Why Puerto Rico Could Reclaim Its Status as a Pharmaceutical Powerhouse: The Hidden Opportunity Behind Reshoring

Manufacturing drives Puerto Rico’s economy: Manufacturing represents around 43–47% of Puerto Rico’s gross domestic product (GDP) and supports hundreds of thousands of jobs. In 2020 the sector delivered over $50 billion in output and provided 78,000 direct jobs plus 143,000 indirect jobs, making it far more important than tourism ^[1]. The island continues to host 12 of the world’s leading pharmaceutical companies and seven of the top ten medical‑device manufacturers ^[2].
A once‑mighty industry undone by tax changes: For decades, Puerto Rico’s pharmaceutical sector thrived under Section 936 of the U.S. tax code, which exempted profits earned on the island from federal taxes. Steve Forbes notes that Section 936 attracted major drugmakers, creating good jobs and making Puerto Rico a leading source of America’s essential medicines ^[3]. The repeal of Section 936 in 2006 precipitated plant closures and economic decline ^[4].
Reshoring momentum: The COVID‑19 pandemic and geopolitical tensions exposed U.S. reliance on overseas drug production. Policymakers, including Gov. Jenniffer González, now view Puerto Rico’s “Made in USA” status as key for supply‑chain security. She formed a Reshoring Task Force and calls for incentives to bring pharmaceutical manufacturing back to the island ^[5]. U.S. tariff policies have already spurred at least seven manufacturers to expand on the island, committing over $220 million and creating 1,600 jobs ^[6].
Generous tax incentives and a skilled workforce: Puerto Rico’s Act 60 offers a corporate tax rate as low as 4%, no U.S. federal tax on eligible income, 100% exemptions on capital gains, and R&D credits up to 50% ^[7]. The island produces more than 20,000 STEM graduates annually and offers a bilingual, U.S.‑trained workforce ^[8]. Wages and operational costs are 30–40% lower than on the mainland ^[9].
Major investment projects: Pharmaceutical and medical device firms are making big bets. Amgen announced a $650 million expansion of its biologics facility in Juncos that will create 750 construction and manufacturing jobs, with overall plans to invest $926.7 million and create 2,950 jobs ^[10]. Millicent Manufacturing is relaunching a former Teva plant in Fajardo with a $45.5 million investment and is the first new pharma operation there in 15 years ^[11]. Solar manufacturer Solx is building Puerto Rico’s first module factory, capable of producing 700–800 MW annually and employing 200 people ^[12].
Challenges remain: Puerto Rico faces stiff competition from U.S. states and foreign hubs with similar operational costs ^[13]. Frequent power outages and high electricity costs threaten reliability ^[14], and there are concerns about aging demographics and shortages of skilled workers ^[15]. Nonetheless, leaders argue that investments in renewable energy and workforce development can address these issues.

Puerto Rico’s pharmaceutical roots and the Section 936 story

For much of the late 20th century, Puerto Rico was an unlikely but critical component of America’s medicine chest. The island’s status as a U.S. territory provided access to federal intellectual‑property protections, Food and Drug Administration (FDA) oversight and the “Made in USA” label—all while offering costs and tax advantages more akin to an emerging market. The most potent driver was Section 936, enacted in 1976, which exempted profits earned by U.S. corporations in Puerto Rico from federal income taxes. Pharmaceutical giants set up dozens of plants, creating tens of thousands of jobs and spurring spin‑off industries in packaging, logistics and medical devices. According to Steve Forbes, Section 936 attracted companies and fueled innovation and prosperity, enabling Puerto Rico to produce a significant share of America’s most essential medicines ^[16].

Yet this golden era unraveled when Congress phased out Section 936 in 2006. The decision, driven by concerns over lost federal revenue, proved disastrous for the island. Factories closed and middle‑class jobs disappeared, while the United States became dangerously dependent on overseas supply chains, many concentrated in China ^[17]. The economic decline aggravated Puerto Rico’s debt crisis and prompted massive migration to the mainland. Many residents still view the repeal of Section 936 as the root of the island’s economic woes.

Why reshoring matters today

A matter of national security

The COVID‑19 pandemic and geopolitical frictions with China have exposed vulnerabilities in America’s medical supply chain. In 2020, shortages of active pharmaceutical ingredients (APIs) and personal protective equipment highlighted the risks of relying on far‑flung factories. Puerto Rico offers a ready solution: it can produce drugs and devices within U.S. jurisdiction without being subject to tariffs, and its plants are already integrated into the FDA regulatory system. Governor Jenniffer González’s administration has established a Reshoring Task Force to coordinate incentives and streamline approvals ^[18]. The island’s ability to claim the “Made in USA” label gives it a unique advantage when U.S. policy makers impose tariffs on imports ^[19].

