings.
These disaster-recovery investments are complemented by Puerto Rico’s $787 million stimulus plan for coronavirus, and the $2.2 billion reserved for the territory in Congress’ Coronavirus Aid, Relief and Economic Security (CARES) Act.
Increased activity among Puerto Rico’s pharmaceutical manufacturers would afford Americans peace of mind. Knowing that they may be able to access essential medications –in the event overseas suppliers are delayed or unavailable due to changing foreign trade policies and future medical threats – from a U.S. territory allays concerns ranging from access to quality.
Stronger & More Resilient
Like the mainland U.S., Puerto Rico will overcome coronavirus and its many economic challenges. We will emerge stronger. Our ability to face all kinds of crises has been reaffirmed repeatedly: “Resilience” is built into our DNA. This is true of our existing small-business cluster (89% of the island’s small businesses reopened after the hurricanes), as well as our manufacturing prowess.
Recent events have caused our manufacturers to strengthen their business continuity plans and boost the preparedness of their operations and personnel. We have a resilient and well-trained workforce of over 1 million people, nearly 10% of whom hold manufacturing jobs. Plus, Puerto Rico has the infrastructure capacity to expand with relative ease.
Puerto Rico is already the U.S.’s pharmaceutical powerhouse, but can leverage its impressive assets to make the country even safer and more secure from global disruptions. We can ensure that Americans have access to the highest quality and most cost-effective drugs on the market. The U.S. should not have to rely on imported goods to care for its 331-plus million residents.
Rodrick Miller leads Invest Puerto Rico, an investment promotion agency created in 2017. Invest PR’s business recovery portal, PuertoRicoSigue.org, has helped hundreds of businesses affected by COVID-19 and the recent earthquakes. His 20-year career in economic development includes leading disaster recovery efforts in New Orleans and Detroit. He holds a Master of Public Policy from Harvard University’s Kennedy School of Government