Puerto Rico Builds a Foundation for Biopharmaceuticals

As the pharmaceutical majors re-evaluate their manufacturing networks in consideration of cost-containment, shifting product development, and capacity needs, the manufacturing hubs that house that manufacturing also must adapt. Such is the case with Puerto Rico. Long a mainstay of pharmaceutical manufacturing, particularly solid-dosage manufacturing, Puerto Rico is focusing on not only providing the infrastructure and business support to retain current manufacturing, but is also intensifying its efforts to attract biopharmaceutical investment, both biomanufacturing and research and development (R&D).

Looking at the numbers

Puerto Rico is a significant site for pharmaceutical manufacturing. The commonwealth currently has more than 50 bio/pharmaceutical manufacturing facilities. Of these facilities, forty-five are for solid-dosage manufacturing, nine are facilities for manufacturing active pharmaceutical ingredients (APIs), and three are facilities for sterile manufacturing, according to data from the Puerto Rico Industrial Development Company (PRIDCO), the economic development arm of the commonwealth of Puerto Rico. The island also has five biopharmaceutical facilities, which includes biopharmaceutical manufacturing facilities of Amgen (Thousand Oaks, CA), Eli Lilly (Indianapolis, IN), Ortho Biotech, a subsidiary of Johnson & Johnson ( J&J, New Brunswick, NJ), Abbott Laboratories (Abbott Park, IL), and Becton Dickson (Miami, FL).

Manufacturing accounts for approximately 40% of Puerto Rico's gross domestic product of $93 billion, and life-science operations (pharmaceutical, biopharmaceuticals, and medical-device), represent 70% of the commonwealth's manufacturing activities, according to data from PRIDCO. Puerto Rico ranks itself on a global basis as the third largest biologics producer, the fifth largest pharmaceutical manufacturer, and the seventh largest producer of medical devices.

Adapting to change

One challenge that Puerto Rico faces, along with other pharmaceutical manufacturing hubs, is the rationalization of manufacturing capacity by the pharmaceutical industry due to cost-containment efforts and shifting product demand and mix. As a case in point, Pfizer (New York) announced in May its plans for restructuring its manufacturing network following its $68-billion acquisition of Wyeth (Madison, NJ) in 2009. According to a Pfizer press release, the company plans to discontinue manufacturing operations at its solid-dosage manufacturing facility in Caguas, Puerto Rico, and plans to phase out solid-dosage manufacturing at its facility in Guayama, Puerto Rico. The Guayama site will be expanded to include the company's consumer healthcare operations. Pfizer will also exit a sterile manufacturing facility in Carolina, Puerto Rico. The company will retain solid-dosage manufacturing in Barceloneta, Puerto Rico. The moves will be phased in over time as part of global and larger restructuring efforts by Pfizer. The timing of specific exits will depend upon the complexity of operations, the amount of time required for product transfers, and other business requirements.

"The pharmaceutical industry as a whole is undergoing change, but we think Puerto Rico has a strong and solid base in which to adapt to those changes," says Javier Vázquez, executive director of PRIDCO. That strategy involves attracting new pharmaceutical investment to the island, intensifying efforts to build its base in biopharmaceutical development (including clinical research) and biomanufacturing, and supporting efforts to facilitate the location and investment of suppliers and supply-chain companies to the pharmaceutical industry in Puerto Rico.

Transitioning assets. One approach taken by PRIDCO is to assist companies in the transition of existing assets through business incentives and other support services. A recent gain was the acquisition by the generic-drug manufacturer Blu Pharmaceuticals (Florence, KY) of a 145,000-ft² FDA-approved facility in Dorado, which was previously owned by the generic-drug company Biovail (Mississauga, Ontario, Canada). Biovail announced in May 2008 that it would be phasing out its solid-dosage manufacturing facility in Dorado. Blu Pharmaceuticals' new facility in Dorado, Blu Caribe, opened earlier this year and is the first new pharmaceutical factory to open in Puerto Rico since 2007, when the generic-drug manufacturer Teva Pharmaceuticals (Jerusalem) acquired an existing manufacturing facility. Blu Pharmaceuticals plans to invest $60 million in the facility during the next three years. Plans call for Blu Caribe to manufacture seven drugs in the Puerto Rico facility, including ciprofloxacin, which is the antidote to anthrax. The company also has plans to establish an R&D operation within the Dorado facility, which has a pilot plant that will allow the company to run small batches of product under development.

