The pharmaceutical industry in Croatia, which joined the European Union on 1 July 2013, is looking to capitalise on its accession by increasing its exports, entering new markets and expanding its product ranges. However, the industry is wary of the challenges that its EU entry could bring.
Croatia’s pharmaceuticals industry, which comprises 37 companies and employs around 4,420 people, according to its government Agency for Investments and Competitiveness (AIK), is primarily focused on the manufacture of generics. Its biggest companies include Pliva, part of the Israel-based Teva Group, which produces generic and niche products for cardiovascular, gastro-intestinal, anti-infectives, oncology, musculoskeletal, neurological and psychiatric diseases; Belupo, the leading company in sales of medicinal products for the cardiovascular system, nervous system and skin complaints; Jadran Galenski Laboratorij (JGL), which offers a range of brand-name generics, over-the-counter drugs and medical products; and PharmaS, established in 2009, which produces generics mainly for cardio, gastro and neuro-psychiatric groups.
According to the Croatian Chamber of Economy, exports of pharmaceuticals in 2012 were worth €347m, representing 4.6% of Croatia’s total exports. And European Commission data says exports of pharmaceuticals from Croatia to the EU grew by 9.4% to €88.4m in 2012, and were worth €56.4m in the first six months of 2013.
Slovenia is the biggest EU market for Croatian pharmaceuticals, taking products worth €24.1m in 2012, followed by the Netherlands with €20.1m, Poland with €12.7m, the UK with €4.99m, Spain with €4.97m, the Czech Republic with €4.7m and Slovakia with €4.6m.
The Commission said Croatian imports of pharmaceuticals from the EU fell by 2.3% to €474m in 2012, and were worth €220m in the first six months of 2013. Hungary is the biggest EU supplier, with exports of €111m in 2012, followed by Slovenia with €100m, Germany with €67.6m and Netherlands with €45.9m.
Jerko Jaksic, CEO at PharmaS, expects Croatia’s entry to the EU will help to grow the country’s exports and expand its range of markets. ‘We expect many business opportunities in the large EU market and the liberalisation of the market through product registration at the EU level,’ he said.
We expect many business opportunities in the large EU market and the liberalisation of the market through product registration at the EU level
As well as increasing its exports, PharmaS hopes to build on Croatia’s EU accession by working with companies from outside the EU that are looking to enter the European market. ‘We want PharmaS to be recognised as experts in the region of south-east Europe. In this way we can be of interest to various companies, whether it is co-operation on a single product or expanding in the region. Each individual market in the region, because of its size, is not attractive enough to large multinational companies, but if there is a partner, such as PharmaS, that covers more markets that have a total population of more than 20 million people, and has the experience and expertise of operating in these markets, then the possibility of the co-operation increases,’ he said.
Belupo is also hoping to expand its range of export markets following accession. Chief Executive Hrvoje Kolaric said that currently 49% of its sales are from markets outside Croatia, and it wants to grow its exports to account for a greater share of its overall sales. ‘Orientation to new markets remains a priority and the only way to continue the current growth,’ he said.
According to Kolaric, Belupo’s strategy is to maintain its current leading position in Croatia, strengthen its central and eastern European market base, and expand into other markets, particularly in the EU but also in other parts of the world.
Croatia’s EU accession means that the country has exited the Central European Free Trade Agreement (CEFTA), which gave it free-trade access to Albania, Bosnia and Herzegovina, Macedonia, Moldova, Montenegro and Serbia.
However, PharmaS said that it has been preparing for this well ahead. ‘A few years ago, PharmaS set up a long-term strategy that, among other things, gave a solution for doing business with CEFTA countries after Croatia’s accession to the EU,’ said Jaksic.
He explained that in 2012, PharmaS opened a new pharmaceutical factory in Zrenjanin, Serbia with the capacity of 30 million packs per year, ‘through which it is possible to ensure the supply of CEFTA member countries, as well as countries in which we will continue to expand the business’. He added: ‘Serbia has signed a non-customs agreement with Russia and other eastern countries, and due to the fact that PharmaS in Serbia operates as a domestic manufacturer, it is an excellent platform for new business in these countries.’ The company’s main factory for exports will continue to be its site in Popova, Croatia, which also has an annual capacity of 30 million packs of medicines.
