Sector-specific Dossier: Medical Devices and Pharmaceuticals Sector  

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Sector-specific Dossier: Medical Devices and Pharmaceuticals Sector  

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SUMMARY

The medical devices and pharmaceuticals sector is one of the foundations of the free zone industry, with a great potential for DR-based manufacturing and export. The country offers many advantages to the sector for its development and manufacturing activities: A clear indicator of that is the country’s excellent record with the United States Food and Drug Administration (FDA), as well as other health agencies around the world. The Dominican Republic also offers highly qualified labor at competitive costs, a modern infrastructure, a strategic location and preferential access to markets in the United States, Europe, Central America and the Caribbean.

The production of medical devices in free zones started 40 years ago, with a company called Surges, a pioneer in the world of industrial free zones. Their presence kicked off a history of positive reputation in the realm of manufacturing medical equipment and disposable products, a status that our country’s free zone sector has maintained for more than two decades.

The Dominican Republic is one of the main suppliers of dental floss, pacemakers and several disposable items used by hospitals around the United States, as well as sera, bedsheets and medical gowns, among many others. In terms of medical tools, we’re currently America’s third largest exporter and its fifth largest supplier.1

SECTOR GROWTH AND OTHER TRENDS

Within the free zone industry, this sector is the second largest in terms of joint cumulative investment —a total of $753.83 million, only surpassed by the clothing and textiles category. This investment is comprised of 27 medical device and pharmaceutical companies that altogether create 17,937 jobs.2

Exports for medical devices and pharmaceuticals have followed an upward trend: in 2013, total exports reached $1,230.4 million –that is, 24.5 percent of all free zone exports. According to the National Free Zones Council (CNZFE), between January and October of 2013, exports to the US and Canada registered visible growth when compared to the same period from the previous year: 9.0 and 4.3 percent, respectively, while exports aimed at the European Union experienced a 20 percent increase in January to August of 2013 when compared to the same period in 2012.

In 2013, exports of medical devices and pharmaceuticals accounted for 25 percent of all free zone exports.

1 2013 – First quarter of 2014 (preliminary data). CNZFE. 2 National Free Zones Council (CNZFE)  

Sector-specific Dossier: Medical Devices and Pharmaceuticals Sector  

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Medical Devices and Pharmaceuticals Exports 2003-2013

(US$ MM)

Source: National Free Zones Council (CNZFE)

GOVERNMENT INSTITUTIONS LINKED TO THE SECTOR

• National Free Zones Council. Government entity authorized to present, evaluate and recommend to the Executive the installation of free zones for export. The Council actively outlines an integral promotion and development policy for the free zone sector, and participates in any national or international negotiation, agreement or treaty related to the operations and logistics of export-oriented free zones. cnzfe.gob.do

• PROINDUSTRIA. Institution charged with supervising the new institutional framework that will promote competitive development within the manufacturing industry. PROINDUSTRIA endorses policies and support programs that stimulate industrial renewal and innovation through the promotion of industrial districts and parks, as well as new links to international markets. proindustria.gov.do.

Sector-specific Dossier: Medical Devices and Pharmaceuticals Sector  

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LEGAL FRAMEWORK - INCENTIVES

I. Law 8-90, dated January 10, 1990, on Free Trade Zones in the Dominican Republic and its Implementing Regulations

• Law 392-07 on Competitiveness and Industrial Innovation, dated December 4, 2007

Law 8-90 promotes the establishment of new free zones and the growth of existing ones, regulating their logistics and development.

• Special customs controls regime • Tax incentive of up to 100 percent • Payment of taxes on construction, loan contracts, and on the registration and

transfer of property starting with the construction activities of the corresponding free zone operator

• Payment of taxes related to the creation of trading companies or any corresponding increase in capital

• Payment of any municipal taxes that may affect these activities • Import taxes, customs tariffs and any other related charges over raw materials,

equipment, construction materials, building components, office equipment, etc., destined to build, furnish or operate in free trade zones. Also, taxes related to importing equipment and tools needed to install affordable cafeterias, health services, medical assistance, childcare facilities, leisure facilities or any other amenities.

• Taxes related to exporting or re-exporting items, except for those directed towards industrial processing or export services, such as raw materials, containers, labels and services demanded by the productive sectors

• Patent tax over assets, as well as ITBIS • Consular taxes for imports destined to free zone operators or businesses II. Payment of import tax on transportation equipment

MAIN FOREIGN COMPANIES IN THE COUNTRY

By 2013, the Dominican Republic had a total of 55 free zone parks offering services to investors, a factor that significantly eases operations for the companies.

Below are some of the largest foreign companies dedicated to manufacturing medical devices in the Dominican Republic.

Sector-specific Dossier: Medical Devices and Pharmaceuticals Sector  

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COMPANY LOCATION ACTIVITY

Arriol International San Isidro Ind. FZ Surgical sutures, IV drips and disposable dialysis equipment

B Braun Dominican Republic

Las Américas Ind. FZ IV drips

Cardinal Health DR/ Converters

Las Américas Ind. FZ Bedsheets and needle counters, both for surgical purposes

CareFusion Las Américas Ind. FZ Biopsy needles and drainage collectors

ConvaTec PIISA Industrial Park Plastic bags for human waste

Covidien (Davis & Geck) San Isidro Ind. FZ Surgical sutures

ECOLAB (Microtek Dominicana)

La Romana II Ind. FZ Surgical tools and disposable items

Edwards Lifesciences PIISA Industrial Park Components for cardiovascular equipment

Fenwal International PIISA Industrial Park Catheters and blood filters

Hope Orthopedic del Caribe

San Isidro Ind. FZ Orthopedic medical instruments

Hospira PIISA Industrial Park Primary IV drip sets

Johnson & Johnson Dental Care

PIISA Industrial Park Dental floss

Medsorb Dominicana San Pedro de Macorís Ind. FZ

Disposable surgical, dental and ophthalmic devices

Metrix Dominicana PIISA Industrial Park IV drips for enteral and

Sector-specific Dossier: Medical Devices and Pharmaceuticals Sector  

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parenteral nutrition

Oscor Caribe Las Américas Ind. FZ Components for cardiovascular equipment

CEA Global Dominicana SRL

San Pedro de Macorís Ind. FZ

Cardiovascular adapters

Remington Medical Las Américas Ind. FZ

Component packing and final assembly of plastic and electromechanical products for medical devices

De Royal Intercontinental Santiago-Navarrete FZ Syringes and bandages for therapy

Sources: National Free Zones Council (CNZFE) Export and Investment Center of the Dominican Republic (CEI-RD) WHY THE DR? “We can highlight the country’s excellent geographical location, its modern and sophisticated seaports and its transportation system, which offer easy access to international markets. Also, our corporation has been quite impressed with the work ethic and motivation of the Dominican people.” — Paolo Tolari, General Director, Covidien Source: Diario Dominicano. August 14, 2014. Inauguration of new Covidien factory.