Croatia Pharmaceuticals & Healthcare Report Q1 2008

The Croatian market is small and behind many of its regional neighbours, despite its relatively advanced status. At more than 70% by value, generics - comprising mostly relatively expensive branded generics - meet the bulk of demand for pharmaceuticals, with the segment continuing to be boosted by healthcare debts, cost-containment initiatives and the support for the strong domestic generics industry in the face of distinct intellectual property (IP) deficiencies.

As in many of its regional peers, prescription medicines in Croatia account for an estimated 85% of the market, largely reflecting the underdeveloped primary care network and the status of medical professionals in the country. The aim of joining the European Union (EU) in as early as 2009 or 2010 will stimulate healthcare system reform in Croatia, gradually leading to the development of a more comprehensive primary care network. Cost-containment pressures will similarly stimulate the growth of an over-the-counter (OTC) market, although the cost-consciousness of consumers will act as a brake on the sector's value development.

In BMI's new Q108 Business Environment Rankings for the major 15 Central and Eastern Europe (CEE) markets, Croatia is found in joint twelfth place, alongside Lithuania, and above only Ukraine and Serbia.

The current situation, therefore, is not judged particularly favourable for conducting business in the country, with other markets viewed as offering more commercial potential to multinationals. However, Croatia's removal from the Office of the US Trade Representative (USTR)'s 2007 'Special 301' report, focusing on countries in violation of intellectual property rights (IPRs), indicates a definite improvement in the country's operating conditions.

In the meantime, the local industry remains strong. Pliva, recently acquired by US Barr, is the dominant local player, commanding around a quarter of total generics sales in the country. The acquisition will improve Pliva's access to foreign markets and the US in particular. In the meantime, foreign direct investment (FDI) is discouraged by the country's severe healthcare debt and delays in payments, although the government has relaxed its notoriously difficult reimbursement list inclusion policy somewhat in recent months, including more foreign-made drugs.