A challenging pharma market
The Croatian pharmaceutical market is currently worth around €740.1 million and has been growing slowly because of the government's ability to fund healthcare as a result of the global economic crisis (2). In the short term, the market is considered challenging for manufacturers of branded products because of the prevalence and popularity of generic drugs, and strict reimbursement criteria. However, in the longer term there are predictions that the pharma industry will benefit from investment, as Croatia has been improving its healthcare system and pharmaceutical regulations to bring them into line with standards in the EU. German pharmaceutical distributor ANZAG reported that Croatia's pharmaceutical market grew by 4.3% during the second half of 2010 (3). In contrast, other emerging Eastern European markets didn't fare so well over the same period. Lithuania's pharma market, for example, decreased by 1.2% (3). As a whole, the pharmaceutical market of Central and Eastern Europe is growing at an annual rate of 7.7% (4), which puts the Croatian pharmaceutical market's positive growth rate in a favourable light.Better access to high quality healthcare is leading to a rise in demand for the latest medicines in Croatia. As a result of healthcare reforms, the Croatian Institute for Health Insurance (HZZO) has established a special budget to provide access to innovative medicines. Between July 2009 and July 2010, 47 innovative molecules were added to the HZZO's lists of reimbursed medicines (5, 6). The pricing system in Croatia is considered strict, with international price comparisons being used to set maximum wholesale prices. The HZZO evaluates drug prices in Italy, France and Slovenia, but if prices from these countries are not available, then data from Spain and the Czech Republic are considered instead. If a drug is thought to be a breakthrough product, then the system does allow a company to charge up to 100% of the average price in Italy, France and Slovenia. The HZZO insists that its decisions regarding product innovation take into account the importance of a medicinal product from a public health viewpoint, as well as therapeutic criteria. Therefore, at least according to the regulations, there are opportunities for branded medicines' manufacturers to profit from marketing expensive, innovative products in Croatia.
As an industry, Croatia's pharmaceutical sector is very well developed. The pharmaceutical industry represents 4% of the country's total manufacturing industry and accounts for 1.7% of the manufacturing workforce. The major domestic pharmaceutical companies are Pliva, Belupo and Jadran Galenski Laboratorij (7), but around 50 international companies are also represented in the market, with more likely to enter now that EU entry has been confirmed. Croatia's adoption of better intellectual property laws, which are in line with EU standards, should also encourage other companies to enter the market.
Croatia's pharmaceutical potential is best highlighted by Pliva, the country's leading company. More than 80% of Pliva's products are exported, with the US being one of its top foreign markets— exports to the US were valued at €62.8 million in 2010 (8). In May 2011, the company received an award from the Croatian government for becoming the country's leading exporter to the US. The company also was responsible for the discovery of the globally successful antibiotic azithromycin, which is registered under the brand name Sumamed. Pfizer marketed the drug internationally as Zithromax and this arrangement boosted Pliva's finances dramatically. When the US patent for Zithromax expired in 2005, however, Pliva was placed under tremendous pressure to maintain growth and it became a target for acquisition. In 2009, Pliva was integrated into Teva, which was interested in turning the company's Zagreb site into an R&D hub.