Costa Rican nearshoring opens a window for the export of an additional $1.5 billion of medical products

Baxter was an early investor

Baxter, a company dedicated to the production of medical devices, settled in Costa Rica at the end of the 1980s. At that time, the payroll that existed in the country comprised thirty-five people dedicated to the manual assembly of intermediate components for final products. At that time, these items were mainly shipped to the United States, Baxter’s country of origin.

Today the complexity of Baxter’s manufacturing operations is much greater, and devices are produced for the intravenous application of fluids, chemotherapy, and parenteral nutrition.

Currently, the company has 1,700 workers in its Costa Rican nearshoring operations. This staff is distributed between the medical manufacturing plant, a shared financial services center for Latin America, and a commercial unit in the country.

Investment flows steadily into Costa Rica

“In the last five years, our investment in Costa Rica has been approximately US $35 million. Additionally, there are plant modernization strategies planned for the next eight years,” said Roberto Terán, general manager of Baxter’s Costa Rican nearshoring manufacturing operation.

The experience of this multinational company reflects the ability of Costa Rica to increase the production of medical and related precision equipment.

According to an analysis carried out by the IDB, Costa Rican nearshoring has the potential to increase exports to the US by an additional $1.5 billion each year. This can be achieved by installing new companies in the country or expanding the operations of those manufacturers already established there.

Nearshoring is a trend that promotes the location of offshore operations, mainly from the Asian continent, closer to the headquarters of US firms. Costa Rican nearshoring was strengthened due to the effects of the global coronavirus pandemic and the supply chain and container crisis.

For Mauricio Claver-Carone, president of the Inter-American Development Bank (IDB), Costa Rica also has excellent opportunities to promote the industries linked to medical products. This is evidenced by the fact that it already has large pharmaceutical companies installed in the country that include global industry brands such as Bayer and Pfizer, he stressed.

“To give an idea of the scale of the opportunity that exists, we look at product categories where Latin America and the Caribbean are already successfully exporting to the United States and where there is clear room for growth. For example, companies that are engaged in Costa Rican nearshoring could increase their exports of medical products and equipment by $1.5 billion. This figure represents an increase of 66%.

Real opportunities for more Costa Rican nearshoring

Claver-Carone stressed that Costa Rica has enormous opportunities to expand its commercial relationship with the United States.

“Costa Rica has all the capacity to attract new investments from the pharmaceutical industry. The opportunity exists thanks to the work of its investment attraction agency, Cinde, and other private sector actors,” he stressed.

Jorge Sequeira, general director of the Costa Rican Coalition of Development Initiatives (Cinde), recently pointed out that the potential of Costa Rican nearshoring is factual and verifiable. This fact can be seen with a view toward an increase in exports of medical devices. This expansion of the sale of these products overseas continued amid the pandemic over the recent period of two years.

“The reported growth is record and historic and will continue due to many factors. We have a population in the United States that is aging and requires medical attention; therefore, medical devices produced in Costa Rica will have a strong market to sell,” affirmed the director of Cinde.

Costa Rican nearshoring is also considered to be “friendshoring”

Sequeira added that the phenomenon of Costa Rican nearshoring has now become what is known as friendshoring. This is the transfer of investments and manufacturing operations to countries that share the same values as companies in the United States and Europe.

“Costa Rica, clearly in the region of the Americas, is one of those countries that is considered a friend. This is so because we share values such as democracy and human rights. This relationship has enabled us to have a powerful competitive advantage at the positioning level,” he said.

Our country currently has more than eighty foreign companies that are dedicated to the production of medical devices. Some, such as Nextern, are relatively new to Costa Rica. At the same time, others are expanding existing operations, as recently has been the case with OKAY Industries and Coloplast. The latter company opened its second plant on Costa Rican soil this year.

“The sum of all the positive variables of Costa Rican nearshoring drive the growth potential of this burgeoning industry. However, this is not something that will progress by itself. We must work very hard as a country to develop the required human resources. We need not only trained assemblers, but also supervisors, engineers, people in research and development, and other classes of managers,” stressed Sequiera.

The Deputy Minister of Foreign Trade, Paula Bogantes, commented that Costa Rica is the second-largest exporter of medical devices in Latin America. “It is a sign that medical device manufacturing companies are betting on the country and have seen good results,” she asserted.

Source: La Nación