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Costa Rica: Med tech giant of the Americas



Costa Rica

With a population of just above five million people, Costa Rica is an unusual suspect for a consolidated health tech hub.

Yet the country boasts many hallmarks of an innovation powerhouse, including a high education spending budget, Free Trade Zones offering attractive tax incentives and a proven track record of more than 360 multinational companies established in the country, including 24 Fortune 100 companies.

Carolina Sánchez leads life sciences operations at CINDE, the Costa Rican Investment Promotion Agency, which is a private, non-political and non-profit organisation whose mission is to assist international companies in setting up their operations in Costa Rica.

Medical Devices account for 95 per cent of the Life Sciences Sector companies CINDE works with, representing a truly booming market.

“Our value proposition is based on three main pillars: people, planet and prosperity,” Sánchez tells Health Tech World.

“People’ refers to our talent base.

“Since our army was abolished in 1948, all the resources which were once used for this activity go to education.” This amounts to more than 7 per cent of the country’s GDP.

“We also have robust academic alliances. When a new customer or industry comes to Costa Rica and requires specific skills, we can work with them alongside academic institutions to develop a customised approach to suit their needs.”

Costa Rica is also a beacon for sustainability and the adoption and achievement of Social Development Goals (SDGs) as the world turns towards more eco-conscious practices.

The country’s national electric grid is made from 99 per cent clean and renewable sources, mostly based on hydro power, but also wind and even geothermal sources.

Additionally, in 2016, immediately following COP21, Costa Rica became the first nation to sign a national pact for the advancement of the SDGs.

The country has already put in place a National Decarbonisation Plan for 2050 as well.

Costa Rica also boasts its ‘prosperity’ pillar, where companies from several industries not only find a well preserved natural ecosystem, but can also profit from a technology-enabled ecosystem.

This has proven to be the ideal environment for crosswise collaboration, where manufacturing, knowledge-intensive services and MedTech leaders come together to create patient-centred solutions.

Although Costa Rica has historically been known for traditional exports such as coffee, pineapples and bananas, since 2016, its number one export product has been medical devices.

Last year, the export of medical goods amounted to $5.2 billion, an increase of 24 per cent from the previous year.

Moreover, the country has successfully shifted to exporting high value-added services at a rate that is twice the OECD member average.

This shift began around the 1980s, when Costa Rica began prioritising high value-added exports.

Initially, the country saw an influx of electronics companies investing there to manufacture components for the booming mobile phone sector.

“But it really changed when Intel began operating here in 1997,” Sánchez says.

“That’s when we really started developing this specialised pool of talent and began attracting MedTech leaders like Hologic and Pfizer.”

By 2003, Costa Rica boasted 11 MedTech companies, with ‘mega projects’ of more than 100 employees and more than $10 million investment.

Names like Abbott, Philips and Cardinal Health were helping to establish Costa Rica as an up-and-coming health tech cluster.

Today, the country is home to 14 of the world’s top 100 MedTech companies, including Boston Scientific, Edwards, Smith & Nephew and The Cooper Companies, just to name a few.

These 14 leaders are among a total of 92 medical devices companies already established in the country.

Many of these names are looking to capitalise on the country’s strategic location.

Its time zone is ideal for doing business with US partners in particular, given a flight time from Costa Rica to New York is comparable with that of a US coast-to-coast trip.

Additionally, the country serves as an ideal point for global exports, given its 15 free trade agreements, which gives access to two-thirds of the world’s GDP, putting countries such as Canada, China, Singapore and South Korea within easy reach.

Manufacturers operating in Costa Rica are now developing even more complex devices, Sánchez says, with much of value chain operating within its shores.

“Sometimes they bring a pilot programme here to test a particular process. And then suddenly, you have a full chain of processes, from new product development all the way to distribution.

“That’s a model that we’re seeing now, especially in those companies that are in a mature phase and have been operating in Costa Rica for a while.

“In Costa Rica you can find the right suppliers, service providers, real estate solutions and most importantly, you can find the talent and you can rely on the country and the academia to develop that talent.

“You can find everyone from very specialised employees to assemblers and CNC machine operators. All the talent is here.”

The COVID-19 pandemic necessitated a boom in health innovation, helping to ease the strain of overworked and understaffed health systems. And behind the scenes in Costa Rica, manufacturing continued at pace.

There was no business disruption for any of the companies operating in the country, even those related to manufacturing, as companies were able to quickly put in place strategies to continue operating while administrative staff adopted work from home schemes.

As a result, Costa Rica’s exports were the least volatile in the Americas during this period, and the third least volatile on a global scale, according to UNCTAD’s 2021 Global Trade Update.

Companies like Microvention and Boston Scientific shifted a significant portion of their production to the country throughout 2020 and 2021, mainly due to the availability of talent.

That experience has helped cement Costa Rica as a stable alternative to disrupted markets like Europe and Asia, Sánchez says.

“We saw a lot of companies that were already operating here shifting production lines, because we never closed, not even for a single day.

“Companies operated normally, even during the generalised shutdowns we saw worldwide.”

“Actually, 2020 was a record year for the country in terms of the quantity of FDI projects that we were able to attract. That applies to new projects as well as reinvestments. Then 2021 built on that success.”

In the years ahead, Sánchez predicts that Costa Rica will incubate more and more health startups across areas like dental and cardiology.

Eight of the top 10 manufacturers of clear aligners already operate in the country.

“I personally anticipate a lot of growth in products that combine medical devices and pharmaceuticals,” Sánchez says.

“I also see a growth in diagnostics, which is booming market all over the world because of Covid and the need for diagnostic equipment and rapid tests.

“Costa Rica is at the forefront of the MedTech industry and we still have plenty of room to grow here.”

“We are eager to host more medical related operations in the country.”

This is an excerpt from our Special Report – Global Health Tech Clusters

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