The Health Equipment Industry in Costa Rica Prospers
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Contact the Central American Group to explore the foreign investment option in Costa Rica and to establish nearshore manufacturing operations in the Green Park Free Zone.
Costa Rica’s medical technology exports are proliferating, attracting new investments from companies seeking to enter the health equipment industry. The medical equipment and supplies industry in Costa Rica continues to shine in terms of exports and attracting foreign direct investment. However, these companies face the challenge of constantly reinventing themselves, thanks to the global transformation, where the Internet of Things, health, automation, and new materials will set the trend in the coming years.
Impressive Export Growth
According to a recent report by the Costa Rican Investment Promotion Agency (CINDE), 2023 closed with a growth of 15.5% in exports of goods from the health equipment industry in Costa Rica, that is, US$2.5 billion more than in 2022, reaching US$18.2 billion. The precision and medical equipment sector continues to lead Costa Rica’s exports with a 42% share (US$7.6 billion) and a growth of 28% compared to the previous year, and the pharmaceutical chemical sector with a 13% annual increase.
Ecosystem for Life Sciences and the Health Equipment Industry in Costa Rica
Costa Rica hosts an ecosystem for the next stage of life sciences, with more than 70 multinationals in the technology and medical devices industry. “Costa Rica has proven experience in the life sciences sector. “This leads us to continue strengthening the sector and welcome companies, which will put Costa Rica on the world map of medical device manufacturing and thereby meet the growing demand for these products, hand in hand with Costa Rican talent,” says Marianela Urgellés, general director of the Costa Rican Coalition of Development Initiatives (CINDE).
New Investments and Expansions
The health equipment industry in Costa Rica is experiencing a wave of new investments and expansions. In recent months, Inari Medical arrived in the country with an initial investment of US$15 million; Linde invested more than US$15 million in the expansion of its plant in the Propark Industrial Park; Freudenberg Medical began the construction of its second operations center with an investment of US$25 million and aims to expand its workforce to 900 employees, among other cases.
Strategic Tax Incentives
Costa Rica has established itself as a prominent hub for the health equipment industry, attracting numerous international companies through a combination of strategic tax incentives and other benefits. One of the central pillars of this strategy is the country’s Free Trade Zone (FTZ) regime, which offers significant tax advantages to qualifying companies. Under the FTZ regime, companies benefit from a 100% exemption on income taxes for the first eight years of operation, followed by a 50% exemption for the subsequent four years. Additionally, firms are exempt from import duties on raw materials, components, and capital goods, significantly reducing the cost of setting up and maintaining operations.
Additional Fiscal Benefits
Furthermore, the FTZ regime provides exemptions from the Value Added Tax (VAT) and municipal taxes, creating a highly favorable fiscal environment. These tax incentives are designed to reduce operational costs and enhance company profitability, making Costa Rica an attractive destination for investment in the health equipment sector.
Skilled Workforce and Strong IP Protection
Beyond tax incentives, Costa Rica offers other substantial benefits that support the health equipment industry. The country boasts a highly educated and skilled workforce, particularly in fields relevant to medical device manufacturing and healthcare services. This is bolstered by strong government, academia, and industry collaboration, ensuring the workforce has the necessary skills and knowledge. Costa Rica also has a robust intellectual property protection regime, which is critical for companies in the health equipment industry that rely heavily on innovation and proprietary technologies.
Logistical Advantages and Infrastructure
The country’s strategic location in Central America provides logistical advantages, with easy access to North and South American markets. Costa Rica has invested significantly in developing its infrastructure, including modern airports, ports, and road networks, to facilitate efficient transport and distribution. Additionally, the government offers various grants and funding opportunities for research and development, encouraging innovation and technological advancement within the industry.
Support from CINDE
Moreover, the Costa Rican Investment Promotion Agency (CINDE) supports foreign companies by providing comprehensive assistance throughout the investment process. CINDE offers site selection, regulatory guidance, and connections with local suppliers and service providers. This level of support helps companies to navigate the local business environment effectively and maximizes their chances of success.
The health equipment industry in Costa Rica is thriving, with rapid growth in medical technology exports and substantial foreign direct investment. In 2023, the industry saw a 15.5% increase in exports, totaling $18.2 billion, driven by the precision and medical equipment sector. Costa Rica’s success is underpinned by strategic tax incentives, mainly through its Free Trade Zone (FTZ) regime, which offers significant exemptions on income taxes, import duties, VAT, and municipal taxes. These incentives reduce operational costs and enhance profitability, making the country an attractive investment destination. Additionally, Costa Rica benefits from a skilled workforce, robust intellectual property protections, and a strategic location with well-developed infrastructure. Through agencies like CINDE, Costa Rica provides extensive support to foreign companies, including site selection and regulatory guidance, fostering a conducive environment for business growth. As a result, more than 70 multinational companies operate in Costa Rica, with recent investments and expansions from firms like Inari Medical, Linde, and Freudenberg Medical. Costa Rica’s ecosystem continues to attract new ventures, positioning it as a global leader in medical device manufacturing and meeting the growing demand for health equipment.
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