Pink Sheet is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call +44 (0) 20 3377 3183

Printed By

UsernamePublicRestriction
UsernamePublicRestriction

SCHERING, SMITHKLINE AND J&J ARE COMMITTING TO MANUFACTURING FACILITIES IN GRENADA ON CONDITION THAT ADMINISTRATION RETAINS SECTION 936 TAX INCENTIVES

Executive Summary

Schering-Plough, SmithKline Beckman, and J&J are committed to locating manufacturing facilities in the Caribbean nation of Grenada on the condition that the Reagan Administration leave intact Section 936 Puerto Rico tax incentives. In a May 3 letter to Grenadan Prime Minister Herbert Blaize, Schering Chairman Robert Luciano said that "should the President of the United States propose the retention of Section 936 in its present form in his forthcoming tax message, and should that proposal be accepted by the Congress, we at Schering-Plough have decided to invest in the establishment of a manufacturing facility in Grenada." Luciano added that "it is anticipated that our facility will complement both current and planned operations in Puerto Rico." On May 3, SmithKline Chairman Robert Dee sent similar messages to both Blaize and Puerto Rican Governor Rafael Hernandez Colon stating SmithKline's intent to establish operations in Grenada, on the condition that Section 936 is retained in its present form by the Administration. JPJ had previously made a commitment to locate a facility in Grenada. It has already begun planning the type of operation it will establish in the island, while a fourth firm -- Abbott -- is also apparently considering a commitment to establish a presence in Grenada. Through its Surgikos subsidiary, J&J would establish a pilot facility in Grenada to finish production of surgical caps. The company estimates that approximately 50-60 Grenadan employees would sew the caps from cloth initially cut by workers at an expanded facility in Puerto Rico. The Puerto Rican operation would employ approximately 15 workers. The J&J project would be undertaken as part of a plan proposed to the U.S. Treasury by Puerto Rican Governor Colon which is intended to stimulate investment in "twin plants" in Puerto Rico and other Caribbean island nations. Colon's proposal would link retention of Section 936 Puerto Rican tax incentives to economic development under the Reagan Administration's Caribbean Basin Initiative. According to background material on Section 936 from the Puerto Rican govt., "initially Puerto Rico will provide financing on favorable terms through the Government Development Bank, based on its deposits of 936 earnings, for expansion of job-creating opportunities in Puerto Rico on condition that recipients utilize their own funds to invest in supplementary manufacturing facilities in Caribbean Basin Initiative beneficiary nations." The promise of investment in other Caribbean islands -- specifically Grenada, which is symbolically important to the Reagan Administration as a result of the U.S. military intervention there in 1983 -- gives Hill supporters of the tax break for Puerto Rico an added bargaining chip to use in political debates. Capitol Hill supporters of tax incentives for the drug industry can now argue that Section 936 should be retained for foreign policy reasons. The Puerto Rican govt.'s background paper says that meetings between El Salvador President Duarte and his cabinet and the Secretary of State of Puerto Rico could lead to the establishment of a twin plant relationship between the two countries "based on new investments in Puerto Rico financed with Section 936 earnings. President Monge of Costa Rica has also expressed his strong interest in, and support for, this form of economic cooperation." In the last round of 939 debates, the drug industry argued that Puerto Rico trains executives for expansion of U.S. industry into Latin America. The twin plant proposal takes that argument one step further.

You may also be interested in...



Part D Discount Liability Coming Into Focus: CMS Releases Drug Cost Data

Newly released Medicare Part D data sheds light on the sales hit that branded pharmaceutical manufacturers will face when the coverage gap discount program gets under way in 2011

FDA Skin Infections Guidance Spurs Debate On Endpoint Relevance

FDA appears headed for a showdown with clinicians and the pharmaceutical industry over the proposed new clinical trial endpoints for acute bacterial skin and skin structure infections, the guidance's approach for justifying a non-inferiority margin and proposed changes in the types of patients that should be enrolled in trials

Shire Hopes To Sow Future Deals With $50M Venture Fund

Specialty drug maker Shire has quietly begun scouting deals with a brand-new $50 million venture fund, the latest of several in-house investment arms to launch with their parent company's pipelines, not profits, as the measure of their worth
UsernamePublicRestriction

Register

PS008297

Ask The Analyst

Please Note: You can also Click below Link for Ask the Analyst
Ask The Analyst

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel