Croatia, Pharma and Corruption - Pharmaceutical Technology

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Croatia, Pharma and Corruption
Croatia is on track to join the EU in 2013 and offers a well-developed pharmaceutical market. However, its EU membership application has undergone much scrutiny because of concerns regarding corruption, organised crime and counterfeit pharmaceuticals.


Pharmaceutical Technology Europe
Volume 23, Issue 8

Controversy and counterfeits

One of the stumbling blocks to Croatia's EU application had been corruption and organised crime, and these issues continue to receive attention from those wary of Croatia's entry into the EU.

At the end of 2010, for instance, Pliva was surprisingly mentioned as part of the wikileaks controversy concerning a previous takeover battle between Barr Pharmaceuticals (US) and Iceland-based Actavis. According to the media reports, there had been rumours that the Croatian Prime Minister, Ivo Sanader, had been in collusion with the chairman of Pliva to ensure that the company was sold to a US firm (11). To make matters more complicated, the US Ambassador was also quoted in the Croatian media as stating that the sale of Pliva to Barr Pharmaceuticals would represent a demonstration of confidence by US companies in Croatia's investment climate. According to information cited by wikileaks, Sanader was upset by the negative way in which the deal was being portrayed by some sections of the media and called the US Ambassador to issue a statement denying any improper action on his part. The US ambassador duly issued a statement to indicate that market forces alone would decide the outcome for Pliva, but privately, the cables indicate that the US embassy saw the sale as a challenge to Croatia's regulatory system. At the time of the takeover attempt, the share price of Pliva had risen by 60%, which gave the press considerable material for speculation regarding the real factors behind the deal making. Barr's initial €1.58billion offer for Pliva had been countered by a €1.72 billion from Actavis (9). According to the US Embassy's discussions with Barr, the US company was satisfied with the activities of the Croatian authorities in the matter. Pliva transferred ownership of its US business to Barr Pharmaceuticals in 2007.

Another problem for Croatia is counterfeiting—even more so than for existing EU member states. The Croatian Customs Administration seized almost 1.3 million counterfeit items (10) in 2011, but despite these successes, the authorities say that the country is still being flooded with counterfeit products. These counterfeiting incidents have also affected the pharmaceutical sector. In 2010, a widely cited report appeared in a Croatian journal: out of 26 samples of erectile dysfunction drugs seized from an illegal supply chain, around half may have been counterfeit (11). To date, however, there have been no recorded incidents of counterfeit medicines entering the official supply chain. It is also worth putting incidents of counterfeits into perspective. In 2009, Pfizer conducted a study of pharmaceutical products seized by authorities under suspicion of being counterfeit Viagra. Of the total number of seizures worldwide, only approximately 1% came from Croatia— a similar level to many existing EU countries (12).

As the EU expands, one major concern is securing the pharmaceutical supply chain. The new EU's pharmaceutical package highlights the fight against counterfeit medicines as a priority to protect patients and will probably lead to amendments to strengthen Directive 2001/83/EC and to Commission Directive 2003/94/EC, which relate to medicinal products for human use and good manufacturing practice, respectively. The EMA is working closely with the Croatian authorities to both improve the detection of counterfeits and suppress the activities of those behind the illegal trade. The subject was covered in a pre-accession meeting in June 2011, held in Zagreb (Croatia), involving the EMA and Croatia's national regulatory Agency for Medicinal Products and Medical Devices of Croatia (HALMED).

Summary

The concerns about Croatia seem to have been overcome as the country's entry into the EU is on course for 2013. Because of its business environment and pricing system, Croatia is a challenging market, but it also offers a highly developed pharmaceutical sector and good growth prospects for the future. The fact that many international pharma companies have already moved into the market suggests that the industry is optimistic about its potential.


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