On September 26, Amgen announced a $650 million expansion in its biologics manufacturing facility in Juncos, Puerto Rico. The investment is expected to create roughly 750 jobs, including construction roles and new highly skilled manufacturing jobs.
Amgen has had a factory in Juncos since 1993. The company’s presence began with a single building and 30 workers. By 2022, the facility had grown to 30 buildings and thousands of employees.
Puerto Rico has long been a pharmaceutical powerhouse of the United States, exporting more medications than any state. The industry has been a source of jobs in Puerto Rico, although the number of jobs has not reflected the generosity of federal tax credits. The level of manufacturing growth in Puerto Rico has also stagnated in past years consistent with nationwide trends.
Manufacturing vs. manufacturing jobs
Nearly half of Puerto Rico’s GDP is attributed to manufacturing, but only 8% of employment is in that sector. This is unusual; for example, manufacturing accounts for about 11% of the U.S. GDP, and about 11% of jobs in the states. That’s normal.
In Puerto Rico, largely as a result of Section 936 and other tax deals, much of the profit claimed for manufacturing companies in Puerto Rico is illusory. Based on transfer payments, these profits are counted as originating in Puerto Rico for tax reasons, but they don’t line up with the number of workers at the locations in question.
Pharmaceutical companies saved $3.08 in taxes for every dollar they spent in Puerto Rico when Section 936 was in force, according to a 1987 U.S. Treasury Department study and reports by the Government Accountability Office (GAO). On average, each employee of the industry represented a loss of $81,483 in U.S. tax revenue, while the average wage per employee was just $26,471 per year. The benefits to Puerto Rico were essentially fictional, as confirmed by a Senate report on the subject.
Amgen
Amgen, makers of prescription drugs for conditions including osteoporosis, leukemia, and asthma, has faced scrutiny from Congress for its participation in the tax practices created by Section 936 of the U.S. Internal Revenue Code. However, instead of leaving the Island after the end of Section 936, as some drug companies did, Amgen stayed and expanded.
The reduction in pharmaceutical companies’ presence in Puerto Rico was connected with a wave of drug patent expirations. When an expensive drug loses its patent, other companies can make the same drug in a biosimilar form and sell it more cheaply, reducing profits significantly for the original manufacturer. Amgen is working in Puerto Rico on a range of biosimilar drugs.
The biosimilar factory in Juncos employs more than 2,500 people, and the planned expansion will bring another 750 jobs.
Puerto Rico: Part of the U.S. supply chain
“This expansion underscores Amgen’s commitment to U.S. biomanufacturing and to strengthening the resilience of our global supply chain,” said Robert A. Bradway, chairman and chief executive officer at Amgen. “By growing our capacity to deliver innovative medicines with cutting edge technology in our manufacturing plants, we will not only better serve patients but also create high-quality jobs that reinforce America’s leadership in biotechnology.”
“Amgen’s multimillion-dollar expansion reflects a bond of mutual loyalty: Amgen’s sustained investment and Puerto Rico’s skilled, resilient workforce reinforcing each other over time,” said Puerto Rico Governor Jenniffer González Colón. “This new expansion not only strengthens U.S. supply chain security through reshoring, it also opens new horizons for our people as we build an innovation ecosystem that positions Puerto Rico as the strongest biopharmaceutical hub in the United States.”
“Puerto Rico boasts more than 60 years of expertise and excellence in the biopharmaceutical sector, supported by highly skilled talent and world-class infrastructure,” said Sebastián Negrón Reichard, Puerto Rico Secretary of the Department of Economic Development and Commerce. “This investment by Amgen is a testament to how committed we are to advancing a competitive and innovative ecosystem that allows global companies to grow and prosper in Puerto Rico.”
The effects of manufacturing on local economies
While an office employing a few people and claiming large profits for their work does little for the economy of the community that surrounds it, a large factory employing thousands of people brings prosperity to the town where it is located. Workers spend their paychecks locally. The company that employs many workers has local expenses, too, unlike companies that wash profits through with transfer payments.
Amgen, like most manufacturing companies, also has a history of providing support for the local community through grants and charitable work, as well as offering individual support for staff members in the areas of education, transportation, and healthcare. Amgen has provided consultation, money, and equipment for the Biotechnology Learning Center at the University of Puerto Rico at Mayagüez, for example. The Amgen Foundation provided significant support following Hurricane Maria. The company has also made major commitments to sustainability.
