Okay. Most pundits are pointing to the patent cliff (currently roiling all of the multinational pharma concerns) as the main culprit for the closings of facilities in Puerto Rico. That may not be the whole story though. No, I’d certainly also point to a change in the Puerto Rico tax code, called Law 154 (it greatly blunted the nearly half-century old tax incentives for pharma to manufacture its most-labor intensive components on the island). We’ve been over this here at length, in 2010, but pharma has been a driving force for robust employment on the island since the mid-1960s. Coincidentally, that is also when so-called tax haven status — for manufacturing — became fully operational — from the point of view of U.S. multinationals, especially high margin multinationals. . . like pharma.
Now, half a century later, there is a vast, deep, well-trained labor force on the island. And post Law 154, that labor force has fewer and fewer places — to ply its various trades. In short, a more gradual ramp up of taxes on multinationals might have been a wiser choice here, by the Puerto Rican legislature, in my opinion.
Here is but one version of this continuing “under-“employment story — of a very well-trained, highly motivated and able workforce, on the island — via InPharma — do go read it all:
The Pharma Giant has three Puerto Rican manufacturing plants but late last week Pfizer announced operations at its active product ingredients (APIs) and solid dosage products in Barceloneta are to be phased out by the end of 2017. . . .
The [Pfizer] Barceloneta facility manufactures 13 APIs – Amlodipine, Azithromycin, Celecoxib, Doxazosin, Exemestane, Fluconazole, Linezolid, Nifedipine, Parecoxib, Sertraline, Tolterodine, Varenicline, Latanoprost – as well as several branded drugs, including Cardura, Diflucan, Glucotrol, Minipress, Norvasc, Procardia, Tikosyn, Xanax/Halcion, Zithromax and Zoloft. . . .
I am amenable to the argument that Puerto Rico needed to begin to move toward a more “market-based” system of taxation of companies whose headquarters were not on the island (for its longer term economic prosperity to continue), but Law 154’s “off the cliff taxation” may have been “too much, too soon“. And that is extremely unfortunate — for the people who’ve previously made their careers on the relatively high-skill, high paying jobs — primarily in pharma (but also in electronics) there.