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Croatia Pharmaceuticals and Healthcare Report Q1 2009
Business Monitor International, Jan 2009, Pages: 69
This Croatia Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Croatia's pharmaceuticals and healthcare industry.
The Croatian pharmaceutical market is estimated to be worth around US$1bn, with the figure expected to reach US$1.23bn by the end of 2013, representing an average annual growth of 7% in local currency terms. However, Croatia remains one of the least attractive investment destinations in Central and Eastern Europe (CEE), with BMI’s Business Environment Ranking (BER) matrix for Q109 placing the country in the joint 15th position, alongside Ukraine, out of the 18 regional markets, which now include Uzbekistan.
Apart from the modest population numbers and GDP per capita, other key issues include amassed healthcare debts in the state sector and the massive delays in payments to hospitals and pharmacies, which in turn struggle to meet their obligations to drugmakers and wholesalers. The government is, however, making efforts to address healthcare system shortcomings. To this end, in October 2008, Croatia's Ministry of Health pledged to introduce a combination of merging regional waiting lists and procuring additional services from the private sector in order to address the issue of long waiting lists. While the scheme initially offers limited foreign investment opportunities for large private healthcare firms, as local healthcare providers are likely to compete for the service contracts, foreign manufacturers and importers of medical devices should reap the benefits.
In the meantime, healthcare funding – especially in the light of widespread corruption and bribery – will continue to play a vital role in terms of reform progress.
In terms of wider economic climate, Croatia is likely to experience a soft landing, unlike its major trading partners in Western Europe. Real GDP growth over our five-year forecast period will average 3.4%, which will underpin long-term convergence with the eurozone. Additionally, we maintain our core view that Croatia's inflation is set to lower over the medium term, as the kuna strengthens and as global commodity prices are reduced.
This slower growth climate will be primarily caused by lower real consumer spending growth and the slowing pace of credit expansion within the local economy, although the forecast growth of Croatia’s pharmaceutical market is expected to top that of its GDP.
The past quarter has been less dynamic in terms of company news. However, the August 2008 announcement of H108 financial results for Pliva, the largest pharmaceutical concern in the country, illustrates that the months ahead will be challenging. While the company’s massive reduction in total turnover was mostly attributed to a range of positive influences during H107, including its sale to US major Barr, the like-for-like increase in turnover was only 2%. The company also reported a net loss of HRK102mn (US$20mn), as the economic problems and payment delays continue to take their toll.
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