Infrastructure sucks relatively to almost everywhere else in the US (better than other territories, probably better than parts of Alaska). Legal system is really bad (bad hybrid of old Spanish law, 1950s American law, and nearly a century of corruption). High costs (inherent to being on an island) combined with regulatory/etc. burden raising costs.
It makes sense for completely vertically integrated businesses which are highly profitable (some software, crypto, pharma production), but it's not a place you'd put most businesses. compared to Florida/Texas (low tax low cost), a lot of other parts of the US (low cost moderate tax), or CA/NY/etc. (high talent pool, high tax).
It can be done, it's just harder, and it's probably not worth saving 20% long-term capital gains (if successful) this way vs. a higher change of a successful outcome at all otherwise. But for some specific kinds of businesses it works great.
It still is relatively better to do pharma in PR than many other industries in PR, since it has an established workforce and a bunch of facilities, and there are PR-specific tax breaks under IRC 933 (just no longer 936). There's established pharma, and sometimes line extensions; not sure if anyone would put a new pharma startup here.
Microsoft lost their tax case so they're GTFO after >10 years, though; that probably also discourages similar IP-embodied manufacturing in pharma.
It makes sense for completely vertically integrated businesses which are highly profitable (some software, crypto, pharma production), but it's not a place you'd put most businesses. compared to Florida/Texas (low tax low cost), a lot of other parts of the US (low cost moderate tax), or CA/NY/etc. (high talent pool, high tax).
It can be done, it's just harder, and it's probably not worth saving 20% long-term capital gains (if successful) this way vs. a higher change of a successful outcome at all otherwise. But for some specific kinds of businesses it works great.