Trump‑era tariffs have spurred early wins

Following former President Donald Trump’s renewed tariff policies in 2025, at least seven manufacturers expanded operations in Puerto Rico. They pledged more than $220 million in investments and created 1,600 jobs, according to government figures ^[20]. Companies are choosing Puerto Rico because they can avoid import duties while still benefiting from the island’s cost and tax advantages. Governor González said the island’s “Made in USA” designation is a decisive factor ^[21].

New incentives under Act 60

Puerto Rico’s Incentives Code (Act 60), which took effect in 2020, is the successor to Section 936. It grants eligible manufacturers a 4% corporate tax rate, no federal income tax on Puerto Rico–sourced profits, exemptions on property and municipal taxes, 100% exemption on dividends from Puerto Rico activities, and generous research‑and‑development (R&D) tax credits up to 50% ^[22]. The law aims to attract not just pharmaceutical and medical device firms but also technology, aerospace and renewable‑energy companies.

Workforce and infrastructure advantages

Invest Puerto Rico (InvestPR), the island’s economic development agency, touts Puerto Rico’s bilingual, U.S.‑trained workforce as a key selling point. About 20,000 STEM graduates enter the labor market annually and wages are 30–40% lower than on the U.S. mainland ^[23]. The island also has more than 70 FDA‑approved manufacturing sites, 14 of the world’s top 20 pharmaceutical companies and 70+ FDA‑approved medical‑device plants ^[24]. Its logistics infrastructure includes seaports and the Luis Muñoz Marín International Airport, which holds the CEIV Pharma certification for cold‑chain logistics ^[25]. Recent investment has brought 5G labs, 0G IoT networks and more than 30 internet providers, underscoring the island’s technological readiness ^[26].

Recent investments and success stories

Amgen’s massive expansion

Biotech giant Amgen has operated in Puerto Rico for over four decades. In October 2025 the company announced a $650 million expansion of its Juncos facility, which manufactures biologics including key oncology and cardiovascular medicines. The project will create 750 high‑paying construction and manufacturing jobs and leverage advanced technologies such as automation and digital twins ^[27]. Amgen’s vice‑president Thomas Seewoester noted that about 70% of Amgen’s medicines are produced in Puerto Rico and the Juncos plant supplies more than 60 countries ^[28]. Governor González said the broader expansion plan totals $926.7 million and will create 2,950 jobs ^[29], underscoring Puerto Rico’s ability to secure mega‑projects.

New entrants: Millicent, Terumo and Brightforce

Puerto Rico is also seeing green shoots of manufacturing diversification. In 2025 Terumo Puerto Rico opened a $45 million plant in Caguas to produce the Angio‑Seal Vascular Closure Device, adding 180 jobs to its workforce ^[30]. The facility received over $6 million in government incentives and federal training funds ^[31]. Millicent Manufacturing PR, a women’s health company, is relaunching a former Teva Pharmaceuticals plant in Fajardo with a $45.5 million investment; it will create 73 jobs initially and is the first new pharmaceutical operation there in 15 years ^[32]. These projects highlight the island’s ability to attract both multinationals and specialized biotech firms.

Solar and clean‑energy manufacturing

Reshoring extends beyond pharmaceuticals. Startup Solx is building Puerto Rico’s first solar module factory in Aguadilla, repurposing a former Hewlett‑Packard facility. The plant will produce 700–800 MW of solar panels annually and create over 200 jobs, with more than 200 additional construction jobs during build‑out ^[33]. Co‑founder James Holmes cited Puerto Rico’s skilled workforce and strategic location as key factors ^[34]. The company received grants covering equipment costs and job‑creation incentives ^[35], signaling government commitment to energy diversification.

PRiMEX roundtable and expert perspectives

In October 2025 the Puerto Rico Manufacturing Extension (PRiMEX) convened a roundtable titled “Manufacturing 2025: Challenges and Opportunities of Reshoring for Puerto Rico.” Executive director Ramón Vega Alejandro said the goal was to unite expert voices and develop strategies that balance private‑sector and government efforts ^[36]. He stressed that Puerto Rico’s ability to produce goods under the “Made in USA” label—amplified by Trump’s tariff policies—gives it a competitive edge ^[37]. Panelists included Ella Woger‑Nieves, CEO of InvestPR; Rafael Vélez Domínguez, president of the Puerto Rico Industrial Association (PRMA); economist José Joaquín Villamil; and strategic advisor Félix Negrón ^[38].

