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Puerto Rico Pharmaceuticals and Healthcare Report Q4 2008
Business Monitor International, Nov 2008, Pages: 59
BMI's Puerto Rico Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Puerto Rico's pharmaceuticals and healthcare industry.
Puerto Rico continued to climb up the BMI’s updated Business Environment Rankings table, rising to second in Q408, out of the ten markets surveyed in the Americas. Puerto Rico’s drug market, which was worth about US$2.7bn in 2007, is forecast to reach US$4.3bn by 2012, supported by a strong per capita spend, the availability of expensive products and US Food and Drug Administration (FDA) regulatory standards, which are in effect in the territory. The strong growth of recent years has been linked to demographic and macroeconomic factors, with many more innovative pharmaceuticals available in Puerto Rico than elsewhere in Latin America. In the coming years, however, financial pressures will result in generics being the fastest growing segment of the market, as consumption slowly falls into line with levels in the US.
As the local economy remains on course to endure a third year in recession and inflation continues to rise, economic concerns are considerable. While there is clearly a need to kick start economic activity, BMI is concerned over the lack of fiscal clarity and policy coherence in the government’s electoral agenda, with elections scheduled for November 2008. In our view, the possibility of a ratings downgrade on the back of a looser fiscal regime would limit the government’s ability to tap the international markets for financing, and significantly damage the country’s medium-term fiscal and external debt outlook.
At the same time, Puerto Rico’s pharmaceutical manufacturing sector has been gradually losing its shine. A number of multinationals have closed down their local production plants in recent years, with many also experiencing problems with manufacturing quality. In January 2008, Bristol-Myers Squibb (BMS) announced it would close its plant in Barceloneta, following a recent closure of another plant in western Puerto Rico. Nevertheless, Israeli generics firm Teva returned to manufacturing on the island, after purchasing an API plant from Germany’s Archimica, The government is also attempting to boost activity in the manufacturing sector through tax breaks and various other incentives, which are particularly targeting the biotechnology sector.
In terms of its healthcare system, Puerto Rico continues to try to manage the aftermath of the privatisation of state health services conducted in the 1990s, which has resulted in fiscal mismanagement and even corruption. On one hand, almost 40% of the population is reliant on state-funded insurance, while on the other, the island remains a popular destination for medical tourism, especially in the cosmetics surgery field. In the meantime, healthcare costs – due mostly to higher drug costs – are rising above insurance under the current health reform programme, which will eventually force the government to reconsider the current provision levels.
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