Costa Rica is home to 88 multinational medtech companies employing more than 32,000 people, 52% of which are women. (Photo courtesy of CINDE)

In June 2021, US-based Terumo Blood and Cell Technologies announced plans to open a medical device manufacturing facility in Costa Rica, creating 700 new jobs in the country over the next year and a half.

The global leader in blood component, therapeutic apheresis and cell therapy technologies will be producing cutting-edge medical device products used to collect and separate blood and cells to help manage and treat a range of diseases.

“We chose Costa Rica for our new manufacturing plant because it is a proven hub for the production of medical devices,” says Terumo BCT’s SVP of global manufacturing, Chris Williams. “Our customers and patients rely on us to deliver high-quality products and outstanding services. Costa Rica has the resources, talent and solid supply chain infrastructure that we need to fulfil our commitments.”

Taking medtech by storm

Terumo BCT’s announcement was just one of the latest in a series of Costa Rican success stories in this space and is an example of nearshoring priorities amplified by the effects of the pandemic.

In fact, for foreign investors considering shortening supply chains to increase productivity post-pandemic, Costa Rica’s value proposition is proving difficult to ignore.

In 2017, medical devices became the country’s top export, overtaking the agricultural sector for the first time. Today, the precision and medical equipment sector accounts for 34% of the country’s exported goods and registered a percentage change of more than 46% from 2021’s accumulative first semester data versus 2020’s.

Costa Rica is home to 12 of the top 30 global medical device manufacturing companies in 14 different subsectors, including Abbott Laboratories, Boston Scientific and Medtronic. Having successfully maintained operations following the onset of Covid-19, the country’s medical device exports grew by 8% in 2020, demonstrating an impressive level of resiliency within the sector.

Just over two decades ago, the country was home to eight medtech companies – a number that has since soared to 88 multinationals employing more than 32,000 people, 52% of which are women. Total medtech exports are currently valued at a hefty $3.9bn, a figure that is expected to grow by 17% annually to reach $5bn this year – an increase of more than $1.3bn over three years.

Costa Rica’s productivity in the medtech sector has risen by 61% since 1999, with the average output per employee climbing from $76,000 to $120,000, while the country has diversified its product offering and embraced possibilities and technologies in advanced manufacturing.

“Over the years, Costa Rica’s life sciences manufacturing has evolved from disposables in the early 2000s, to a wide variety of class I to III devices like surgical, aesthetics, optics and cardiovascular tools,” says head of investment advisory at CINDE Pilar Madrigal. “Currently, the US and Europe are the main export destinations. It is thanks to the trust of these global companies that this sector has grown exponentially in Costa Rica.”

Also, the country offers a wide range of experienced local suppliers that promote solid linkages and supply chain versatility.

High-value training

It is little wonder that a steady stream of global medtech organisations are choosing to put down roots and expand services in Costa Rica. In June, global industrial technology leader TE Connectivity announced plans to hire more employees at its medical manufacturing plants in San José, a move indicative of the company’s wider growth strategy.

The expansion seemed like an obvious choice. “Several of our clients already have operations of significant magnitude in the country, which allows us to work more closely with each of them and establish a more agile and rapid supply chain in response to business needs,” says Enrique Saborio, general manager of TE Connectivity. “From a talent point of view, Costa Rica offers a solid line of well-prepared human resources who can adapt quickly to the needs of the industry, in the professional, technical and operational fields.”

Total medtech exports from Costa Rica are currently valued at $3.9bn, a figure that is expected to grow by 17% annually to reach $5bn this year. (Photo courtesy of CINDE)

Medical device manufacturing giant Boston Scientific has also been eager to take advantage of the country’s skilled workforce. In 2004, the US-based organisation set up its first manufacturing plant in La Aurora de Heredia producing biopsy forceps in the endoscopy division. Five years later, this was joined by a second plant in Coyol de Alajuela, and today a range of medical devices are produced at both sites in fields including urology, cardiology and neuromodulation.

“From the beginning of our journey in Costa Rica, we found great talent,” reflects VP of Boston Scientific Heredia Greg Harris. “When we started our operations in the country, we had only three collaborators. Over the years we have seen how the talent has grown rapidly throughout the country, which makes us very pleased to have such amazing talent available for us to grow as a company.”

Indeed, Boston Scientific now employs more than 5,300 people in Costa Rica. The organisation recently won the international Shingo Prize, an award that recognises operational excellence and world-class manufacturing. In line with the country’s promotion of sustainable practices, Boston Scientific’s manufacturing operations have been certified carbon neutral since 2016, while its building in El Coyol de Alajuela was the first in Costa Rica to be certified LEED Silver – the most widely used green building rating system – by the US Green Building Council.

The establishment of innovative organisations like this has created a specialised workforce with the expertise to meet the needs of the country’s rapidly evolving medtech sector. In collaboration with universities and technical institutions, CINDE has developed more than 40 projects for this purpose, such as a master’s degree in engineering in medical devices with TEC University and tailor-made medical devices training programmes with the National Training Institute.

Costa Rica also boasts a steady flow of science, technology, engineering and mathematics (STEM) graduates. According to CINDE, based on data from the National Council of University Rectors, the country will have 15,500 STEM graduates by 2023, 1,500 more than in 2019.

When Covid-19 struck, the industry was quick to adapt. “During the pandemic we have found an ecosystem of collaboration throughout the country, looking towards the same goal: avoiding deaths and maintaining the livelihood of Costa Ricans through quality jobs,” reflects Harris.

“Within days of the first lockdown, manufacturing companies identified all critical on-site jobs which continued to operate under the strictest sanitary protocols, prioritising the well-being of the people,” recalls Madrigal. “Assurance of this business continuity with a clear rule of law and openness to trade demonstrated multinationals’ trust in Costa Rica as their strategic partner for nearshoring.”

The country certainly ticks a lot of boxes in this regard. Costa Rica’s geographical proximity to the US, Canada and Europe enables straightforward collaboration between teams, while its free trade agreements give preferential access to two-thirds of the world’s GDP. On top of this, it is well located to facilitate exports, with ports on both the Pacific and Caribbean coasts.

Costa Rica boasts a steady flow of science, technology, engineering and mathematics graduates, and is forecast to have 15,500 such graduates by 2023. (Photo by CINDE)

Given the industry’s success during a challenging year, it is not surprising that Madrigal is confident about what lies ahead. “Our outlook is that Costa Rica’s medtech sector will experience continuous growth and reaffirm itself as a serious contender within the FDI smart manufacturing sector,” he says.

“We project that medical device exports will reach $5bn this year, but also that expansion will be reflected by more R&D projects, Costa Rica’s increasing sophistication in medical device manufacturing and more participation in the pharma and health and well-being sectors.”

Following years of transformational growth, Costa Rica is ready to play a leading role in defining the future of health.