Lack of energy certainty leaves pharmaceutical sector behind

Although he recognized progress in strengthening energy infrastructure, the issue of production continues to concern Puerto Rico’s pharmaceutical sector, which could affect the sector’s competitiveness on a global scale.

According to Iván Roman, Advisor to the Board of Directors of the Puerto Rico Pharmaceutical Industry Association (PIA, in English)The industry is not certain that the island has the infrastructure capable of meeting its energy demand, which has forced the region to spend million-dollar cogeneration systems.

,Forcing this industry, or any industry in Puerto Rico, to produce its own energy is a lossBecause when we think of energy production we think of residential production, but when we talk about companies of this magnitude we are talking about companies that are involved in cogeneration systems. invests $50 million, $100 million, and “Every dollar that industry invests in co-production is a dollar that cannot be invested in manufacturing biopharmaceuticals,” Roman said.

Last September, Negosios reported that fed up with interruptions in electrical service, dozens of companies on the island, especially in the industrial sector, have chosen to become energy “independent”, installing renewable energy systems or replacing fossils with natural gas. produce.

The number of corporate or industrial consumers in Puerto Rico has grown so much that together they can generate 6% of the electricity demand on the island.

According to PIA data, In Puerto Rico, pharmaceutical products are produced for approximately 130 countries and production is said to represent more than 70% of the territory’s total exports to the United States.

Román explained that Puerto Rico stands out for the production of small molecule drugs, such as tablets and capsules, as well as larger molecules, which would be biologic products.

The pharmaceutical sector represents over 30% of Puerto Rico’s gross domestic product (GDP) and directly employs over 75,000 people.

for its part, President of Puerto Rico Industrial Associationeric santiagohighlighted that progress has been made with respect to energy infrastructure, but this issue remains one of the main challenges, along with the lack of available talent.

“Significant steps have been taken to improve energy supply, quality and costs, but the reality is that Puerto Rico still has much room for improvement. “We’re going in the right direction, but we definitely have to improve.”Santiago said.

However, for William Hughes, Jr., principal of the law firm Porzio Bromberg & Newman, LLC, the energy issue is being addressed by both the government and LUMA Energy.

,Power issue has been fixed and resolved, “You have a commitment from the United States government of between $13,000 million and $15,000 million to rebuild the electrical infrastructure and provide renewable energy,” Hughes told El Nuevo Día.

The challenges facing the sector were the topic of discussion at the Puerto Rico Manufacturing Summit, an event held this year at the La Concha Hotel in Condado.

On my part, Under Secretary to Department of Economic Development and Commerce (DDEC), Humberto Mercaderacknowledged that the energy issue remains a hurdle for the sector. He highlighted the contrary, Distribution of approximately $50 million in public funds to encourage the energy transition in manufacturing and maintain its competitiveness,

“There are challenges that, although we cannot control, still exist and we have to prioritize them. Energy (as a challenge) is 100%, I think it’s one of those problems that you want to solve tomorrow, but it takes longer,” Mercader said.

While energy costs for the industrial sector in other jurisdictions range between six and eight cents per kilowatt hour (kWh). In Puerto Rico it is between 25 and 30 cents kWhNot including the proposed increase for the restructuring of Electric Power Authority (PREPA) debt, the report was detailed by Jennifer Gonzalez, Resident Commissioner in Washington, who appeared as a speaker at the event.

On average, across all commercial and industrial categories, the suggested new increase resulting from the so-called legacy fee in the PREPA Adjustment Plan (PDA-AEE) is approximately 12.51%According to business calculations after the Fiscal Oversight Board presented its most recent adjustment proposal.

Summit participants said that despite the challenges, the industry remains competitive in the United States compared to other jurisdictions, largely due to government incentives.

According to the principal of Porzio Law Firm, The island’s manufacturing sector is in a privileged positionFor which he advised the government to strengthen the dedicated infrastructure for this sector so that it can retain and attract more companies.

,In terms of competitiveness, Puerto Rico is in a better position than the rest of the countryJust because of the tax incentives, its location and the infrastructure,” Hughes said in a separate conversation with this newspaper.

“I think that Puerto Rico is a gem in terms of its manufacturing situation“, he insisted.

Following the expiration of various patents for drugs such as Humira, Opdivo, Lines.

One of the strategies Hughes mentioned is to require manufacturers interested in selling their products in the United States to set up operations in Puerto Rico.

“They’re not going to accept it (first class) as a condition, but what can be done is to create the economic environment for it, to incentivize them,” Hughes said.

However, Nick Uhleke, Principal, Todd Strategy Group -a company specializing in federal government matters-, stressed that it does not know whether the government is willing to force companies to operate on the island as a solution to the expiration of patents, so opted to create tax incentives,

“There has to be a level of work done between local government and the United States government to identify whether new tax incentives can be created,” Uhleke said when asked by Business.

Uhleke added, “Puerto Rico also has other incentives that make it a great place to live, so I believe that, with stronger tax incentives, manufacturing will be brought back from around the world.”

Meanwhile, Roman, advisor to the PIA board of directors, stressed that pharmaceutical companies that find themselves in a patent expiration scenario should adopt a strategy of maintaining communication with their research units to patent the next product.

Román stressed, “Puerto Rico remains an excellent location for the manufacturing of pharmaceutical products by multinational companies, because we have the experience, we have the talent and we have a series of incentives that make it a real option “

So far, 12 of the world’s top 20 pharmaceutical companiesSuch as Eli Lilly, Johnson & Johnson, AbbVie, among others, they work on the island,

Last year, pharmaceutical company Merck announced that, in December 2025, they would be closing their plant in Puerto Rico and the reasons given included the expiration of patents on the drugs they produce on the island.