Boston, MA -- (SBWIRE) -- 06/03/2013 -- The importance of Puerto Rico as a major production hub for multinational pharmaceutical companies will continue to deteriorate due to drug patent expiration, production quality issues, increasing labour and other operational costs, and the potential tax increase from the local government.

However, the pharmaceutical industry will remain an economic mainstay for Puerto Rico, as the incentives draw multinational drugmakers' investment - as long as the market's attractiveness continues to offset the impact of the negative pressures mentioned above.

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Headline Expenditure Projections

- Pharmaceuticals: US$2.93bn in 2012 to US$3.05bn in 2013; +4.2% in local currency terms. Forecast slightly higher from Q113, on account of macroeconomic factors.
- Healthcare: US$7.53bn in 2012 to US$7.81bn in 2013; +3.7% in local currency terms. Forecast broadly unchanged from Q113, although overall historical expenditure revised downwards.

Risk/Reward Rating: Puerto Rico's Pharmaceutical Risk/Reward Rating (RRR) score for Q213 is unchanged from the previous quarter. This is also the case for all other countries in BMI's proprietary system that ranks pharmaceutical markets according to attractiveness to multinational drugmakers. A minor re-weighting of one of the RRR components is being implemented to improve the tool, and the adjusted scores for all markets will be published in the Q313 updates of the Pharmaceuticals & Healthcare reports. Puerto Rico has an RRR score of 65.6 out of 100, making it the third most attractive pharmaceutical market in the Americas region, which covers 17 countries.

Key Trends And Developments

- Puerto Rico is emerging as a medical tourism destination for US patients. According to reports by NBC Latino in February 2013, the island benefits from factors such as lower costs, high standards, geographical proximity and also from being required to comply with same regulations as the providers of medical services on the US mainland. Moreover, some Puerto Rican hospitals are partnering with local hotels in order to provide patients with an 'all-round' medical and leisure experience. Similarly, some companies in the US are offering their employees a choice of treatment abroad, in countries including Puerto Rico as well as Turkey and Mexico. While treatment abroad is not without risks, the outflow of patients from the US is expected to continue, given the rising costs of healthcare services there.
- Eli Lilly's Puerto Rican subsidiary, Lilly del Caribe, will reduce production at its plant in Guayama, Puerto Rico by 2013, according to Lilly del Caribe's senior human resources director, Ileana Rivera (PMFARMA). The company has offered employees a voluntary separation programme. The company operates three plants in Puerto Rico, two in Carolina and one in Guayama, which produces the ingredients for Cialis (tadalafil) and Cymbalta (duloxetine).

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