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Tubing maker Natvar follows medical-device firms to Costa Rica

By: Gayle S. Putrich

April 12, 2013

WASHINGTON — Medical extruder Natvar, a division of Tekni-Plex Inc., is expanding operations into Costa Rica, beginning in June.

Over the next 18 months, Natvar expects to invest $4 million in a new 40,000-square-foot facility that will mirror the equipment, tooling and compounds of its plants in the United States, Europe and Asia, said Bob Donahue, general manager of global medical operations.

"Our goal is that when you walk into any of our plants, that the procedures and processes and certifications are identical," Donahue said.

Natvar, which provides medical-device companies with precision tubing for chemotherapy, cardiovascular and other applications, began considering Costa Rica as an expansion location two years ago. The establishment of a free-trade zone — where there are no taxes on capital equipment coming in or products going out — plus a stable economy and a highly educated workforce with low turnover makes the country an appealing location for more than just Natvar.

"Everybody we deal with in the U.S. is in Costa Rica," Donahue said. "Boston Scientific, St. Jude … more than 25 medical tech companies in the last couple years. It's been the new hot spot since 2010."

Costa Rica is coming to see itself as a "medical devices hotspot." In 2011, medical devices accounted for 3 percent of gross domestic product and represented 11.8 percent of total exports. CINDE — the Costa Rican Investment Promotion Agency ¬— estimates the medical-device and medical technology sector will become Costa Rica's top exporter within the next three years.

Coordination with local governments and education systems, particularly with the help of CINDE, including training centers that will be up and running well before the new facility is complete, aid in cutting down the three years Donahue said it takes to fully train someone in precision medical extrusion.

Although a lot of medical-device work has been building up in Costa Rica, there has been virtually no compounding and very little extrusion there and not much of an established workforce for it, Donahue said, so some customers are forced to ship in millions of pounds of PVC resins as part of a long export/ import back-and-forth to get finished products to end users.

"A lot of the raw materials, like catheters, are all being sourced in the U.S. and then just being brought back down to Costa Rica," Donahue said.

"That doesn't make a lot of business sense. Natvar will be able to shorten its supply chain drastically, he said, in addition to being closer to new markets, creating business continuity and accelerating disaster response times.

"We already ship a lot of product to Costa Rica, so it makes sense to come here," he said. "Everyone wants the supply chain directly next door. It's another plus in that it opens us up to other parts of the world.

"And with the new medical-device tax, everyone is looking for ways to drive down costs anywhere they can. If we don't move closer to customers, it hurts us," Donohue said.

Both Tekni-Plex and Natvar are headquartered in King of Prussia, Pa.