Boston, MA -- (SBWIRE) -- 06/21/2013 -- Croatia's entrance into the EU will accelerate its economic liberalisation and the development of the country's 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, the imposition of across the board price cuts later in 2013 will weigh heavily on the pharmaceutical market. We forecast weak pharmaceutical market growth for the next decade due to the prevailing economic conditions in Europe. Healthcare spending is projected to rise significantly over the next 10 years, in line with a rapidly ageing population.

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Headline Expenditure Projections

- Pharmaceuticals: HRK7.50bn (US$1.28bn) in 2012 to HRK7.05bn (US$1.22bn) in 2013; -6% in local currency and -5.1% in US dollar terms. Forecast changed from Q213, owing to price cuts announcement from Health Ministry.
- Healthcare: HRK27.04bn (US$4.62bn) in 2012 to HRK28.27bn (US$4.88bn) in 2013; +4.5% in local currency and 5.6% in US dollar terms. Forecast changed from Q213, owing to updated World Health Organisation figures on government and private expenditure.

Risk/Reward Rating:

A minor re-weighting of one of the RRR components has been implemented to improve the tool, and the adjusted scores for Croatia has been published in time for the Q313 update of the Pharmaceuticals & Healthcare report. Croatia has a RRR score of 45.8 out of 100, making it the 18th most attractive pharmaceutical market in Central and Eastern Europe. In the categories of Industry Rewards, Country Rewards and Country Risk, Croatia scores below average, highlighting its challenging market conditions.

Key Trends And Developments:

- Health minister, Rajko Ostojic, announced an across-the-board price cut of 15-20% for medicines on the Croatian positive reimbursement list on March 8 2013. The minister also announced unified public procurement would enable cost savings of HRK600mn (US$103mn). The Croatian pharmaceutical market is coming under intense contractionary pressure in 2013. The HZZO announced its 2013 budget for prescription drugs would be reduced from HRK3.1bn (US$530mn) to HRK2.8bn (US$480mn), combined with price controls introduced on expensive medicines in November 2012.
- 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.

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