Despite GATT, US Drug Firms Flock To Foreign Trade Zones

29 September 1996

Approximately 40 US pharmaceutical majors are said to be "thriving" in foreign trade zones, which are to be found in 48 US states and in Puerto Rico, according to a report in the US Journal of Commerce.

The trade initiatives which first brought these manufacturers into the FTZs will soon be lost, with the General Agreement on Tariffs and Trade's 1995 Uruguay Round's undertaking to eventually remove tariffs on all finished pharmaceutical products. However, the manufacturers are becoming aware of the new advantages presented by the zones as a result of new Food and Drug Administration rules permitting their use for the manufacture of products which are not yet approved for sale in the USA.

"Win-Win" For Industry Marshall Miller, principal of law firm Miller & Co, says Bristol-Myers Squibb was "the first to recognize the competitive advantages to be gained from manufacturing drugs" in the zones, and almost all the other industry leaders have now joined it. The new use of the zones presents a win-win situation for the industry, he says, as manufacturers are able to export the products to countries where they are permitted for sale, and also to get US distribution underway speedily when the FDA approves them for US sale. Moreover, he says, overseas sales of the products will be boosted once they are FDA-approved, given that the agency appears to be happier approving drug products which are manufactured in the USA.

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