Following recent discussions, the EC has decided to support Croatia's entry into the EU. Croatia originally applied for membership
in 2003, with formal discussions beginning in 2005, but progress faltered over time because of issues regarding the legal
system and environment for competition (1). Bulgaria and Romania, which joined the EU in 2007, had previously failed to meet
full EU standards in these areas, and their pre-accession environment was believed to be similar to that of Croatia. As a
result of political and media criticism of these countries' ease in gaining entry, there was greater scrutiny of Croatia and
a general reluctance to fasttrack the application. In particular, there were worries concerning corruption and organised crime
in the country. It now appears that these concerns have been overcome, so Croatia is set to become the 28th member of the
EU in 2013.
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.