By TBY | Costa Rica | Feb 03, 2017
Over the past two decades, the medical devices sector has experienced incredible dynamism in Costa Rica, growing to represent 23% of the country’s total exports in 2015. Medical device activity […]
Over the past two decades, the medical devices sector has experienced incredible dynamism in Costa Rica, growing to represent 23% of the country’s total exports in 2015. Medical device activity began in Costa Rica back in 1987 when the American firm Baxter Healthcare first set up shop. Since then, the industry has only been evolving and growing in size and complexity, gaining a positive reputation that has encouraged more firms to start producing in the country.
With a cluster of 68 companies divided between OEM’s and suppliers, Costa Rica is home to six of the 20 largest medical device companies in the world. The country’s strategy to drive innovation and become a regional actor in the global medical devices industry has been stimulated primarily by large corporations’ export-oriented strategies, which established operations in the country to take advantage of competitive labor and favorable trade and investment regimes. Today, the sector plays a key role in Costa Rica’s economy, accounting for 4% of GDP.
Costa Rica’s medical devices production has grown significantly, with a compound annual growth rate (CAGR) of 24% since 1998. Nowadays, the life sciences cluster in Costa Rica consists of around 40 multinational companies, including Boston Scientific and Hospira, which have recently upgraded both their manufacturing processes and the products they export. The production lines have become increasingly sophisticated and cover a wide range of market segments, including drug delivery systems, cardiovascular and orthopedic devices. On the other hand, local firms made their contribution by mainly participating in packaging functions.
In the last decade, exports of medical equipment have grown by almost 280% and were rapidly moving toward becoming Costa Rica’s first industrial export good in 2015, accounting for USD2.2 billion. Moreover, employment in the industry is 13 times higher than in 2000, and the number of companies has increased nine times over. These figures illustrate the government’s decision in 2012 to declare the investigation, development and production of Medical and Biotech Devices in the public and national interest.
In this sense, the government has worked to foster an ideal ecosystem for expanding Costa Rica’s lead in the sector and ensuring there is a sound supplier base that offers solutions in many areas. Fast track immigration procedures, online customs expedited with transparency, and one of the most attractive tax incentives in Latin America are some of the additional stimulus for multinationals. In addition, several industrial free zone parks located throughout the country offer robust infrastructure in which to operate. Moreover, hosting the Latin American headquarters of the Food & Drug Administration (FDA) facilitates cooperation with regulatory authorities, industry, and academia.
Private organizations like the Costa Rica Investment Promotion Agency (CINDE) are also working to promote the country as a medical device hub. Over the last three years, CINDE has been organizing the Life Sciences Forum, an exhibition that gathered more than 450 players in the sector in 2016.
In order to continue to support growth and make a significant impact on the local population, Costa Rica is moving toward product development by strengthening linkages between multinationals and suppliers. As innovation requires a high level of education, another priority must be to invest more in human capital with an eye toward improving the quality of its engineering graduates, increasing the number of PhDs, and encouraging business graduates to become the workforce required for upgrading into higher-value segments of the development chain. In addition, the quality of scientific research done by over 3,800 researchers in 32 institutions gives Costa Rica room to enhance its presence in the global life sciences industry and attract even more medical device companies to invest in the country.