The biotech companies see great opportunity in developing new drugs in Cuba, which boasts a sophisticated drug research operation after years of isolation from the U.S. pharmaceutical market.
New collaborations between Cuban scientists and U.S. biotech firms could result in novel drug development, Robert Coughlin, CEO of the Massachusetts Biotechnology Council (MBC), said on Oct. 17. The MBC has more than 1,000 members including pharmaceutical giants Abbott Laboratories, Eli Lilly & Co., and Merck & Co.
“We need to tap into the science there and turn it into meaningful drugs,” Coughlin said during an event in Boston about business opportunities in Cuba, hosted by the New England Council, a regional business association. “The investment is what’s missing,” Coughlin said.
License First
In 2015, President Barack Obama reinstated diplomatic relations with Cuba and loosened the U.S. ban on travel and doing business there. Despite November 2017 actions by the Trump administration to reinstate some restrictions, it can be legal, with care, for U.S. companies to set up shop in Cuba, Joshua Hill, a member with Eckert Seamans Cherin & Mellott, LLC, said.
Companies must first receive a license from the Commerce Department’s Bureau of Industry and Security before they do business in Cuba, Hill said.
“You must make sure you are not engaging in a banned activity,” he added.
Investors Shy
But investors are slow to jump in, because the U.S. could slam the door shut on Cuba at any time.
Last month, Roswell Park Comprehensive Cancer Center in Buffalo, N.Y., took the leap and signed on with the Cuban Center for Molecular Immunology to work together on new immunology drugs. The arrangement involves clinical trials of a Cuban vaccine aimed at lung cancer and the development of three other immunotherapy treatments.
A number of Massachusetts biotech companies are in conversations with Cuba about collaborations, said Coughlin, who declined to name the firms.
Biotech and pharmaceutical companies are interested in collaborating with Cuba on drug development, clinical trials, and licensing some of the 900-plus drugs Cuba has already developed, Coughlin said. The drugs are available around the world except in the U.S.
“Some of the drugs are much better than what we have here,” Coughlin said.
Cuban Medicines
One Cuban drug is highly effective against diabetic foot ulcers. The drug is not available in the U.S. because of the U.S. embargo.
“We do 80,000 transplants a year that we wouldn’t have to do if we had access to this drug,” Coughlin said. “That is so wrong.”
“We have to get the government to change this,” Coughlin said, referring to a full lifting of bans on U.S. trade with Cuba.
It would take an act of Congress to lift or change the embargo against Cuba, Rep. Jim McGovern (D), said. If the November elections flip the House to the Democrats, McGovern said he expects to chair the Rules Committee, which decides whether a bill can move to the House floor and how it will be considered.
If so, “I will move heaven and Earth to allow a bill through” to lift the embargo, McGovern told Bloomberg Law Oct. 17 in an interview.
Drug Manufacturing
The Associated Industries of Massachusetts has held a number of seminars about doing business in Cuba, and there is great interest in manufacturing and selling drugs there, Kristen Rupert, a senior vice president at the AIM, a business group, said.
“They have 11 million people, 90 miles from our shore. Hello! That’s an incredible opportunity,” Rupert said.
“It very well may turn out to be a Caribbean tiger,” Jose Buscaglia, a professor of Global Studies and Cuba expert at Northeastern University, told the group.
Cuba Wants Business
Cuba also has relaxed its restrictions on foreign dollars and has moved rapidly toward a market economy. The island nation is open for business and wants to work with more U.S. companies, Ambassador H.E. José Ramón Cabanas Rodriguez, Cuba’s ambassador to the U.S., told Bloomberg Law in an interview.
Cuba has created a special business development zone with tax incentives for foreign companies in Mariel Bay, a deep port 28 miles from Havana.
Incentives include 50-year contracts and no payment of labor taxes or local taxes. The labor tax elsewhere in Cuba is 20 percent. Companies in the special zone also pay no profits tax for 10 years. After 10 years, a 12 percent profits tax kicks in, instead of the typical 30 percent profits tax elsewhere in Cuba. Equipment brought into the special zone is duty free.
Companies still must pay a 14 percent social security tax.
There is a limited amount of space in the zone, Rodriguez said. “The U.S. is a natural partner. But if companies don’t come from the U.S., they will come from somewhere else,” he said.
A Glimpse of the Beach
Coughlin visited Cuba in 2017 with McGovern and biotech company representatives and scientists. He was eager to go. “I like old cars, beaches, and rum, and I thought, this is going to be a great trip.”
It was a great trip, but it was definitely a work trip. “In 48 hours, we had 14 meetings. I didn’t get to touch a beach,” Coughlin said.
Selected information in the "Pharmaceutical Science Update" is compiled from summaries and articles from Bloomberg BNA.