Puerto Rico: A lure for life sciences, growth area for contamination control market
06/01/2003
Island has offshore advantages with comforts of home
By MARK A. DESORBO
OLD SAN JUAN, P.R.—A visitor strolling through the narrow, cobblestone streets between the colorful, colonial buildings of this historic paradise may have a hard time imagining that 16 of the top 20 drugs sold in the United States are manufactured on this Caribbean island.
Even from the white sandy beaches or high atop the mountains of the Cordillera Central, one may never realize that Puerto Rico also produces 50 percent of all defribrillators and pacemakers, including the one that keeps Vice President Dick Cheney's heart ticking timely.
Pharmaceutical and biotechnology giants like Abbott Laboratories (Abbott Park, Ill.) and Pfizer (New York City) are not the only industries booming on the island. In fact, last year, 21 electronics manufacturing companies, like Palo Alto, Calif.-based Hewlett Packard Co., expanded operations in Puerto Rico.
While the U.S colony has long been considered a hot spot for big drug makers, many supporting industries, including the supplier networks for cleanroom and contamination control products, are now taking advantage of Puerto Rico's offshore yet comfort-of-home-advantages.
James Enos, vice president and group publishing director of the CleanRooms Group, says CleanRooms, too, has positioned itself to be a catalyst in helping its customers break into what is perhaps one of the hottest and fastest-growing areas in the global contamination control marketplace.
The PennWell Corp. division continues to gear up for the launch of CleanRooms Puerto Rico 2003, a conference and exhibition focusing on contamination control and controlled environments that will be held November 19-21, at the Caribe Hilton Hotel in San Juan.
"Once again, we are expanding our business in order to help our customers do the same," Enos says. "Our customers are our number one priority, and they count on us to bring them exciting, new opportunities like this one in Puerto Rico. Explosive growth in the life sciences, increased clean manufacturing concerns, along with a highly-educated and largely bilingual workforce make it a desirable location for both exhibitors and attendees."
Enos is also quick to point out that some very well established manufacturers of contamination control technology, who also exhibit at CleanRooms' events, have been on the island for quite some time.
Filtration and purification giant, Millipore Corp. (Bedford, Mass.), has been in Puerto Rico since 1978. Its 125,000-square-foot facility in the eastern central city of Cidra employs 245 and manufactures microporous cellulose membrane to support Millipore's Membrane Technology, Life Sciences and Biopharmaceutical divisions. Millipore's Cidra facility also produces capillary cellulose membrane for diagnostic applications.
Another purification and filtration heavyweight, Pall Corp. (East Hills, N.Y.), has also had a long-standing island presence, opening a facility in the northeast coastal town of Fajardo in 1975.
While it declined to provide specifics on the facility's 10,000 square feet of cleanroom space, Pall did indicate that the area is used to produce biopharmaceuticals filters, which are flushed with high-purity water before being bagged in the controlled clean environment.
"We started manufacturing there with seven employees," says Julio Juarbe, strategic account manager for Pall Life Sciences. "We now have three buildings at this site, two of which manufacture filtration cartridges and disposable systems for small and large batch pharmaceutical processing."
At the time of this report, Pall was finalizing an aseptic processing program with the University of Puerto Rico that will provide a hands-on opportunity to learn how to pack the filtration/purification cartridges, install the devices into the process, as well as to conduct integrity testing of the device housing.
"Pall is training [students] to take what they've learned to the process scale," says Juarbe. "We are bringing them from the lab to the manufacturing environment, and providing them with initial guidelines to comply with current Good Manufacturing Practices (cGMPs) needed to scale up aseptic processes."
Juarbe, who has been with the company for 12 years, says Pall established itself in Puerto Rico with support from PRIDCO, the Puerto Rico Industrial Development Co., which works with government, industry and academia to bolster the economy by attracting big business, like pharmaceutical and biotech companies, to the island.
The proverbial feather in Puerto Rico's cap, which has allowed its pharma-biotech sector to grow 33 manufacturers strong over the last three decades, was Section 936 of the Internal Revenue Service tax code.
In 1996, the U.S. government dissolved incentives under that section, causing major concerns that Puerto Rico had now lost an edge and life science industries would then move operations to such targeted growth areas as Europe and Asia. Puerto Rico remained a strong contender, however, because Section 936 has been somewhat offset by a new set of laws that allows the island to maintain a tax rate of seven percent or less.
"What they found was that by the time 1996 rolled around, such an infrastructure had been built that it made no sense to leave the island," says Rob DeRocker, executive vice president of Development Counsellors International, a New York City-based economic development-and tourism-marketing firm.
That's why, he says, a drug maker like Abbott Labs is spending more than $350 million to build a biologics plant in Barceloneta that will house more than 170,000 square feet of cleanroom space. The new facility will create 200 jobs and allow Abbott to ramp up production of Humira, a recently approved medication for rheumatoid arthritis.
 Bedford, Mass.-based Millipore Corp.'s facility in Cidra, Puerto Rico opened in 1978. |
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In addition, Amgen (Thousand Oaks, Calif.) is investing $800 million to build a plant in Juncos, creating 600 jobs, while Eli Lilly (Indianapolis) will create 450 jobs with a $450 million facility to ramp up production of Humalog, a treatment for diabetes.
The workforce to fill those jobs is skilled and highly educated, with more than 22,000 people receiving higher education degrees. Nearly half of those degrees are earned through science and engineering programs.
Manufacturing is the largest sector of Puerto Rico's economy, with tourism making up just seven percent of the island's Gross Domestic Product (GDP). In fiscal year 2001, manufacturing generated $27.1 billion, or 40 percent of the island's $71.1 GPD, according to PRIDCO.
Nearly 132,000 islanders hold manufacturing jobs—11 percent of Puerto Rico's total employment. More than 28,000 of those jobs are provided by the pharmaceutical industry. Just under 17,000 work in electronics fabs, while more than 10,700 manufacture medical instruments.
"Having a job at a pharmaceutical or biotechnology company is something that is very prestigious for people in Puerto Rico," says William Riefkohl, executive vice president of the Puerto Rico Manufacturers Association.
The environment in which life science industries and cleanroom end-users thrive seems to differ greatly from those that silently coexist on "the mainland."
Many pharmaceutical and biotechnology professionals attribute to the "cluster" effect, a paradigm that PRIDCO strives to cultivate.
"The whole idea is to integrate academia with government and industry to promote effective communication that sustains and helps industry get to the next level," says Carlos A. Tollinche, director of scientific affairs for INDUNIV, PRIDCO's research consortium.
Harry Rodriquez, divisional vice president and general manager of Abbott Health Products (Barceloneta, Puerto Rico) agrees. Generally, he says, there is an ongoing dialogue between competing pharmaceutical and biotech companies. If a plant manager or an engineer needs advice or feedback, they have no problem calling on colleagues in the Pfizer plant across the street.
The relationship, Rodriquez adds, is the same as someone knocking on a neighbor's door to borrow a cup of sugar. In this case, drug makers are poised to share bulk chemicals if a rival should come up short.
"We collaborate with each other," Rodriquez says. "Even though we are competitors, we are all working for what I like to call Puerto Rico, Inc."