Pharmaceutical companies doing business in Puerto Rico will not show any significant growth this year, pressured by upcoming patent expirations and underperforming economic conditions, Irish research firm Research and Markets said in its most recent industry report.
Furthermore, the approval of Law 154 passing a temporary 4 percent tax on non-resident companies is another factor playing negatively on the sector’s growth in 2011.
“The law not only goes against the government’s attempt to foster scientific innovation, but may also lead to further plant closures, thus negatively impacting the island’s export potential,” Research and Markets said. “Puerto Rico is already in danger of losing drug manufacturing plants to Latin America, which is investing heavily in developing its exporting industry and, most importantly, has the bonus of massive domestic demand.”
While this tax will provide further support to its fiscal accounts over the coming years, for its duration (the tax is set to expire in 2016), it may also provide detrimental to the governments’ desire to attract crucial foreign direct investment, which is required for economic growth,” the global research firm noted.
In its report, the Dublin-based company said local pharmaceutical companies will spend $2.81 billion, or 2 percent more than the $2.75 billion on record for 2010 in operating expenses. Medical device firms will also see an increase of about 2.3 percent in their cost of doing business this year, to $536 million from the $528 million spent last year.
In its analysis, Research and Markets also emphasized on the recent string of pharmaceutical product recalls and manufacturing issues plaguing locally run companies, saying the problems have “marred” Puerto Rico’s image.
“Although Puerto Rico has established itself as one of the leading pharmaceutical manufacturing hub globally, its attractiveness has been marred by recent issues with the quality of output from some of the plants on the island,” the report noted.
The Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Puerto Rico’s pharmaceuticals and healthcare industry.