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Puerto Rico Ups Efforts For Bay State Biotech
Jennifer Heldt Powell
January 6, 2003
While Bay Staters don their snow boots and scrape the ice off their car windows before heading to work, William Riefkohl dresses in short-sleeve shirts at his office in Puerto Rico and basks in warm sunshine on his lunch hours.
But promoters of the island hope to entice Massachusetts biotech companies with more than tepid temperatures and snow-free winters. They say they can offer a well-educated work force, cheap factories and tax breaks.
"There is a lot of stability here, politically and socially," said Riefkohl, executive vice president of the Puerto Rico Manufacturers Association.
Puerto Rico has long been a stronghold for the pharmaceutical industry and, with manufacturing jobs slipping, Puerto Rico's economic developers want to add more biotech to that.
They already have a strong start with recent investments from many of the largest biotech and pharmaceutical companies. Amgen Inc. is spending $470 million on the Island. Eli Lilly & Co. is putting up $450 million. Abbott Laboratories is expanding to the tune of $350 million.
Puerto Rico's push comes as biotechnology leaders in Massachusetts urge state leaders to put more effort into attracting and retaining local companies.
"We think we can capture a fair amount of the manufacturing, based on the fact that a lot of companies say they want their first (manufacturing) plant to be based near their research," said Stephen Mulloney, spokesman for the Massachusetts Biotechnology Council.
But Puerto Rico is a worthy competitor, he said.
It's just one of many regions eyeing Massachusetts' companies.
"It's a very competitive landscape," Mulloney said.
To keep up, Massachusetts state and industry leaders must present a more unified front and be more proactive in meeting company needs, he said.
"We're pretty confident that the message that the state has to do more is being heard and that state government will take action," Mulloney said.
But Massachusetts is an expensive place to do business, and it doesn't have the tax advantages Puerto Rico can offer, say those promoting the island.
"Massachusetts is good at innovation," said William B. Wiederseim, chief executive of PharmaBiosource, a pharmaceutical industry consulting company.
Companies should "think" in Massachusetts and "do" in Puerto Rico, he suggested.
The country already has more than 30 years of experience with meeting stringent U.S. Food and Drug Administration regulations, Wiederseim said.
"They're really, really good at getting things that are safe for you to take as a drug," he said. "They're good at complying with the laws set up by FDA to assure patient safety."
The country's educators are also working with the industry, helping prepare the work force to handle the work promoters hope to bring in. The work force is bilingual and has been well trained in both the traditional U.S. and metric measuring systems.
"Universities are very attuned to the needs of the manufacturing sector and will make changes in curriculum to reflect what is going on in the industry," said Gary A. Bingham, director of research for the Puerto Rico Industrial Development Co.
Biotechs will also find much of the support services they need, because of the large pharmaceutical base.
"Once the process moves from the laboratory to the factory floor, it's not a whole lot different," Bingham said. "One is mixing chemicals and the other is mixing biologics."
Plus there is the tax advantage. Puerto Rico's corporate income tax is 7 percent or less, and there are federal incentives. Companies don't pay the U.S. federal tax until the dollars are repatriated. That means companies can use their earnings to invest in Puerto Rico and defer the taxes.
Puerto Rican officials first concentrated on attracting the big biotech industries, but they have expanded their net.
"Now there is a growing awareness that they have to look at smaller companies that are coming up with new products," said Riefkohl. "We have to be attractive to them."