Puerto Rico's drug production sector has had an eventful few years, with investments by Eli Lilly ($LLY), Bristol-Myers Squibb ($BMY) and others being offset by cutbacks at Merck ($MRK) and Pfizer ($PFE). Now the island can add another line to its list of positive events: Actavis ($ACT) is investing $48 million to revitalize assets it acquired in the takeover of Warner Chilcott.
The investment will create 300 jobs over the next three years, at the end of which Actavis will have added a solid dosage manufacturing and packaging facility at its Manati site and expanded its hormone plant at Fajardo. Both sites were part of Actavis' $8.5 billion takeover of Warner Chilcott. In the years before the 2013 acquisition, Warner Chilcott cutback its operations at Manati, converting the manufacturing and packaging site into a distribution center. More than 70% of the 119-person workforce lost their jobs in the process.
Actavis' plans will cause the headcount to rise again, with the company expecting to employ 700 people on the island when the expansions are completed. Governor Alejandro García Padilla chalked up the investment up as a vindication of his efforts to actively promote the incentives the island can offer to manufacturers. Other regions have suffered cutbacks in the wake of Actavis' acquisitions of Warner Chilcott and Watson Pharmaceuticals. Actavis sold 7 plants in Western Europe to Aurobindo in April and has also dropped capacity in India, China and North America.
Puerto Rico appears to be one of the winners from the deal, with fresh investments being made in two sites that had uncertain futures. Manati was of declining importance to Warner Chilcott and the Fajardo plant had quality problems that resulted in the FDA sending a warning letter in 2012. After taking steps to fix the problems, Warner Chilcott received a close-out letter last June.