Recently published research from Business Monitor International, "Puerto Rico Pharmaceuticals & Healthcare Report Q1 2014", is now available at Fast Market Research

Boston, MA -- (SBWire) -- 01/01/2014 --Puerto Rico's struggling economy will continue to put pressure on public healthcare resources, and we expect only a limited increase in the uptake of pharmaceuticals and medical services in the short-and medium- term. Given such a background, it is therefore unsurprising that Puerto Rico's House of Representatives passed a resolution, in October 2013, to promote the production of generic drugs in the country, which would also stimulate their local consumption. Although Puerto Rico is a well-established pharmaceutical manufacturing hub, the industry has been suffering due to the economic slowdown in export markets - resulting in job losses- and to the downward pressure on the territory's wider economic performance.

Headline Expenditure Projections

- Pharmaceuticals: US$2.92bn in 2012 to US$3.03bn in 2013; +3.5% in local currency terms. Forecast below the previous quarter's projection due to macroeconomic factors.
- Healthcare: US$7.53bn in 2012 to US$7.81bn in 2013; +3.7% in local currency terms. Forecast unchanged from the previous quarter.

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Risk/Reward Rating: While Puerto Rico is again ranked third out of the 17 markets surveyed in the Americas region in our latest Pharmaceutical Risk/Reward Rating (RRR) regional assessment, Puerto Rico is not considered an attractive longer term prospect from the point of view of multinational investment.

Although its per capita spending on medicines is higher than in Latin American countries, an economic slowdown, high unemployment and falling population numbers will continue to weigh on its pharmaceutical market development.

Key Trends and Developments

- In October 2013, US-based Elite Pharmaceuticals signed a manufacturing and licence agreement with compatriot Epic Pharma. Under the terms of the agreement, Epic will have the right to manufacture, market and sell 12 generic products owned by Elite in the US and Puerto Rico. Of the 12, Epic will have the exclusive right to market six and the non-exclusive right to market the other six. The term of the licence agreement is for five years, although it may be extended for an additional five years upon mutual agreement.

BMI Economic View: We recently flagged up the high likelihood that Puerto Rico had fallen into a double-dip recession in Fiscal Year (FY) 2013 (July 2012 to June 2013), following a five-year recession between FY 2007 and 2011. We see a high likelihood of a technical debt default by Puerto Rico amid a double-dip recession and a delicate fiscal position. In the actual event of a default, the lack of legal precedent generates significant uncertainty of how it would unfold, although we see a high risk of substantial losses for investors.

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