The Burgeoning Medical Device Manufacturing Cluster Next Door
BIOCOM CEO and President Joe Panetta delivers a thank you speech after BIOCOM received the Regional Leadership Awards as part of the fifth-annual Inter-American Business Awards in Tijuana.
By Terri Somers
Director of Communications
Surprised and impressed are words BIOCOM leaders used repeatedly during a recent tour of Tijuana’s ever-expanding life sciences cluster.
While many people are aware that a number of San Diego life science companies, including DJO and Care Fusion, have manufacturing facilities in Tijuana and other parts of Baja, the scope of the work being done across the border and the size of the growth in the sector has not been widely reported in the U.S.
For that reason, the Mexico Business Center, the Baja Chamber of Commerce, the San Diego Regional Chamber of Commerce and others, arranged for BIOCOM board members to get a first-hand look at what’s happening. With Mexico’s Consul General in San Diego Remedios Gomez Arnau as their guide, a contingent of BIOCOM’s board and staff visited Greatbatch Medical’s Tijuana plant, as well as a private hospital, during which they had a chance to hear from representatives of numerous companies doing business there.
“I don’t think that many of us in San Diego were fully aware of the quality of medical device manufacturing in Tijuana,” BIOCOM CEO Joe Panetta said after the tour. “I can certainly confirm they are comparable to facilities found in the United States. I have no doubt device companies will be looking at the opportunities there firsthand, just as I did,” Panetta said.
BIOCOM and Panetta were honored on the day of their visit at the fifth annual Inter-American Business Awards luncheon attended by San Diego Mayor Jerry Sanders, Tijuana and Mexican officials, over 200 business people from both sides of the border, a cadre of Mexican media and even Padres player Edgar Gonzalez.
BIOCOM won the Regional Leadership Award for its work representing life science companies throughout Southern California and Baja California, and helping to foster continued growth of the sector. The award is sponsored by the Mexico Business Center and the San Diego Regional Chamber of Commerce, in cooperation with DEITAC.
According to data from the Food and Drug Administration collected in 2005, there are 64 medical device establishments in Baja California, and about 240 companies total in Mexico. And the industry has grown substantially since those numbers were collected, said Kenn Morris, CEO of Crossborder Group in San Diego, who has been doing Mexico and border market business analysis for 16 years.
“No one realizes the sophistication that is happening inside the walls of factories in Mexico, in many cases,” Morris said.
He has visited numerous manufacturing facilities across Mexico, then collected and crunched data for many business and organizations on both sides of the border, including University of California San Diego and Merck. Among the data Morris has crunched, are medical device employment and production figures.
“I thought Orange County might be bigger. It has roughly 14,000 people working in device manufacturing,” Morris said. “But nothing could stand up to Tijuana,” he said.
Many of the Tijuana-based medical device companies are manufacturing plants for U.S.-based companies. The Greatbatch facility, which was toured by the BIOCOM contingent, was a 144,000 square-foot, state-of-the-art operation that provides its company with efficient, turnkey manufacturing and assembly capabilities that are currently used to make many of the parts used in cardiac products such as pacemakers and internal defibrillators.
The Greatbatch plant employs around 1,000 people. It includes 90,000 square feet of manufacturing space, including one class 10,000 and two class 100,000 clean rooms. It also has fully equipped engineering, metrology, and quality laboratories; and high-tech security and monitoring systems. The facility, like the companies manufacturing in the United States, has international regulatory certification for device assembly, said Dennis M. Diaz, Greatbatch’s executive director of operations.
In 2005, Greatbatch closed a facility in the US and expanded its operations in Mexico, for better efficiency, he said.
Diaz was one of about a half dozen Greatbatch executives in Tijuana who greeted the BIOCOM contingent, took their on a tour of the plant and answered numerous questions.
“I was impressed by the state of the art facility and pride in the quality of their product displayed by the management at Greatbatch,” said BIOCOM Board Member Steve Mento, who is CEO of Conatus in San Diego.
International companies including Medtronic have long known of advantages to device manufacturing in Mexico.
“In the last 28 years, I have been involved with three global companies all over the world,” said Gerardo de la Concho, vice president of operations for Medtronic in Mexico. “At the end of the day, Tijuana is one of the best options for quality, service and cost – not to mention a prime location,” he said.
From the Consul General, to the Greatbatch executives and tourism officials such as Gilberto Macias Zavala, of Pro Mexico, the Southern California contingent was told that while innovative life science companies could continue to be headquartered in San Diego and Orange counties, where discoveries pour of esteemed universities and research institutions, there are many advantages to moving manufacturing and other functions south of the border. There are savings in the workforce of 40 to 80 percent, and that workforce is experienced, well trained and working at facilities with required US and international regulatory standards. There is also government support for protections of intellectual property under NAFTA and TRIPS, said Morris, of the Crossborder Group.
The close proximity to the border also gives the Mexican people and products at the facilities easy and quick access to the ports, highways and airports in the US, Morris said. And it’s a quick trip each way for Southern California-based executives to travel and become involved in operations there, he said.
While Tijuana is the second largest city on the West Coast of North America and one of the highest proportion of big-income makers in Mexico, it continues to be perceived as a struggling “border town,” Morris said. Cross border partnerships continue to be hampered by a number of perceptions held by many people north of the border, said Morris. Among the topics generating misconceptions are education of the workforce, violence in Mexico and the traffic and tie-ups crossing the border?
Admitting there was a very-highly publicized spate of violence in recent years involving drug cartels, Morris points out that it is often portrayed as “Mexico’s drug war,” and not the cross-border problem that also vexes officials in the United States. And he has statistics that show the same or higher levels of violence in major US cities are not covered the same as the crime in Mexico.
To dispel some of the fear, Morris has collected even more data showing that murders and crime have decreased dramatically in the last year. Most of the serious crime was between those involved with the illegal drug trade. About 10 to 15 percent involved the general public, he said. Based on figures through mid-October, the murder rate in Tijuana is half that in New Orleans, lower than the city of Baltimore and much lower than Camden, N.J.
Mindful of the perceptions north of border of both crime and the reality of city traffic in Tijuana, the Mexican officials provided BIOCOM’s contingent with a police motorcycle escort throughout their visit, helping it to breeze through the mid-day crush of cars and trucks around the city’s traffic circles (that are mild in the eyes of this New Jersey-raised writer).
“Meeting the remarkable companies providing state-of-the-art technologies to U.S. Medical device clients really changed my impression of the resources available across the border – next door!” said BIOCOM Board member Guy Iannuzzi, who is founder and president of Mentus in San Diego. “It is clear that the overstated news reports focusing on crime grossly distort the business opportunities available next door. Tijuana is clearly one of the world’s most useful locations for contract manufacturing resources,” Iannuzzi said.
Many BIOCOM board members were also previously unaware of many details of Mexico’s medical tourism industry, in which many US licensed and educators clinicians participate.
By the end of the afternoon, all agreed that their perspective of Tijuana’s life sciences sector had changed. Said Iannuzzi: “I am amazed how we all look across the globe for resources – Singapore, Belgium, and China – and ignore better resources only 20 minutes away.”
BIOCOM board members mingled with top executives of Greatbatch Medical in Tijuana.