BMI's Executive Summary

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Puerto Rico's pharmaceutical market was hit by more bad news in the second half of 2007 as a number of multinationals revealed plans to downscale their manufacturing presence on the island, adding to wider economic problems. While the slight contraction witnessed in the pharmaceutical market between 2006- 2007 is not expected to be repeated, growth will be slow. The drug market was valued at US$1.77bn in 2007 and should reach US$1.94bn by the end of the forecast period in 2012, representing sluggish 1.85% CAGR.

Slow drug market expansion and the retreat of multinationals are related to the wider cloud that continues to hang over Puerto Rico's economy - real GDP will struggle to reach 1% over the forecast period, although the contraction in real terms seen in 2007 should not be repeated. The traditionally privileged trade position that Puerto Rico held with the US is being eroded by concerns over the future of tax incentives at the same time as several Latin American rivals increase their own economic ties with the US through free trade agreements (FTAs). Meanwhile, the government is in a precarious position fiscally speaking, with a soaring budget deficit that may threaten health spending.

For Q108 BMI has overhauled its Business Environment Ratings methodology. The most obvious change comes with the inclusion of the US and Canada in the rankings table – made possible due to a uniform ratings criteria employed across all 61 states in BMI's pharmaceutical universe. It is no surprise that the US and Canada occupy the top two spots, leaving Puerto Rico in fourth place behind only Mexico in Latin America. The strong showing is a welcome bright spot for the drug industry and has been made possible by favourable US-aligned policies and regulation that make for the most stable business environment outside North America.

In the second half of 2008, both GlaxoSmithKline and Bristol-Myers Squibb (BMS) joined the list of multinationals with plans to close factories on the island, while Pfizer announced further job cuts at its own factory. However, BMI has hopes that Puerto Rico can turn around its flagging fortunes. The island is hoping to re-brand itself as a 'high-tech hub' as well as a centre for active pharmaceutical ingredient (API) manufacturing, which should play to its strengths as it loses its high-volume drug manufacturing edge. Proximity to the US, a skilled workforce and strong investment in infrastructure over a number of years should maintain the attraction of Puerto Rico to the pharmaceutical industry, albeit in a different form to that if the past.

Contents

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Chapter 1 - Executive Summary

Puerto Rico Pharmaceuticals & Healthcare Industry SWOT

Chapter 2 - Puerto Rico: Business Environment Ranking

Business Environment Ranking

Economics - Long-Term Risk

Politics - Long-Term Risk

Regulatory Barriers

Domestic Sector Threat

Market Growth Potential

Market Size Ranking

Chapter 3 - Puerto Rico: Market Summary

Chapter 4 - Regulatory Regime

Pricing & Reimbursement issues

Chapter 5 - Industry Developments

Tax Incentives

Table: Puerto Rico - Incentives, Benefits And Discounts For Pharmaceutical Manufacturers

Trade Accords

Biotechnology

Corporate Activity

Chapter 6 - Industry Forecast Scenario

Table: Drug Market Forecasts

Key Macroeconomic Factors

Table: Puerto Rico: Historical Data And Forecasts

Prescription Market Forecast

Table: Prescription Market Forecasts 2004-2010

OTC Market Forecast

Table: OTC Market Forecasts 2004-2010

Generics Market Forecast

Table: Generics Market Forecasts 2006-2010

Export/Import Forecasts

Table: Leading Five Exported Drug Products, Q105

Table: Variations In Export Sales, Selected Products, Q105

Table: Puerto Rico Pharmaceuticals Exports & Imports Forecasts 2004- 2010

Healthcare Data & Forecasts

Table: Other healthcare data & forecasts

Key Risks To BMI Forecast Scenario

Chapter 7 - Competitive Landscape

Overview

Table: Pharmaceutical Sales in Puerto Rico, US$, 2004

Leading Products, 2004

Chapter 8 - Company Monitor

Profiles

Eli Lilly

Abbott Laboratories

Pfizer

GlaxoSmithKline (GSK)

Merck & Co

Chapter 9 - Regional Overview: Central America & Caribbean

Chapter 10 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Pharmaceutical Industry

Sources

Chapter 11 - Appendix: Regional Demographic Data

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Chapter 12 - Country Snapshot: Puerto Rico Demographic Data

Section 1: Population

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Healthcare: Vital Statistics

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Wages Per Year