President Oscar Arias has cut countless ribbons and made cameos at innumerable inaugurations. But Tuesday was a first.
“I have no doubt… that of the many businesses around the country that I’ve inaugurated, none manufactures a product that not only brings happiness to women, but especially to us, the men,” a smiling Arias said as he wrapped up his speech at the inauguration of the medical product manufacturer Allergan’s new plant in Heredia, north of San José.
After his speech, which drew laughs from a select audience of about 50, Arias slipped on a plastic head cover and toured the sterile white plant where workers dressed in white lab coats, head covers and gloves dipped female breast molds into liquid silicon and dried them into shells that they later filled with silicon gel and saline for export.
Allergan, which claims to be the fastest growing California-based medical product manufacturer, joins nearly two dozen companies in Costa Rica that have turned medical products into the country’s second biggest export behind microprocessors and related components.
“6,000 Costa Ricans have found good, stable jobs with good pay, good labor conditions and training opportunities in the medical devices sector,” said Edna Camacho, Costa Rican Investment Promotion Agency (CINDE) director.
In the past decade, the number of businesses producing and exporting medical equipment and products has nearly quintupled, having attracted nearly a half billion dollars in direct foreign investment. Last year, the medical products sector exported $600 million worth, a 13% growth rate compared to the year before, according to Camacho.
That’s why Camacho, Arias and Foreign Trade Minister Marco Vinicio Ruiz stood side by side at the inauguration of Allergan’s new 9,500-square-meter plant in the GlobalPark free trade zone in Heredia.
Ruiz said government officials plan to see to it that the medical equipment sector –which has outgrown traditional exports such as pineapple, banana or coffee – continues to grow under the Arias administration.
In November of last year,Allergan bought out the medical company INAMED for $3.2 billion. INAMED had seen an annual growth rate of 20% since 1999 when it set up shop in Costa Rica with about a dozen employees, according to Alexander Unfried, the general manager of Allergan in Costa Rica.
The buyout came the same month that the United States lifted a 14-year ban on silicone breast implants in that country.Unfried said the fact that the U.S. Food and Drug Administration (FDA) recently legalized silicon gel implants was a factor in the company’s purchase of the Costa Rican factory, and said he expects the demand for breast implants in the United States to take off.
In Costa Rica, Allergan also manufactures other medical devices such as a balloon and band that are surgically implanted into patients with morbid obesity to reduce hunger and help them lose weight, and a skin expander that helps doctors reconstruct the breasts of cancer victims.
The company has spent some $15 million in Costa Rica to date, and plans to double its work force here to 400 employees by 2012, Unfried said.
Trade Minister Ruiz also celebrated the plans of Baxter International, Inc., a leading maker of treatments for blood disease, to invest another $6.5 million here (see separate story).
In the face of last year’s World Trade Organization mandate that all direct incentives for exports expire by Jan. 1, 2010 (TT, Aug. 4, 2006), Ruiz said he is working on “strengthening reform” to the nation’s free zones. The administration has suggested a 15% tax on free-zone businesses starting in 2010, but investments from certain countries such as the United States may be protected under a proposal the Trade Ministry is drafting. Ruiz gave no further details.
He said diversifying exports with products like those Allergan exports is the key to reaching the Arias administration’s $18 billion export goal by 2010.
Last year, Costa Rica’s exports grew 17% to a record $8.2 billion. Arias said his $18 million goal will require 25% annual growth over the next three years, which he said is feasible if the Central American Free-Trade Agreement with the United States (CAFTA) is approved and trade negotiations with the European Union are successful.