Freudenberg quadruples med-tech footprint in Costa Rica

COYOL, Costa Rica—There is an established relationship between Costa Rica and medical technology, a trend that has existed for some time now.

Jeffersonville, Ind.-based Freudenberg Medical, a business division of Weinheim, Germany-based Freudenberg Group, was one of the first CDMOs—or contract development and manufacturing organizations—to establish itself in the Central American country, doing so with a 30,000-sq.-ft. location 12 years ago.

Now, Freudenberg is refreshing its commitment to the region with a $25 million investment in a new production facility, one that will comprise 100,000 square feet once complete.

"With this investment in a second facility in Costa Rica, we are strengthening our ability to offer our customers efficient solutions along the entire device lifecycle—including cost-effective manufacturing capabilities on a large scale," Mark Ostwald, CEO of Freudenberg Medical, told Rubber News in an email interview. "Freudenberg Medical aims to expand its market share globally with the increased capacity in Costa Rica."

The greenfield expansion is intended to meet increasing global demand for precision medical components.

Freudenberg's focus will remain on select medical device markets, specifically high-volume, minimally invasive catheters for electro-physiology, vascular and structural heart therapies.

In the initial phase of the expansion, a 50,000-sq.-ft. facility will be built, with an additional 50,000 square feet to be added over the next three years, Ostwald said.

Upon completion, the facility will quadruple Freudenberg Medical's total footprint in Costa Rica. The new facility is set to begin production early in 2025.

Employment is expected to grow from the current 300 people at the 30,000-sq.-ft. site to more than 900 over the next three years, with approximately 600 employees in the new location once both phases are complete and operational.

Ostwald said the existing facility currently serves customers of both Freudenberg Medical business units: assembly of minimally invasive catheters and specialty components.

"Our existing facility will become Freudenberg Medical's specialized Costa Rica site for primary processing technologies, including molding and extrusion of thermoplastics for medical applications, (such as) IVD test cartridges and drug delivery devices," Ostwald said. "Once the new facility becomes operational, assembly manufacturing will be transferred to the new location."

Freudenberg is offering customers the option to transfer mature medical device production programs from higher labor cost locations to Costa Rica.

"To ensure a seamless technology transfer, engineers from Costa Rica are spending two years at another Freudenberg Medical facility to learn everything about a customer program to then accompany it to Costa Rica," Ostwald said.

For new production programs that exist only as a proverbial napkin sketch, Ostwald said effective communication early in the design and development phase is crucial for successful medical product development.

"Our engineering teams support our customers with know-how across the entire value chain: from design for manufacturability, to choosing the right processes, tooling and materials to assembly, surface modifications and packaging if needed," he said. "We apply Freudenberg's core technology competencies—expertise in materials and processing—to the highly regulated medical technology market and make them available to customers and patients.

"We not only understand the technology, but also the clinical application. This allows our customers to get their products to regulatory approval and market launch—faster, reliably and with cost-efficiency."

As another benefit, the new Costa Rican facility also will offer vertically integrated production of catheters, including molding and extrusion capabilities as well as catheter-specific manufacturing processes.

Material-wise, Freudenberg Medical focuses on biocompatible silicones and thermoplastic elastomers, as well as thermoplastics and metals in hypotubes and needles.

"In addition to these raw materials, we are experts in drug and hydrophilic coatings," Ostwald said.

The facility also is being built with sustainability in mind.

Charging stations for electric vehicles will enable employees and visitors to commute emission-free, and "the planned two-story building will be barrier-free to meet the needs of people with impairments, reflecting Freudenberg Medical's dedication to creating an inclusive working environment," Ostwald said.

The facility will be powered, in part, by a photovoltaic solar array.

"The investment in this new site underlines Freudenberg Medical's confidence in Costa Rica as an integral part of our global growth strategy," said Roger Gomez, vice president and general manager of Freudenberg Medical in Costa Rica. "We are committed to diversity and inclusion (and) we offer equal opportunities to all."

Costa Rica today is much less dependent on legacy exports like fruits, sugar and coffee, thanks to its increasing prominence in medical component (as well as electronics) manufacturing.

Just last year, the life science and medical product space took over the No. 1 spot from agriculture as the nation's top export industry, at $5.2 billion and 36 percent of Costa Rica's trade percentage, according to the Costa Rican Medical Device Cluster, based in the capital of San Jose.

"The significant growth of the medical device sector in Costa Rica began with the investment of Baxter (International Inc.) in 1987, followed by other major med-tech companies over the years," Ostwald said. "Since then, Costa Rica has become a hotbed for the medical technology industry, offering a life-sciences ecosystem, a well-educated work force and a strategic geographical location."

Freudenberg Medical maintains 11 production medical technology hubs and production sites in the Americas, Europe and Asia, all with regionalization and proximity to customers in mind.

"When we established our first production facility in Costa Rica more than 12 years ago, we were one of the first global (medical technology) partners in the region," Ostwald said.

In addition to Freudenberg's expansion plans, Trelleborg Healthcare and Medical, based in Minneapolis, Minn., recently announced plans for a $21 million, 107,000-sq.-ft. greenfield facility in the Evolution Free Zone Park in Grecia.

The Evolution Free Zone Park is similar to the Coyol Free Zone in its tax incentive and abatement perks, making the cost of establishing a presence in Costa Rica minimal for the first few years.

"The Coyol industrial park is providing med-tech companies with excellent business conditions as a free-trade zone," Ostwald said, adding that the area is home to 31 life science companies, "including seven of the top 30 med-tech OEMs worldwide."

Recent investments from the plastics world has seen Tekni-Plex Inc., via its health care division, spend $8.5 million to double its extrusion capacity in Cartago.

In aggregate, these three companies—Trelleborg, Freudenberg and Tekni-Plex—are bringing about 1,000 jobs to the region.

"This is another important step toward our goal of becoming a climate-neutral company by 2045," said Tilman Krauch, chief technical officer of the Freudenberg Group. "Since the beginning of our company 175 years ago, we have taken responsibility for the communities in which we are at home, as well as for our environment and a sustainable future."

Freudenberg Group has more than 51,000 employees in 60 countries worldwide, with annual net sales of more than $12.6 billion.