Panama's Strategic Advantages for the Pharmaceutical Industry

Panama's unique positioning and efforts in the pharmaceutical industry have garnered recognition and support from prominent international organizations, fostering a conducive environment for growth and innovation. Its strategic location, established infrastructure, and business-friendly policies make it an ideal destination for pharmaceutical companies looking for expansion and investment opportunities in Latin America.

The country’s initiative to expand its pharmaceutical sector is an ambitious endeavor, requiring active participation and investment from international stakeholders. For companies interested in drug discovery and research, Panama offers a biodiverse environment with immense untapped potential. The presence of institutions like the Institute for Advanced Scientific Research and High-Technology Services (INDICASAT) provides a foundation for groundbreaking work in drug discovery, making Panama an enticing prospect for firms engaged in pharmaceutical research and development.

Furthermore, the Panamanian government’s commitment to creating a hospitable business environment cannot be overstated. The implementation of Special Economic Zones and investment regimes, like MSM (Manufacturing Service for Multinational Companies, also called EMMA in Spanish), provide substantial incentives and support to pharmaceutical companies, facilitating their operations and ensuring they can navigate the market efficiently and effectively.

These strategic efforts are supplemented by Panama's role as a humanitarian hub, which has been crucial during global crises, most notably the COVID-19 pandemic.

The Regional Logistics Centre for Humanitarian Assistance in Panama has been instrumental in distributing aid and medical supplies to countries in need, showcasing Panama's logistical capabilities and commitment to global health and humanitarian efforts. Commonly referred to as the Humanitarian Hub, it is a cutting-edge facility aimed at streamlining and centralizing humanitarian aid and disaster relief efforts in the Latin American region. Situated at the Panama Pacifico International Airport, it has direct access to the runway, allowing for rapid deployment of aid. The hub is one of only 5 such centers, and hosts multiple humanitarian agencies, including the United Nations Humanitarian Response Depot, managed by the World Food Programme, the International Federation of the Red Cross, and the Spanish Agency for International Development Cooperation.

For pharmaceutical firms considering international expansion, understanding, and leveraging Panama’s strategic advantages is crucial. Engaging with local institutions, participating in the country’s investment regimes, and contributing to its growing pharmaceutical ecosystem will be key to successful business ventures in the region.

On December 7, 2021, UNIDO's action plan underscored Panama as a significant pharmaceutical activity center in Central America. Hosting close to 300 pharmaceutical companies and distributing about 5,000 products, the nation is not just a participant but a leader in the industry. The Panamanian government is not resting on its laurels; instead, it's actively working to expand this sector further, envisioning the country as a pivotal pharmaceutical hub for the entire region.

With a diverse pharmaceutical market boasting 299 active importers and manufacturers as of the end of 2019, there's potential for more. UNIDO has identified areas in Panama ripe for expansion and investment, including Value-Added Distribution, Drug Testing, and Local Drug Production.

Moreover, Panama's rich biodiversity is a treasure trove for drug research and discovery. The INDICASAT's Center of Excellence in Drug Discovery is dedicated to exploring new molecules derived from Panama's marine biodiversity. These molecules are potential game-changers for treating various diseases, including cancer, tropical diseases, and cardiovascular and neurological disorders. An ECLAC study further pointed out Panama's potential as a strategic distribution center for vaccines.

In Geographically strategic

Panama stands at the crossroads of North and South America. This prime location facilitates efficient pharmaceutical distribution to both continents, reducing transport time and costs. The Panama Canal, a marvel of logistics, further enhances its position, enabling swift transit of goods between the Atlantic and Pacific Oceans, fortifying Panama’s standing as a strategic pharmaceutical distribution hub.

Political and economic stability in Panama creates a magnetic attraction for foreign investors. Through the implementation of policies fostering investment, offering tax incentives, and ensuring intellectual property protection, Panama has successfully established a business environment that is not only favorable but also welcoming to pharmaceutical companies.

Ambassador Carmen Gisela Vergara, General Administrator of the Export and Investment Promotion Authority of Panama (PROPANAMA), highlighted that the country is already the host for the regional Humanitarian Hub, providing aid to countries affected by natural disasters. During the COVID-19 pandemic, this hub played a crucial role, supporting not just vaccine distribution but also the dissemination of essential medical supplies.

Education serves as the cornerstone for creating a skilled workforce that meets the pharmaceutical industry's demands. The City of Knowledge, a renowned institution in Panama, actively promotes collaboration between universities, scientific research centers, businesses, and international organizations. This collaboration extends beyond theory, fostering a practical environment for knowledge transfer, sustainable development, and entrepreneurial growth. SENACYT, located within the City of Knowledge, plays a pivotal role in coordinating national policies and activities in science, technology, and innovation.

Panama has demonstrated innovation in its approach to attract foreign investment in key sectors, including pharmaceuticals. The country's investment regimes and Special Economic Zones (SEZs), such as Panama Pacifico and the City of Knowledge, offer compelling benefits to pharmaceutical companies contemplating operations in Panama. These zones not only provide tax incentives but also nurture innovation, research, and value-added business activities. The streamlined import of raw materials and export of pharmaceutical products make Panama an efficient choice for pharmaceutical companies.

Multinational Headquarters Program:

Panama's Multinational Headquarters (MHQ) program has long been a magnet for international companies. Under this program, companies can engage in various administrative activities, such as accounting, finance, procurement, and operations support for their subsidiaries. The MHQ program provides migratory, labor, and tax benefits, making Panama an attractive destination for multinational corporations. Over 180 multinational companies have chosen Panama as their headquarters due to the advantages offered by this program.

Manufacturing Services for Multinational Companies (MSM):

Building on the success of the MHQ regime, Panama introduced the Manufacturing Services for Multinational Companies (MSM) program. This program extends benefits to companies engaged in manufacturing, assembly, maintenance, testing, and more, spanning the entire lifecycle of products and equipment. Companies in the MSM program enjoy a 5% income tax rate and exemptions from various other taxes, including import duties. Additionally, they can hire high and middle-level managers and allow dependents of foreign workers to work in Panama. This program also integrates training programs for local labor, contributing to skill development.

Panama's strategic position is a significant draw for generic drug manufacturers and others in the pharmaceutical industry. The country's network of free trade agreements and diplomatic relations facilitates seamless trade with numerous nations, simplifying the export process for generic drugs.

In conclusion, with its strategic geographic location, political and economic stability, a robust educational ecosystem, and favorable investment and regulatory frameworks, Panama stands out as a promising pharmaceutical hub. The country is not just ready for investment; it is inviting it, offering opportunities for those willing to explore Panama as the next pharmaceutical hub in the region. With open arms, Panama is ready for investors looking to tap into the potential of Latin America's next pharmaceutical hub.

For more insights and details, prospective investors can refer to the resources provided by the PROPANAMA Authority.