An Unexplored Opportunity for Pharmaceutical and Medical Device Industries
December 4-7, 2012
Alan Schwartz, Executive VP, & Aditya Sukthankar, Associate
mdi Consultants Inc., Great Neck, NY, USA
Five years ago, U.S. Agency for International Development (USAID) asked mdi Consultants to visit Nicaragua to review the country’s industries, evaluate their potential for expanding the investment and generate business in the medical device industry. This year we were requested by the government agency of El Salvador, ProESA, to do similar evaluation. Our findings on the visit to El Salvador were very interesting and we think you will find them thought-provoking.
Could El Salvador be the new Costa Rica for medical device and pharmaceutical companies? This is a real possibility. On a recent visit to El Salvador to evaluate the medical device and pharmaceutical industries organized and sponsored by ProESA (the El Salvador government agency for developing and promoting industry and investment), we were pleasantly surprised by what we found.
We can say that the companies we visited (several pharmaceutical companies, plastic molding operation and a medical device company) were well established operations with quality systems on the level that could be compared to those of any company in China and even in the US. Add to this a very competitive cost of operations and salaries, the required travel time of only 2 hours from the USA and use of US dollars as their local currency − and El Salvador is ready to open itself up to the US marketplace.
The following is some background on El Salvador and information about the visit:
Capital: San Salvador
Official Language: Spanish
Area: 21041 km2 (8124 sq.mi)
Population: 6.2 million (2011)
GDP Nominal (2011): 23054 million USD (2011)
Time Zone: UTC – 6
Currency: $ USD
El Salvador is located on the coast of Pacific Ocean and has beautiful landscape and scenery. The country is bordered by Guatemala on the north and Honduras on the east and south. The one area that appears to have the most misconceptions is the country’s political stability. The country has been politically stable democracy since 1992, for more than 25 years. The people employed in the industries are industrious and hard working. An interesting fact is that the average age of the labor force is 24.7 years old. This young work force is a direct result of the civil unrest prior to 1992.
El Salvador has a strategic location with a natural bi-oceanic logistics corridor. The country has a major airport certified A1 by the FAA which helps in linking important cities.
ProESA – the government agency who set up this visit
We were not surprised to see the level of effort that ProESA is putting into promoting the industries in El Salvador to attract foreign investments. They are a government agency that wants to show the very best of the country. The arrangement and planning execution was simply worth appreciating. The Agency for Promotion of Exports and Investments of El Salvador (PROESA) invited us (mdi Consultants Inc.) to introduce us to the advantages the country has to offer as an investment platform for medical device and pharmaceuticals industries. ProESA and the Ministry of Finance invited mdi Consultants to a press conference where they provided details of the government’s intentions to pursue these business opportunities. mdi Consultants also gave a seminar to the Salvadoran medical device and pharmaceutical industry on the “Opportunities for Industry Growth” and the FDA regulations that pertain to their exporting to the USA.
The seminar was inaugurated by Mr. Armando Flores, Minister of the Finance and Mr. Giovanni Berti, the CEO of ProESA. “With this activity, we are kicking off an ongoing program to attract foreign direct investment that seeks to publicize the advantages of the country through the multiplier effect by inviting to the country international leaders and experts who can then replicate our messages in different industries worldwide. This time, we decided to start with the medical device industry because we are convinced that it is an industry with high growth potential and has shown a steady growth despite the global economic difficulties” said Berti.
Both Mr. Flores and Mr. Berti, being aware of these industries’ advantages encouraged local organizations to develop the medical device and pharmaceutical industries and then promote them through their international networks. El Salvador is looking to be the “new” Costa Rica of Central America and follow in the steps of their neighboring country.
Besides focusing on the medical device industry, we had a chance to visit companies from the national plastic industry, textiles, metallurgy, pharmaceuticals, government agencies and industrial trade and free zones, showing that El Salvador provides a productive platform, cost-effective and fast access to markets.
Plastic, Textile and Pharmaceutical Industries in El Salvador:
During our three day visit in El Salvador we happened to visit few textiles, plastic and pharmaceutical Industries. It won’t be wrong to say that what we were pleasantly impressed with the infrastructure and management of the industries as these were better than we originally expected from a country that was considered “of the map” when discussing FDA related industries. We met the owners and general managers employed in these industries and learned they were ready and willing to do anything to develop the business opportunities that come their way and in turn positively affect the country’s economy by attracting foreign investments. Most of these businesses were family owned and were in there second generation of ownership. We came to learn the staff was well educated, young and eager to work hard. We were told over and over again that the attitude of the El Salvadoran workers is one of best in Central and South America. The monthly wages are low which is reflected in the area cost of living. From what we observed most workers appears to be very conscious and diligent.
We were also invited to visit two pharmaceutical companies. We were extremely surprised to see that one pharmaceutical company was set up to produce sterile solutions for IV bags and had installed a filling machine and class 100 cleanroom worth over $5 million. The cleanroom and quality lab were setup to meet the standards worldwide, including those of the US FDA. It was a very impressive operation and it could provide a real opportunity for US companies to partner up with and/or invest for manufacturing drug products for Central and South American as well as US distribution.
We also visited another second generation family owned and operated company. This company was well situated with both OTC and cosmetic distribution through their own pharmacies and distribution channels throughout Central America. This company appeared to be very well run with many brand name product lines.
During our three days stay in El Salvador, we experienced excellent hospitality and tour organization form the people of the PROESA agency. From receiving us at the airport to arranging meetings with the concerned industry people to arranging press conferences and seminar, every activity was well executed. We were impressed to see the efforts and hard work that was put in by the entire ProESA team including Mr. Berti, the CEO of the Agency. The ProESA mission, “to get the word out that their country was open for business and investment,“ was being well demonstrated by their conscious efforts to make our visit a success and give us a picture of the El Salvador industries that the people in the USA were not aware of.
This was the second country mdi Consultants visited in Central America to evaluate the country’s ability to compete for new business investment. We must admit that El Salvador government along with theirmedical device and pharmaceutical industries, presents themselves as a more highly developed industries and that they are ready for the next step. El Salvador can clearly participate in the worldwide market with similar industries found in other developing countries in Central America and Asia. El Salvador should not be considered a “fly over” country but a country that should be looked at and given serious consideration if a US or other foreign company was looking to expand their operations abroad.
Previously, the general impression of El Salvador may have been tarnished by the wars and a lack of strong and positive publicity. At this time however, the country has all the required facilities, amenities and workforce that every expanding company would look for. The only drawback we felt was that industry representatives were unaware of myriad of opportunities available in the worldwide market. They seemed to lack ideas and knowledge about relevant regulations and this is what holds them back from taking the first step.
If El Salvador industries are given proper advice and consultation and if these industries go forward and promote themselves aggressively to the companies in US through trade shows or some similar forums, we would not be surprised to see these industries and El Salvador to become well known and respected market contributor and partner.