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Puerto Rico Produces 25% Of U.S. Drugs

Value of drugs produced locally compared to the value of drugs made in the States rose from 18% to 25% from 1992 to 1997

by Daniel R. Garza

May 18, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

Drugs produced by Puerto Rico pharmaceutical companies represent 25% of the value of all drugs made in the U.S., according to the U.S. Department of Commerce.

The value of pharmaceutical drugs made in Puerto Rico compared to the value of drugs made in the 50 U.S. states and the District of Colombia (not including Puerto Rico) rose from 18% to 25% between 1992 and 1997.

If Puerto Rico is added to the U.S. totals, the island’s share of the overall U.S. pharmaceutical production pie is 20%.

Pharmaceutical plants in the 50 U.S. states and the District of Columbia produced $93.4 billion in pharmaceutical drugs in 1997, while Puerto Rico produced $23.3 billion.

Nevertheless, employment in the pharmaceutical sector declined, countering a U.S. trend, according to the Commerce Department’s Census of Manufacturing in Puerto Rico. The census, conducted every five years, documents manufacturing activity up to 1997.

Pharmaceutical-manufacturing jobs in Puerto Rico, as a percentage of U.S. pharmaceutical jobs, declined from a historical high of 9.2% in 1995 to 7.9% in 1999, according to the U.S. and Puerto Rico Departments of Labor.

In 1995, Puerto Rico pharmaceutical companies employed 23,777 in 1995 compared to 22,008 in 1999. During the same period, U.S. pharmaceutical jobs rose from 259,800 to 279,500, representing a 7.6% increase.

The numbers indicate that Puerto Rico pharmaceutical companies are producing more drugs, or higher value drugs, with fewer workers.

As of March, some of the island’s largest pharmaceutical companies had committed to making $957 million in new investment in their manufacturing plants as part of renegotiated income tax rates under the 1998 Tax Incentives Act, according to the Department of Treasury (Hacienda).

Some observers have long speculated pharmaceutical companies are ramping up production and investing heavily to take advantage of tax breaks linked to Section 936 of the U.S. Internal Revenue Code, before they expire in 2005, after which the companies will begin to leave the island.

Others say the investment is a reflection of the pharmaceutical industry’s long-term commitment to the island, where some of the world’s most profitable drugs are made.

Puerto Rico Pharmaceutical Industry compared with U.S.

Manufacturing Employment
Year Puerto Rico U.S. PR as % of US
1992 21,104 251,400 8.4%
1995 23,777 259,800 9.2%
1999 22,008 279,500 7.9%

Industry Shipment Value
Year Puerto Rico U.S. PR as % of US
1992 $11.9 b $67.6 b 18%
1997 $23.2 $93.4 b 25%

Source: P.R. Dept. of Labor; U.S. Deptartments of Labor and Commerce

This Caribbean Business article appears courtesy of Casiano Communications.
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