New Market Report Now Available: Croatia Pharmaceuticals & Healthcare Report Q2 2013

New Healthcare market report from Business Monitor International: "Croatia Pharmaceuticals & Healthcare Report Q2 2013"

by Bill Thompson

(WireNews+Co) - Boston, MA - 22 March 2013

Executive Summary

BMI View: Croatia's entrance into the EU will accelerate its economic liberalisation and the development of the private sector. It is also likely to bring about an influx of EU funding in modernising the country's economy. The Croatian pharmaceutical market continues to pose a challenging environment to domestic and international drugmakers, but we believe EU accession will ease the regulatory burden as legislation is harmonised with EU norms. In 2013 the economy is expected to post weak growth in anticipation of capital inflows from the EU. However, VAT rises and inflation suggest that growth seen in 2013 will not be due to increased drug consumption. We forecast weak pharmaceutical market growth for the next decade due to the prevailing economic conditions in Europe. Healthcare and medical devices spending is projected to rise significantly over the next 10 years, caused by the rapidly aging population.

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Headline Expenditure Projections

- Pharmaceuticals: HRK7.50bn (US$1.37bn) in 2012 to HRK7.65bn (US$1.33bn) in 2013; 2% in local currency and -3.4% in US dollar terms. Forecast unchanged from Q113.
- Healthcare: HRK25.09bn (US$4.59bn) in 2012 to HRK26.15bn (US$4.53bn) in 2013; +4.2% in local currency and -1.3% in US dollar terms. Forecast unchanged from Q113.

Risk/Reward Rating: Croatia's RRR score remains unchanged from Q113, however this should be seen as a positive development, as the regional average score has decreased from 51.2 to 50.7. The country's Industry Risk score remains above the regional average, indicating the country's relatively favourable regulatory regime for drug approvals compared to its neighbours. However, in the categories of Industry Rewards, Country Rewards and Country Risk, Croatia scores below average, highlighting its challenging market conditions.

Key Trends And Developments:

- Accession to the EU in June 2013 will see an inflow of EU funding into reforming and modernising the country's economy, legislative bodies, healthcare system and business environment. The benefits of these will only be felt in the medium-to-long term, but promise to boost pharmaceutical spending as Croatia's economy grows.
- The accrual of debts by hospitals and the CIHI has become a major problem for pharmacies and wholesalers, who are owed significant amounts of money by the state. Moreover, the state has taken towards centralising procurement of specific drugs and medical supplies to cut costs.
- The implementation of a clawback tax on pharmacies and producers to ensure neutral budgets has added to the strain on pharmacies and drugmakers. Prescriptions and drug consumption will continue to rise even as unemployment climbs and the economy slowly recovers.
- Price controls or co-payments on expensive medicines are to be introduced this year as the cost of funding these (especially anti-cancer drugs) rises significantly.

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