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Puerto Rico Pharmaceuticals and Healthcare Report Q2 2010
Business Monitor International, March 2010, Pages: 69
Puerto Rico Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Puerto Rico's pharmaceuticals and healthcare industry.
In BMI’s updated Q210 Business Environment Rating (BER) matrix for the 10 major pharmaceutical markets in the Americas, Puerto Rico – the US-affiliated territory – remains placed third, below the US and Canada. While the territory has a well-developed regulatory environment and extremely close political relations with the US, its domestic market potential is limited by small population numbers, as well as by the considerably higher longer-term potential of emerging, rival manufacturing locations in Latin America or Asia. Therefore, Puerto Rico is likely to slip further down the matrix over the coming years, as Brazil and Mexico, for example, gain in attractiveness to foreign players looking to expand. Following the closures of a number of local plants operated by US multinationals over the past few years, Canadian contract manufacturer Patheon reported in December 2009 that it will scale back its operations in Puerto Rico in order to cut costs. Its plant at Caguas will close and all resources will be concentrated at its other site on the island, in Manatí, as it becomes impractical to run both sites during a time of costsaving. The consolidation, expected to be completed by the end of the 2010 fiscal year, also raises question over whether the company will exit Puerto Rico. Nevertheless, notwithstanding the cutbacks at Caguas, Patheon revealed it will commit itself to expanding the Manatí site under a more efficient cost structure and to introducing new products once economy returns to growth.
While Puerto Rico’s overall drug market values – as measured at consumer prices – continued to expand over the course of 2009, to US$2.71bn, recessionary pressures resulted in virtually flat growth of its overthe- counter (OTC) segment, which was worth some US$326mn and which will continue to lose ground to prescription medicines. Through to 2014, the prescription market’s growth will be hampered by the higher uptake of generics, which will comprise the fastest-growing market segment, posting a compound annual growth rate (CAGR) of 6.17% in the 2009-2014 period. In contrast, the overall market will grow at a CAGR of 3.37%, with its value reaching US$3.2bn in 2014, with patented drugs only recording a CAGR of 2.75%, largely due to pressure from the upcoming patent cliff.
Nevertheless, Puerto Rico could reinvent itself as a ‘biotech’ island, with the government already aware of the fact that the emerging global trend of biopharmaceuticals can maintain innovation and therefore patented products’ production. The multinational drugmakers on the island are currently exploring their capabilities in biologics through various joint ventures and small acquisitions, and will undoubtedly use Puerto Rico as a manufacturing base for this new pharmaceutical segment in the long run. Excipients are another area of potential export boost. Presently, their annual sales in Puerto Rico stand at US$150mn, but there is strong potential for growth as new, advanced excipients become popular. Overall, despite plant closures, we maintain that exports will continue to dwarf imports, and thus result in a strong positive trade balance throughout the forecast period.
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