when the company entered the Costa Rican medical device market
10 years ago. Though it often gets lost amid all the BRIC propaganda,
Costa Rica nonetheless has grown into quite an impressive and respectable medical device market over the last decade. In just 11 years,
the number of medical device companies has grown nearly five-fold,
and foreign direct investment has averaged 13. 5 percent, according
to Luis Liberman, second vice president in Costa Rica. In addition,
the country’s per capita Gross Domestic Product is nearly seven
times higher than China’s, and medical device exports have grown
four times fasters than other exported products under the free zone
regime, at an average rate of 31 percent each year from 2002 to 2010.
“The challenges are the same whether the plant is 30 miles away
or 3,000 miles away. Communication has to be perfect and that’s
where you need to have strong program managers in place,” noted
Dave Bonvenuto, executive vice president and general manager of
Oberg Medical, a division of Oberg Industries, a Freeport, Pa.-based
medical device contract manufacturer.“We program manage all of
our OEMs work out of Costa Rica from a single point of contact in
the United States. We think that’s a little unique from what we see
from other contract manufacturers, whereby we do not do just a
handoff to Costa Rica. We will have our United States program man-
ager lead the overall project. We have also structured the Quality
Management System in Costa Rica to be the same as our system in
the US. The protocol for our heat treating in the U.S., for instance, is
the exact protocol that is being used in Costa Rica. We believe this
enhances communication and creates efficiency over the course of
Matching quality protocols, however, doesn’t automatically guar-
antee success. The cultural differences, potential language barriers
and the ability to fully comprehend operational procedures can make
it difficult for an overseas facility to make changes to a product in
development, experts told Orthopedic Design & Technology.
Before a company establishes an operation overseas, it must carefully examine the kind of product it wishes to manufacture offshore.
Expertise in both the device and the manufacturing process is essential for success, as is a comprehension of the product lifecycle. An
OEM such as Smith & Nephew, for example, might be better off
producing its newer products in-house and outsourcing legacy items
that have been on the market for a while and are approaching the
end of their lifecycle.
“It’s one thing to set something up in a foreign country, but when
you have to make changes to a product, the communication and the
ability to make those changes as you develop the device can be very
challenging,”said Kelly Lucenti, president of Millstone Medical Outsourcing, a company in Fall River, Mass., that provides customized
outsourcing solutions to the medical device industry.“There are cultural differences you have to think about, communication issues, understanding the systems that are in place in the United States, and
making sure the same systems are being followed overseas. We have
very effective document control systems in the U.S. They’re very good
overseas at setting something up to run a million in a row, but when
a company has to make changes to the product or process, that’s
when I worry about the quality of the final product. That’s the kind
of challenge you face when you start an operation overseas.”
Brazil Fast Facts:
AREA: 8,514,876 square kilometers
LABOR FORCE: 103.6 million
POPULATION: 191 million
NUMBER OF CITIES: 5,565
NUMBER OF HOMES: 58 million
MEDICAL DEVICE SECTOR REVENUES, 2010: $4.79
billion (U.S. dollars)
EXPORTS: In 2010, the country shipped $84.4 million in
dental products globally. Laboratory product exports totaled
$55.8 million, while radiology device shipments amounted
to $25.2 million. Worldwide medical and hospital equipment
exports were worth $47.2 million.
IMPORTS: The United States was the top seller of dental,
medical, hospital and laboratory equipment to Brazil in 2010.
Rounding out the top five were Germany (No. 2), China,
Japan and Malaysia.
DOMESTIC INVESTMENT: From 2003 to March 2010,
Brazil invested more than $3.6 billion in infrastructure, research and technology in its health sector. Resources came
from the federal government, the Brazilian Economic and
Social Development Bank, and research agencies.
NUMBER OF MEDICAL FIRMS: 450. About 70 percent of
the companies operating in Brazil’s medical sector export
products to 180 countries on five continents.
*source: 2010 U.S. Census Bureau, CIA World Factbook and ABIMO
(Brazilian Medical Devices Manufacturers Association).
The globalization of the medical device market over the last several
decades has sparked a demand for more innovative products worldwide, particularly in emerging markets where growing middle class
populations are spending more of their disposable incomes on discretionary items and services such as healthcare that were impossible just 10 years ago. The United Nations Population Division and
Goldman Sachs estimate that China’s middle class, for instance, will
be roughly four times the size of America’s middle class within a
generation. India’s middle class, meanwhile, is expected to hit 1.07
billion people in just 20 years.
Consequently, orthopedic manufacturers no longer can afford to
disregard such markets. Armed with a burgeoning consumer buying
ability and economies that have shown remarkable resiliency to the
globe’s financial follies (both past and present), international locales
have evolved from low-cost country options to a necessary ingredient for long-term growth. As Oberg’s Bonvenuto told ODT: “You
can’t ignore the population growth and the wealth accumulation
that is occurring in the [emerging] regions of the world. They will be
a source of growth for the orthopedic industry in years to come. The
OEMS’s are clearly focused on these (emerging) regions for growth.
As a contract manufacturer you have to develop a strategy that has
your business participating along side the OEM’s.” ;
ODT • 59