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Croatia Pharmaceuticals and Healthcare Report Q1 2012
Business Monitor International, Nov 2011, Pages: 90
Business Monitor International's Croatia Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Croatia's pharmaceuticals and healthcare industry.
BMI View: At best, Croatia's pharmaceutical market will continue to represent a very modest prospect for foreign companies. A subdued demographic outlook and economic difficulties, which are also weighing down government spending, are expected to continue affecting pharmaceutical market growth over the next few years, despite some opportunities provided by the operating environment improvements expected in the run-up to EU membership.
Headline Expenditure Projections
- Pharmaceuticals: HRK6.79bn (US$1.23bn) in 2010 to HRK6.86bn (US$1.33bn) in 2011; +0.9% in local currency and +8.0% in US dollar terms. Local currency forecast down moderately from Q411 due to analyst modification and exchange rate considerations.
- Healthcare: HRK26.54bn (US$4.82bn) in 2010 to HRK27.34bn (US$5.32bn) in 2011; +3.0% in local currency and +10.2% in US dollar terms. Forecast largely unchanged from Q411, although the 2010 absolute local currency value is slightly lower following an update to historical figures.
- Medical devices: HRK1.43bn (US$260mn) in 2010 to HRK1.42bn (US$277mn) in 2011; -0.6% in local currency and +6.4% in US dollar terms. Forecast down moderately from Q411 due to analyst modification.
Business Environment Rating
BMI's assessment of Croatia's pharmaceutical market has improved slightly due to the better longer-term outlook for pharmaceutical spending. However, the country remains just 15th out of the 20 markets surveyed in the Central and Eastern Europe (CEE) Business Environment Ratings (BERs) for Q112. In BMI's BER global matrix for the quarter, Croatia is 52nd out of the 95 markets surveyed in total, with little likelihood of major improvement.
Key Trends And Developments
Given the market conditions and the lack of significant longer-term growth potential, Croatia is likely to continue to be sidelined by greenfield investors. In August 2011, Russian drugmaker Prodis, part of Protek Group, announced that it will construct a facility in the Macedonian free economic zone of Bunardzik after signing an agreement with Macedonian institutions for a longterm lease of state land and for allocating state aid. BMI believes the drugmaker will use the low-cost site to distribute pharmaceuticals to the Balkans, including Croatia, and Turkey, but it is unlikely to supply pharmaceuticals to Western Europe. Macedonia and other markets in the region demand low-cost, mainly generic medicines.
BMI Economic View
Due to Croatia's high reliance on export demand and external financing, BMI continues to highlight the downside risks that the eurozone debt crisis poses to the economic outlook. If eurozone policymakers fail to stem the escalating debt crisis then Croatia will also face severe macroeconomic turbulence. BMI has revised its GDP growth expectations for 2011 and 2012 downward - to 0.7% and 1.1% respectively, from 1.4% and 1.7% previously. BMI forecasts government spending struggling, which will have a bearing on the public financing of healthcare and pharmaceuticals. Local currency devaluation is also an outside risk.
BMI Political View
Zagreb is continuing its progression towards EU membership, having completed accession talks in June 2011, and BMI continues to expect membership in 2013. BMI views EU accession as a strong policy anchor, underpinning its positive long-term political outlook for Croatia. The government's commitment to EU membership is, in BMI's view, further proof of the country's gradual integration not only with the union but wider Euro-Atlantic institutions. However, from the pharmaceutical industry point of view, most of local regulations are already in line with international norms, though there is still scope for improvement.
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