The pharmaceutical industry faced a challenging situation in September 2017 with the significant weather disruption incurred by their manufacturing plants when the island of Puerto Rico was hit by damaging Hurricane Maria. 

How big of a deal was it for the industry? For many years, favorable tax laws made it cost beneficial for pharmaceutical companies to locate manufacturing plants in Puerto Rico. In fact, almost 75% of Puerto Rico's exports in 2016 were pharmaceutical products according to the Bureau of Labor Statistics. Shortly after Maria hit, the U.S. Food & Drug Administration identified a list of more than 40 high-priority pharmaceutical drugs where short term 

distribution disruption could be an issue (Peters, 2017). That's a huge hit to the industry which it likely had not planned for and would have to incur significant additional costs to remedy. Bye-bye to some of those cost savings. 

If the CEO of a newer pharmaceutical company was in the process of looking to outsource the manufacturing of a medication currently produced at a plant in the U.S. to Puerto Rico when Maria hit, should (s)he immediately stops his/her consideration of the plans because of the hurricane even if it was financially favorable to outsource there?

Vetting each qualitative and quantitative matter takes time and resources, but it is necessary to make sure the company makes sound business decisions from both perspectives.

Answer rating: 100% (QA)

The CEO of the newer pharmaceutical company should carefully evaluate the situation and consider various factors before making a decision Here are som... View the full answer