R&D investment. Puerto Rico is also building its position in biopharmaceutical development, which includes providing the infrastructure and related support network for incubator companies as part of a development plan for Science City, which would be part of the Puerto Rico Knowledge-Base Economy Cluster in San Juan. The plan for Science City involves the addition of mixed-used development, which includes commercial laboratory space, residential housing, and infrastructure improvements to attract emerging pharmaceutical and research-based companies. The goal of the project is to create educational and research campuses with commercial laboratories for science-based research, including drug R&D such as cancer research, as well as to provide a platform for incubator companies and related research companies, according to the Puerto Rico Science, Technology and Research Trust, a nonprofit focused on increasing research and the commercialization of technology in Puerto Rico. The trust, which was founded in 2004, receives support from the government of Puerto Rico, which included the transfer of approximately 70 acres for Science City.

The Knowledge-Based Economy Cluster Corridor will be made of more than 2000 acres and include a mix of public and private private properties, including several medical and research facilities. These include: the University of Puerto Rico (UPR) at Rio Piedras; the University of Puerto Rico Medical Sciences campus; the San Juan Medical Center; the University of Puerto Rico Botanical Gardens; the Puerto Rico Cancer Center, a partnership between UPR and the MD Anderson Cancer Center (Houston), which involves clinical research; the Biomolecular Sciences Laboratory; and Science City. The Biomolecular Sciences Laboratory, which will conduct molecular research, including life-science molecule research, is currently under construction and is scheduled to be completed later this year.

Biopharmaceutical manufacturing. Puerto Rico is also seeking to strengthen its biopharmaceutical manufacturing base. Since 2003, companies have invested approximately $4 billion in biomanufacturing assets, according to PRIDCO's Vázquez. In 2008, with funding from PRIDCO, UPR at Mayaguez, and the US Department of Commerce, a Bioprocess Training and Development Center opened in Mayaguez. The facility provides local companies with training facilities and technical support. It includes bioprocess research laboratories, microbial and mammalian cell-culture suites, purification capabilities, and bioanalytical and biochemical characterization laboratories.

Building the supply chain. Puerto Rico is also seeking to diversify its life-science base by attracting suppliers and companies involved in the pharmaceutical supply chain. "We are also focusing on the pharmaceutical supply chain by responding to pharmaceutical companies to source locally or for near offshore outsourcing," says Vázquez. "As part of that effort, we will look to incubate new companies from the island as well as bring in supply-chain companies," he says. In 2009, UPS, through its Healthcare Logistics business, opened a new 150,000-ft² FDA-regulated facility in San Juan. The facility provides validated warehousing, distribution, and sampling facilities and allows for the expansion for cold-chain storage. The facility, which is part of 26 facilities in UPS's global healthcare logistics operations, serves as a strategic distribution point for the Americas region, including the United States, Central America, South America, and the Caribbean, explains Juan Colón, healthcare logistics manager for UPS.

Sharing current and future goals

The efforts being made by PRIDCO to diversify its manufacturing base is shared by the Pharmaceutical Industry Association of Puerto Rico (PIA-PR). PIA-PR consists of 18 research-based multinational pharmaceutical and biotechnology companies with manufacturing operations in Puerto Rico. PIA-PR includes representation from Abbott, Amgen, Bristol-Myers Squibb (New York), Eli Lilly, J&J, GlaxoSmithKline (London), Merck Sharp & Dohme, part of Merck & Co. (Whitehouse Station, NJ), Novartis (Basel, Switzerland), and Pfizer.

Listen to the podcast with Javier Vazquez, executive director of the Puerto Rico Industrial Development Company, the economic development arm of Puerto Rico about the region's pharmaceutical manufacturing sector.