Our View: Costa Rica taking central role in medical production

Costa Rica has come a long way from its reliance on fruits, coffee and sugar as chief exports, critical for the country's economy 30 years ago.

The country is less dependent on legacy exports today, 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 flourishing medical market hasn't gone unnoticed by rubber industry players.

Trelleborg Healthcare and Medical, based in Minneapolis, Minn., announced plans for a $21 million, 107,000-sq.-ft. greenfield facility in the Evolution Free Zone Park in Grecia.

Jeffersonville, Ind.-based Freudenberg Medical, a division of Freudenberg Group, intends to build a second, 100,000-sq.-ft. manufacturing facility in Coyol for catheter production. The project represents a $25 million investment for the German firm.

Freudenberg was one of the first non-tire rubber product companies to enter Costa Rica, building a 30,000-sq.-ft. medical part production location there about 12 years ago.

And Tekni-Plex Inc., via its health care division, is investing about $8.5 million to double its plastics extrusion capacity in Cartago.

In aggregate, these three companies are bringing about 1,000 jobs to the region.

"This is a strategic location to service customers with nearshoring production in the Americas," Linda Muroski, president of Trelleborg Healthcare and Medical, told Rubber News Feb. 26. "Many health care and medical customers have a presence in Costa Rica, so it is necessary for their medical device partners to be there as well."

A vast majority of these customers are OEs, so the volumes remain high in silicone and TPE molding.

While nearshoring and regionalization play major roles in a company's decision to establish a presence (or greater presence) in Costa Rica, the nation's fiscal incentives are a major draw, as well.

Both the Evolution Free and Coyol Free zones offer tax incentives to committing companies, allowing them to operate tax-free for several years.

The tax exemption is not negotiated by a given company; rather, it is offered by law, according to the CRMDC.

In addition, Costa Rica has invested millions in work force education—both technical and academic—over the past two decades, according to Muroski.

Today, more than 80 companies are producing health care and bio-pharma products in the country of 5 million people.

Outside of Trelleborg and Freudenberg, major medical firms such as Allergan, Boston Scientific, Cooper Medical, Hologic and Medtronic call Costa Rica home for a portion of their medical manufacturing.

As Costa Rica makes gains in economic status, the once-developing country is proving that portfolio diversification—the willingness to change tack by market or product—is good for countries and companies alike.