Puerto Rico Pharmaceuticals and Healthcare Report Q3
2011

Puerto Rico Pharmaceuticals and Healthcare Report Q3 2011

BMI View: Puerto Rico's high per-capita healthcare and pharmaceutical spending represent a draw for manufacturers of patented drugs, which account for the majority of the territory's market. Many of those products are manufactured locally, given the advantages of lower costs in Puerto Rico than in mainland US. However, the island remains highly dependent on exports to the US, with changes in this market likely to have a major bearing on the development of Puerto Rico's pharmaceutical trade balance.

Additionally, underperforming economy and public sector spending cuts will conspire with upcoming patent expirations to keep annual growth rates of the Puerto Rico's pharmaceutical values at low levels.

Headline Expenditure Projections

• Pharmaceuticals: US$2.75bn in 2010 to US$2.81bn in 2011; +2.0% in local currency terms.

Forecast down slightly from Q211 due to macroeconomic factors.

• Healthcare: US$10.81bn in 2010 to US$11.06bn in 2011; +2.3% in local currency terms.

Forecast down significantly from Q211 due to macroeconomic factors.

• Medical devices: US$528mn in 2010 to US$536mn in 2011; +1.7% in local currency terms.

Forecast down slightly from Q211 due to macroeconomic factors.

Business Environment Rating: In our Q311 proprietary Business Environment Rating (BER) matrix for the Americas, Puerto Rico remains in an unchanged third position, after the US and Canada. Puerto Rico's composite score is also unchanged, at 65.6 out of a maximum 100. Its risks and rewards profiles are relatively evenly balanced, although concerns do exist over its economic structure and the extent of bureaucracy. However, in the long term, Puerto Rico will increasingly be challenged by Latin American countries, which are beginning to improve their business environments and increasingly offer the added bonus of massive domestic demand.

Key Trends & Developments

• In January 2011, Bristol-Myers Squibb (BMS) recalled 64mn tablets of its blood pressure oral medicine Avalide (irbesartan-hydrochlorothiazide) from the US and Puerto Rico. The recall follows BMS's concerns over potential inconsistencies in levels of irbesartan, the less-soluble form of Avalide's active ingredient, which could result in slower dissolution. However, no reports of reduced efficacy of the drug have been received, according to BMS spokesperson

Christina Trank. BMI Economic View: Huge structural reforms in Puerto Rico - including major cuts to public sector spending - have dramatically improved the island's fiscal outlook, reflected in upgrades to its credit status in early 2011. However, even though it will return to positive territory, economic growth is set to remain weak, at around 1.65% in 2011. We also caution that revenues will continue to suffer, while expenditure will come under pressure from recent tax cuts, despite the government's commitment to austerity in other areas.

BMI Political View: In line with its attempt to continue improving tax collection systems, the government of Puerto Rico has levied a temporary tax on offshore manufacturers. While this tax will provide further support to its fiscal accounts over the coming years, for its duration (the tax is set to expire in 2016), it may also provide detrimental to the governments' desire to attract crucial foreign direct investment (FDI), which is required for economic growth. Nevertheless, recent reforms to the tax system, including a 0-1% tax rate for any firms engaging in innovative activities based solely in Puerto Rico, should go some way to providing an attractive pharmaceutical manufacturing base.

• Executive Summary
• SWOT Analysis
• Puerto Rico Pharmaceuticals And Healthcare Industry SWOT
• Pharmaceutical Business Environment Ratings
  • Table: Americas - Regional Pharmaceutical Business Environment Ratings, Q311
• Rewards
• Risks
• Puerto Rico - Market Summary
• Regulatory Regime
• Pricing and Reimbursement Issues
• Tax Incentives
  • Table: Puerto Rico - Incentives, Benefits And Discounts For Pharmaceutical Manufacturers
• Trade Accords
• Industry Developments
• Epidemiology
• Healthcare Sector
• Healthcare Financing
• Clinical Trials
• Biotechnology
• Medical Devices
• Recent Developments in Medical Devices Market
• Industry Forecast Scenario
• Overall Market Forecast
  • Table: Pharmaceutical Sales Indicators 2007-2015
• Key Growth Factors - Industry
  • Table: Healthcare Expenditure Indicators 2007-2015
  • Table: Government Healthcare Expenditure Indicators 2007-2015
  • Table: Private Healthcare Expenditure Indicators 2007-2015
• Key Growth Factors - Macroeconomic
  • Table: Puerto Rico - Macroeconomic Data And Forecasts
• Prescription Drug Market Forecast
  • Table: Prescription Drug Sales Indicators 2007-2015
• Patented Drug Market Forecast
  • Table: Patented Drug Market Indicators 2007-2015
• Generic Drug Market Forecast
  • Table: Generic Drug Sales Indicators 2007-2015
• OTC Medicine Market Forecast
  • Table: OTC Medicine Sales Indicators 2007-2015
• Medical Device Market Forecast
  • Table: Medical Devices Sales Indicators 2007-2015
• Pharmaceutical Trade Forecast
  • Table: Exports and Imports Indicators 2007-2015
• Other Healthcare Data Forecasts
• Key Risks to BMI's Forecast Scenario
• Competitive Landscape
• Pharmaceutical Industry
  • Table: Puerto Rico: Multinational Downscaling
• Pharmaceutical Production
• Plant Closures
• Manufacturing Quality Issues
• Recent Company Developments
• Research and Development
• Pharmaceutical Wholesale
• Pharmaceutical Retail
• Company Monitor
• Pfizer
• GlaxoSmithKline
• Merck & Co
• Abbott Laboratories
• Novartis
• Sanofi-Aventis
• Eli Lilly
• Country Snapshot: Puerto Rico Demographic Data
• Section 1: Population
  • Table: Demographic Indicators, 2005-2030
  • Table: Rural/Urban Breakdown, 2005-2030
• Section 2: Education and Healthcare
  • Table: Vital Statistics, 2005-2030
• Section 3: Labour Market and Spending Power
  • Table: Employment Indicators, 1999-2004
  • Table: Average Annual Manufacturing Wages, 2000-2012
• Glossary
• BMI Methodology
• How We Generate Our Pharmaceutical Industry Forecasts
• Pharmaceuticals Business Environment Ratings
• Risk/Reward Ratings Methodology
• Ratings Overview
  • Table: Pharmaceutical Business Environment Indicators
• Weighting
  • Table: Weighting Of Components
• Sources