Guillaume Corpart
As supply chains face continuing uncertainty worldwide, many Latin American countries are increasingly turning to nearshoring as a potential solution to fluctuating costs and procurement issues. Despite the short-term costs of investing in local manufacturing and transportation, the long-term advantages are more stability and lower overall costs from obtaining equipment and supplies from local suppliers rather than overseas.
The Supply Chain Paradigm Shift
The transition to nearshoring has long been discussed in medtech boardrooms and offices, but now it’s increasingly becoming a reality rather than just a theory. Latin America in particular offers several advantages as a nearshoring destination:
- Lower transportation and labor costs. Having manufacturers and suppliers close by can lower the cost of transportation, while Latin American labor rates continue to remain competitive compared to other regions.
- Easier communication and time zone alignment. English proficiency is high across Latin America for communication with customers, while being in the same time zone as North American companies makes real-time communication possible.
- Skilled workforces. Latin America has highly skilled workforces in manufacturing, technology, and other key industries.
- Reduced lead times. Closer suppliers mean that companies don’t have to provide as much advanced notice to get what they need.
- Better trade agreements and local government support. Many Latin American governments are actively promoting nearshoring and creating amenable agreements to make it appealing to potential trade partners.
Put all these factors together, and it’s easy to see why Latin America is seeing a bit of a nearshoring boom. Add in the ongoing geopolitical tensions around the world, rising global shipping costs, and other supply chain vulnerabilities, and the possibilities of nearshoring have become even more appealing to regional medtech giants. [1]
Examples in Action
It’s easy to see how nearshoring is growing by looking around the region. In Mexico, for example, the government recently announced its framework for a 2027-2028 consolidated health sector tender, and companies that invest locally now have a major advantage in the tender procurement process. The upcoming tender will utilize a points-based evaluation system that rewards companies with a greater physical footprint in Mexico.
Points will be awarded for:
- Manufacturing infrastructure: Companies with local production facilities or R&D labs will be awarded more points under the new system.
- Strategic partnerships: Companies that collaborate with Birmex or Mexican universities for technology transfer are also eligible for points.
- Job creation: Potential suppliers who show a demonstrable investment in the Mexican workforce will have an advantage. [2]
While a local factory is not a strict prerequisite for participation, it may serve as a tiebreaker among companies that offer similar products at a similar price. In a market where 65% of supplies are currently imported, the administration is using its purchasing power to encourage a nearshoring of the medical industry. [3]
The Rise of High-Tech Hubs
Another key development in Latin American nearshoring is the evolution of the region beyond basic medical supplies into high-tech production and manufacturing. This growth is being spurred by the development of “innovation hubs” around the region. These are areas where a focus is placed on the growth of technology, and they often attract the venture capital firms needed to fuel this growth.
For example, Mexico City is often referred to as the “Silicon Valley of Latin America.” With its proximity to the U.S., it serves as a vital dual-purpose hub for both exports and domestic supply.
Mexico is far from alone in its embrace of tech innovation. In Brazil, for example, the continued dominance of localized production has helped companies bypass heavy import taxes and capture the massive domestic market. Other regions that have notable tech startups and venture capital funding include Costa Rica, Sao Paulo, Buenos Aires, Bogota, Santiago, and many other areas around Latin America.
The tech talent pool in these regions is large and growing, and they often offer cost savings over other regions, making them appealing destinations for tech companies and venture capital firms. In late 2023, the World Economic Forum declared that Latin America was “set to become a global powerhouse for innovation.” [4]
The Pricing War & Margin Squeeze
As nearshoring across Latin America continues to take hold and grow, it’s placing legitimate pressure on legacy companies to adapt or miss out on potential opportunities. As countries like Mexico begin to incentivize local investment as part of their tender procurement process, companies that rely solely on imports may find themselves losing long-held accounts to locally manufactured alternatives. [5]
When you consider the potential benefits that your company can gain from eliminating transatlantic shipping costs, avoiding import tariffs, and stepping away from unstable supply chains, it might be a trend worth considering for your own company’s manufacturing and transportation operations. [5]
Key Takeaways for Health Care Companies
As you can see, nearshoring in Latin America has evolved in recent years from theory to increasing reality. Companies that want to adapt their pricing and sales strategy to compete need to see what local competitors are doing in real time.
Global Health Intelligence provides the tools you need to stay at the cutting edge of industry trends. With PriceScope, for example, you can track actual transaction-level pricing within public institutions. This allows your sales reps to see exactly how your prices stack up against nearshoring competitors.
With BrandTrack, your company can do side-by-side competitive benchmarking. This enables your commercial team to track quarterly revenue shifts and protect your market share by identifying trends even before they become obvious to your competitors.
Next Steps
Contact GHI to learn more about the growing nearshoring trend across Latin America, and how you can adjust your company’s strategy to account for this changing landscape. Our team of researchers can provide the analysis you need to gain valuable insights to support strategic decision-making in your industry.
************
Sources:
-
- https://latinamericasourcing.com/article/the-2025-nearshoring-index-why-latam-is-now-north-americas-natural-partner
- https://mexicobusiness.news/health/news/mexico-advances-drug-procurement-avoid-supply-gaps
- https://go.gale.com/ps/i.do?id=GALE%7CA846864038&sid=sitemap&v=2.1&it=r&p=IFME&sw=w&userGroupName=anon%7E14d562bf&aty=open-web-entry
- https://www.weforum.org/stories/2023/09/see-how-latin-america-is-becoming-a-thriving-innovation-hub/
- https://americasquarterly.org/article/nearshoring-in-latin-america-who-could-benefit-most/
