Research firm Business Monitor International on Monday predicted that Puerto Rico’s pharmaceutical industry will show a slight growth of 2.5 percent next year, despite the looming threat of the effects of Law 154, which starting in January levies a 4 percent excise tax on foreign corporations doing business on the island.
The Massachusetts-based research firm valued Puerto Rico’s pharmaceutical market at $2.7 billion last year, forecasting that it will wrap up 2010 with a 1.5 percent increase, based on the Consumer Price Index. By the end of 2011 that increase should be of 2.5 percent, BMI noted.
The projected growth is also expected to impact pharmaceutical market values, which should reflect a compound annual growth rate of 2.44 percent over the 2009-2014 period. The conservative prediction is tied to upcoming patent expirations on a number of products manufactured on the island.
The full results of BMI’s research are contained in the “Puerto Rico Pharmaceuticals and Healthcare Report Q1 2001,” released Monday.
BMI released its predictions with the caveat that the panorama could change in 2011 as a result of Law 154, which they said imposes a “discriminatory” tax.
“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. Puerto Rico is already in danger of losing medicine manufacturing plants to Latin America, which is investing heavily in developing its exporting industry and,most importantly, has the bonus of massive domestic demand,” BMI said.
The effects of the tax, coupled with the ongoing recession the island has been facing for the better part of the last five years, could further deteriorate the panorama for local pharmaceuticals, BMI said.
Despite everything, BMI said Puerto Rico “still remains one of the highest-ranked markets” in its latest Business Environment Ratings for the Americas region, behind only to the U.S. mainland and Canada.
Puerto Rico ranks 9th out of 83 countries surveyed by BMI’s pharmaceutical industry team, and is expected to retain some of its attractiveness to pharmaceutical players as Medicaid funding is expected to jump to more than $8.6 billion over the next decade.