AbbVie is one of the biggest biopharma beneficiaries of U.S. tax reform. Besides spending the extra savings on new projects, shareholder returns and pension funds, the company has also decided to give a substantial amount to support charities in Puerto Rico.
The drugmaker, which has an extensive manufacturing footprint on the island, made an initial $4 million donation in the aftermath of a series of disasters in Puerto Rico, Florida and Texas last year. Abbvie is now extending that with a $100 million gift to two nonprofit organizations to help the U.S. territory improve healthcare and housing infrastructure.
Direct Relief and Habitat for Humanity International will each get $50 million. While Habitat works on rebuilding disaster-resilient new houses, Direct Relief will support more than 60 community health centers over a three-year period. It will provide those facilities with alternative energy sources, increase access to a reliable supply of medicines, and establish telemedicine programs.
AbbVie has operated on the island for nearly 50 years and as of the end of last year had 1,200 workers in Puerto Rico. It has a manufacturing site in Jayuya, and in 2015 invested $30 million in two others located in Barceloneta. All of those facilities run on independent power generation and were not affected by the hurricane.
“We deeply appreciate the hard work of our employees, and all the people of Puerto Rico, and we hope today's announcement will deepen and strengthen our long relationship,” said CEO Richard Gonzalez in a statement.
The Illinois-headquartered company is slated to gain big thanks to U.S. tax reform. Leerink analyst Geoffrey Porges previously noted that the company’s 9% tax rate guidance for 2018 is significantly lower than the 18.9% rate in 2017. As a result—and after a strong first quarter—AbbVie has dialed up its earnings per share to somewhere between $7.66 and $7.76, representing a growth of 38% compared to 2017.
Besides investing $2.5 billion in capital within the U.S. over the next five years, the company has said it plans to use the additional cash to make charitable donations of about $350 million to select nonprofit organizations. That contribution will “[support] initiatives such as the Puerto Rico rebuilding efforts, children's healthcare access programs, and charities that support our local community needs,” said Gonzalez on the fourth-quarter earnings call in January.
AbbVie isn’t the only company that has contributed to Puerto Rico’s recovery efforts. Right after the hurricane hit, Amgen, which has a manufacturing facility in Juncos, pledged $3 million for urgent relief needs and committed an additional $2 million for longer-term rebuilding efforts. Bristol-Myers Squibb, which also has operations there, donated about $1.76 million to a number of partners.