Puerto Rico Pharmaceuticals & Healthcare

Summary

Puerto Rico's pharmaceutical manufacturing sector exports medicines worth approximately US$100bn at consumer prices each year, but there are concerns that the island's pre-eminence as a global hub for drug production is being steadily eroded. Other sites that are attractive for research-based firms, such as Ireland and Singapore, threaten to undermine the island's international competitiveness. Changes in local tax incentives granted to manufacturers have also weakened industry sentiment. The island's administration has, however, introduced a series of measures in order to offset the impact of the expiry of exemptions and credits available under Sections 936 and 30A of the US Internal Revenue Code in 2007.

The added-value biotechnology sector, and the research institutions that support it, are the principal targets of the latest tax incentives. It is estimated that the stock of multinational sector investment in biotechnology product manufacturing is as much as US$3.5bn, due to robust commitments in the field by major producers including Amgen , Eli Lilly and Abbott Laboratories . Officials are planning a new package aimed at companies that have not yet reported a profit, in an attempt to attract more early-stage and emerging biotech firms. A credit on clinical trials was introduced in 2004, and local academic research institutions continue to expand their facilities.

However, BMI believes that the long-term future of pharmaceuticals manufacturing in Puerto Rico cannot be guaranteed, with the island likely to face continuing threats in drug development and manufacturing from markets such as India and China. At present, Puerto Rico's proximity to the US mainland is a strong asset, although in the long term the creation of the DR-CAFTA free trade zone represents a further regional threat. Locally, utility tariffs and transport infrastructure problems are reported to be increasing beyond tolerable levels.

Additionally, there are limited prospects for the domestic pharmaceutical market. Puerto Rico is amid a severe financial crisis, with the US territory burdened with public debt in excess of US$30bn. Healthcare expenditure, at more than 17% of GDP, is a major drain on an already overburdened and inefficient public financial system. Although the fast-growing generic medicines sector is expected to fall slowly into line with US levels, with sales reaching 15% of the total market in 2010, the prescription sector is likely to increase its share of overall sales to 79% by the end of the forecast period. This will be attributable to the continued dominance of branded medicines in the territory. The market's total value is expected to reach US$2.01bn by year-end 2010.

Key Benefits of Report

• Rely On Our Independent 5-Year Forecasts As A Benchmark
  to test other views - a key input for successful budgetary and strategic business planning.
• Target Business Opportunities & Risks
  through our reviews of latest industry trends, regulatory changes, and major deals, projects and investments
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  on your competitors and peers through company rankings by sales, market share and ownership structure – includes multinational and national companies.

Scope of Report

An at-a-glance perspective on latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The SWOT outlines strategic factors which affect BMI’s forecast analysis, and taken together with BMI’s Economic and Business Environment SWOTS, give a complete overview of market climate.

Outline of market characteristics, growth factors, leading therapeutic segments and a competitivness of the market.

Guide to and analysis of country intellectual property developments and pricing & reimbursement issues, which constitute the regulatory make-up of the market.

Focus on government healthcare reforms, epidemiological trends, company M&As, product launches, market entries, FDI activity, R&D and patent legislation.

5-Year Forecasts to end-2010 for all key industry indicators (see list below), supported by explicit assumptions, plus analysis of key downside risks to the main forecast, including:

• Drug market expenditure (US$bn); drug expenditure per capita (US$); as % of gdp
• Prescription drug market (US$bn)/as % of total market; sales by alimentary tract/metabolism; antibiotics, cardiovascular, central nervous system, oncology, musculoskeletal and respiratory system
• OTC market (US$bn)/as % of total market (sales by analgesic, cough and cold, digestives, skin treatments, vitamins and minerals)
• Generics market (US$bn)/ as % of total market
• Health expenditure (US$bn, % of gdp and per capita); public sector health expenditure as % of total; number of hospitals; beds, hospital admissions, doctors, births and deaths per 000 population

Forecasts based on bespoke BMI economic modelling, using historical data sets of macroeconomic and industry variables to derive rigorous statistical relationships, anchored in advanced linear regression techniques.

BMI forecasts for all headline macroeconomic indicators, including:
Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against US$, government expenditure, external debt

Intelligence on the market position of major MNC power houses and indigenous companies. BMI profiles key research-based companies. Company SWOTS are provided for all key strategic players, complete with a company activity overview, its leading products and analysis of business opportunities.

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