Romark building $110M plant in Puerto Rico

While Puerto Rico has had its share of announced plant closings this year, it has attracted Florida-based Romark Laboratories, which will make a $110 million investment there.

The company said that it will build the facility in Manati and that it expects construction to start in January. It says it plans to have operations running in the first half of 2016. The maker of Alinia said it intends to manufacture the FDA-approved diarrhea drug there, as well as an influenza product it has under development that it hopes to launch in 2016. The facility will also house some research and development operations and is expected to have up to 200 employees when it ramps up over the next three years.

The Romark announcement came shortly after Sanofi ($SNY) said that its Merial animal health operation would buy a veterinary drug manufacturing facility in Barceloneta, Puerto Rico, from Merck Animal Health. No terms were disclosed for the deal, which Sanofi said still needs the approval of the U.S. Federal Trade Commission.

The company intends to keep the 200 employees at the facility, which it said will add expertise in chewables manufacturing technology to Merial's vet drug network. Merial has been expanding in Latin America and earlier this year said it would invest $25 million in a plant in Brazil.

Puerto Rico has been promoting itself to drugmakers with local incentives after some federal tax breaks were phased out for the island. It has had some hits and some misses. In October, Eli Lilly ($LLY) said it intended to close a plant in Guayama by the end of next year but that the 100 employees would be offered jobs at a plant 50 miles away in Carolina that has been slotted for $240 million in investments. Actavis ($ACT) is investing $48 million to revitalize facilities it acquired in the takeover of Warner Chilcott, one at which Warner Chilcott earlier had cut jobs. Actavis says the improvements will add 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.

Ivan Lugo

Ivan Lugo, a Merck general manager in Puerto Rico for 20 years, who now has his own consulting firm, says the island is still attracting significant business, $650 million in new investments announced this year. Lugo is CEO of ImaGene Pharmaceutical and executive director the not-for-profit INDUNIV Research Consortium, which promotes Puerto Rico to the life sciences industry. While he is based in Puerto Rico, he says his global practibes has allowed him to size up Puerto Rico's progress to markets around the world.

While there have been plant closings and sales, he said much of that has to do with the high productivity rates the island has achieved, second only to New Jersey, according to a recent report. "You hear about the closing of plants but people don't understand the whole story," Lugo said. "People need to see the whole strategy that comes from our development of talent, infrastructure and supply chain."

He said in 2008, Puerto Rico established its own tax incentives that are not based on how many jobs a company has, allowing drug and device makers to be mobile and productive. He said studies have shown that when the incentives are added in, the cost structure in Puerto Rico compares favorably even with places like Singapore and India. And unlike India, Puerto Rico's strength is in new drug development and production, he said.

"With Romark you have a company that is going to do development of the product and manufacturing and commercialization of new molecules and hold the patents in Puerto Rico," Lugo said.

- here's the Romark announcement
- here's the Sanofi release