Foreign-Trade Zone 7-Mayagüez, PR, Application for Subzone, Lilly del Caribe, Inc. (Pharmaceutical Manufacturing)

An application has been submitted to the Foreign-Trade Zones Board (the Board) by the Puerto Rico Industrial Development Company (PRIDCO), grantee of FTZ 7, requesting special-purpose subzone status for the pharmaceutical manufacturing and warehousing facilities of Lilly del Caribe, Inc. (Lilly) located in Carolina, Mayagüez and Guayama, Puerto Rico. The application was submitted pursuant to the provisions of the Foreign-Trade Zones Act, as amended (19 U.S.C. 81a-81u), and the regulations of the Board (15 CFR part 400). The application was filed on August 27, 2007.

The Lilly facilities consist of 3 sites on 375 acres in Puerto Rico. Proposed Site 1 (181 acres, buildings totaling 1,303,852 sq. ft, of which 433,860 sq. ft. is devoted to manufacturing) is located at 65th Infantry Road, Km 12.6, in Carolina, Puerto Rico. Proposed Site 2 (146 acres, buildings totaling 250,499 sq. ft., of which 106, 745 sq. ft. is devoted to manufacturing) is located at State Road 53, Km. 82, Jobos exit, in Guayama, Puerto Rico. Proposed Site 3 (48 acres, buildings totaling 103,816 sq. ft.) is located at No. 3080 Ave Hostos (Carr #2), in Mayagüez, Puerto Rico. The facilities in Carolina and Guayama are used by Lilly for manufacturing operations involving active pharmaceutical ingredients, while the facility in Mayagüez is used for warehousing, storage and other manufacturing support activities. The application indicates that Lilly employs approximately 1,490 employees at the sites.

Lilly has requested authority to manufacture two pharmaceutical products, Humalog (HTSUS 2937.12) and Duloxetine (HTSUS 2934.99) for the U.S. market and export. Duty rates on the finished products range from duty-free to 6.5 percent, ad valorem. Foreign components that would be used in the manufacturing process (up to 25 percent of total content) include prepared binders for foundry molds or cores (HTSUS 3824.90) and halogenated derivatives of aromatic hydrocarbons (HTSUS 2903.69), with duty rates of 5.0 and 5.5 percent, respectively.

The application also requests authority to include a broad range of inputs and finished pharmaceutical products that Lilly may produce under FTZ procedures in the future. New major activity involving these inputs/products would require review by the FTZ Board.

Zone procedures could exempt Lilly from customs duty payments on the foreign components used in export production. On domestic sales, Lilly could defer duty until the products are entered for consumption, and choose the lower duty that applies to the finished product for the foreign components used in production. The company would also realize certain logistical savings related to zone-to-zone transfers and direct delivery procedures, as well as savings on materials that become scrap/waste during manufacturing. The application indicates that FTZ-related savings would help improve Lilly's international competitiveness.

Public comment is invited from interested parties. Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at the address below. The closing period for their receipt is November 6, 2007. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period (to November 21, 2007).

A copy of the application and accompanying exhibits will be available for public inspection at each of the following locations:

U.S. Department of Commerce Export Assistance Center, Centro Internacional de Mercadeo, Tower II, Suite 702, Road 165, Guaynabo, Puerto Rico, 00968-8058.

Office of the Executive Secretary, Foreign-Trade Zones Board, U.S. Department of Commerce, Room 2111, 1401 Constitution Ave., NW., Washington, DC 20230.

For further information, contact Christopher Kemp at christopher_kemp@ita.doc.gov or (202) 482-0862.