Puerto Rico Manufacturing Proposition Analysis

Given the nature of expected moves, stakeholders believe CDMOS will be an important piece of the puzzle along with select Biopharmas and OEMs What we've heard from companies on strategy Create redundancy in Fully exit vulnerable VS. current mfg locations (e.g., China, India) supply chain to reduce risk of disruption ""Companies can mitigate risk for most products by having a US component of supply chain" - VP at large medtech OEM "It would be "expensive, time-consuming and short sighted" to move all manufacturing capacity out of China to the US - VP at large biopharma MNC "Most of our APIs are made in India; if we had to shift to completely 'made in the USA' that would be cost prohibitive" - VP at large generic biopharma Expand, or leverage underutilized capacity, VS. Build new facilities to support manufacturing in existing facilities shifts " " "I believe we will largely leverage our existing capacity for favorable cost structure" - VP at leading biopharma CDMO "If I had to decide where to invest in the US, I would look at our existing facilities first to maximize their capacity" - Former SVP Manufacturing at leading generics co What it means for Puerto Rico Prioritize Branded Cos. and OEMs that ... • . Own / make essential products for the US market Have an existing footprint in Puerto Rico Lack full value-chain manufacturing footprints or redundancy within the rest of the US; though many have at least some existing presence elsewhere in the US E.g., Not all US product made in US, or ex-US raw materials or API that could be required to move Early outreach & collaboration with CDMOs that... • Are likely already getting requests from customers on this topic may end up playing "matchmaker" . Will be able to pool demand (products/segments) across smaller companies, or those without US or PR footprint Focus on return-on-capital and margins - brownfield and cost-competitive labor more influential Can cover broad set of capabilities from final products through upstream steps - in some cases may provide API or raw materials that could be at risk 9 Copyright 2020 by Boston Consulting Group. All rights reserved.

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