Croatian accession to the EU, and the pharmaceutical business in the market with more than 500 million people in front of us is a set of new challenges
Croatia’s pharmaceuticals sector is also looking to expand its product range following accession. Kolaric said that it will be important for Belupo to diversify its product portfolio, and establish itself in certain new niche product areas. ‘Croatian accession to the EU, and the pharmaceutical business in the market with more than 500 million people in front of us is a set of new challenges,’ he said. ‘We are aware that the process of globalisation can be managed in only one way, and that is to target groups in which we will be the local and regional leader. Thus we are looking for niches where we can achieve results or where large business will not go.’ Oncology and diabetes are two therapeutic areas it will look to expand into, he said.
PharmaS intends to capitalise on Croatia’s EU accession by moving beyond generics and launching several new products. ‘PharmaS will no longer be just a generic company,’ Jaksic said. ‘We will seek to fill the niche between generic and innovative drug manufacturers. We intend to bring a number of innovative products onto the Croatian market and therefore we offer partnerships to drug manufacturers in Europe and the rest of the world.’ He said that PharmaS is expanding into consumer healthcare, primarily dietary supplements and OTC products.
It appears that Croatia has prepared well in advance for the legislative changes to the pharma sector required by EU accession. A spokesperson at the European Medicines Agency (EMA) confirmed that Croatia has signed up to the relevant EU ‘acquis communautaire’ of rules and regulations, which means that from now on, EMA’s EU centralised marketing authorisation for medicines will apply to Croatia.
The spokesperson said that Croatia is also now operating the mutual recognition procedure for medicines approved in other EU member states, and of course duties and trade red tape have been scrapped: ‘In terms of customs regulation the rules of the internal market apply.’
A spokesperson at Croatia’s ministry of health said that the country has ensured that its legislation concerning medicinal products is fully compliant with EU regulations. She noted that a new EU-compliant Medicinal Products Act (Official Gazette No.76/13) and subordinate legislation concerning the calculation of prices for medicinal products, as well as the introduction of medicinal products to the list of those whose purchase can be reimbursed by the Croatian Health Insurance Fund, entered into force on 1 July 2013.
‘The new Act provides free movement of medicinal products on the EU single market, and the procedure for the registration of medicinal products has been simplified by way of the centralised procedure and mutual recognition procedure, providing improved access to medicinal products for patients,’ she said.
Since accession to the EU Croatia has been fully participating in the activities of the EMA
The EMA spokesperson noted that Croatia’s pharma sector has prepared well in advance for EU accession. ‘Preparation for the participation of Croatia in the EMA’s activities began in 2007, when the European Commission’s Instrument for Pre-accession Assistance (IPA) programme for Croatia was put in place,’ she said. ‘Under the framework of the IPA, the EMA worked with the Croatian national competent authorities to prepare their participation in the EMA’s activities and contribute to the creation of information exchange systems to support its integration into the European medicines network.’
As part of this programme, representatives nominated by Croatia participated as observers in selected meetings; and conferences, training sessions and visits were organised for Croatian experts on medicine regulation.
‘Since accession to the EU Croatia has been fully participating in the activities of the EMA,’ she said; Croatia is now represented on the EMA’s scientific committees, management board, working parties and other groups, and Croatian experts are participating in the assessment activities of medicinal products.
Meanwhile, François Lamérant, Manager for Country Support at the European Federation of Pharmaceutical Industries and Associations (EFPIA), said that ‘as in the case of previous accessions, Croatia’s entry to the EU is providing both opportunities and challenges to pharmaceutical manufacturers’. He warned that while Croatia’s accession has led to the harmonisation of Croatian pharmaceutical regulation with EU standards, and increased business certainty in Croatia with standard IP protection, ‘it could also become another example of the difficulty to reward innovation in a single market made up of 28 different healthcare systems with different levels of resources.’
He added: ‘While pharmaceuticals can be traded freely within the single market, their price remains publicly administered, which explains important variations of prices across Europe, and generates incentives for re-exportation.’