Woger‑Nieves argued that the recent surge of interest arises from the United States’ push for tariffs and the search for secure supply chains ^[39]. She noted that InvestPR organizes “environmental tests” to bring foreign investors to Puerto Rico so they can see the ecosystem firsthand ^[40]. Vélez Domínguez highlighted the island’s existing base, stating that 12 of the world’s leading pharmaceutical sources and seven of the top ten medical‑device companies already operate there ^[41]. However, he acknowledged that operational costs now mirror those of many U.S. states, meaning Puerto Rico must compete on speed, talent and reliability ^[42].

Challenges: power reliability, workforce, competition

Despite its advantages, Puerto Rico faces significant headwinds. Frequent power outages and high electricity costs remain the top complaint from manufacturers; the island experienced 218 blackout events in 2025, each lasting roughly 20 hours ^[43]. Workforce challenges also loom. Although Puerto Rico graduates more than 20,000 students in key fields annually, only 10% graduate in engineering and 4% in computer sciences, creating gaps for advanced manufacturing ^[44]. Migration and an aging population further strain the talent pool. Additionally, Puerto Rico competes with U.S. states like Texas and North Carolina, which offer comparable costs and strong innovation ecosystems ^[45].

Looking ahead: policy recommendations and outlook

Restoring or enhancing incentives

Steve Forbes argues that reinstating Section 936‑like tax advantages would deliver an immediate boost to Puerto Rico’s pharmaceutical sector. He cautions that tariffs and mandates have limited impact, while “carrots, not sticks” in the form of pro‑growth tax policy encourage companies to invest, hire and innovate ^[46]. Forbes contends that restoring such incentives would not constitute corporate welfare but would provide conditions for mutual prosperity ^[47]. Reestablishing tax breaks could attract supply‑chain partners and contract manufacturers to the island, creating an ecosystem effect.

Investing in energy resilience and renewables

Fixing the island’s energy woes is critical. The government has partnered with private firms to modernize the grid, but progress has been slow. Projects like Solx’s solar factory not only diversify the industrial base but could help develop a local solar supply chain that, when paired with battery storage, reduces reliance on the troubled grid. Encouraging microgrids and renewable installations at industrial parks could further support manufacturing reliability. Incentives for energy efficiency and on‑site generation should be expanded, particularly for pharmaceutical facilities requiring uninterrupted power.

Scaling workforce development and attracting talent back

To address skill shortages, Puerto Rico must align university curricula with industry needs—particularly in biomedical engineering, robotics and computer science. Apprenticeship programs, like those supported by federal training funds for Terumo employees ^[48], should be scaled. Programs to lure diaspora talent back to the island, perhaps through relocation incentives or remote‑work infrastructure, could help replenish the workforce and combat demographic decline.

Leveraging clusters and innovation hubs

Puerto Rico already hosts the Medical Science Campus, Mayagüez University of Puerto Rico, and the Molecular Sciences Research Center, offering platforms for research and technology transfer. By fostering collaboration between academia and industry, the island can incubate startups and attract contract research organizations. Clusters that integrate pharmaceuticals, medical devices, biotechnology and renewable energy could create cross‑sector synergies, boosting productivity and innovation.

Conclusion: a defining opportunity

Puerto Rico stands at a pivotal moment. The island’s pharmaceutical dominance was built on a combination of tax incentives, skilled labor and U.S. legal protections. The repeal of Section 936 eroded that advantage, but the shifting geopolitical landscape and renewed interest in domestic manufacturing present a rare chance to rebuild. The island’s Act 60 incentives, existing manufacturing base, bilingual workforce and logistic advantages make it one of the most promising reshoring destinations in the United States. Yet realizing this potential requires confronting power‑grid issues, expanding the talent pipeline and ensuring that incentives remain competitive.

The enthusiastic response to new investments—from Amgen’s billion‑dollar expansion to the first solar module factory—signals growing confidence in Puerto Rico’s future. With smart policy, strategic investment and collaboration between government and industry, Puerto Rico can again become a pharmaceutical powerhouse and a beacon of modern manufacturing. The stakes are high not just for the island’s economy but for America’s national security and public health.

Puerto Rico Was Once A Pharmaceutical Powerhouse—It Can Become One Again

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