New Market Research Report: Croatia Pharmaceuticals & Healthcare Report Q2 2014

From: Fast Market Research, Inc.
Published: Mon Feb 10 2014

We forecast weak pharmaceutical market growth over the next decade, in light of Croatia's acceding to EU pressure to rein in its budget deficit in December 2013. The budget for 2014 contains major cuts to healthcare funding, with pharmaceuticals expected to bear the brunt. Liquidity issues and payment terms will remain unfavourable in 2014, but we believe that EU pressure should see them ease over the medium term. Healthcare spending is projected to rise over the next 10 years in line with a rapidly ageing population.

Headline Expenditure Projections

* Pharmaceuticals: HRK6.95bn (US$1.19bn) in 2013 to HRK6.74bn (US$1.10bn) in 2014; -3.0% in local currency and -7.4% in US dollar terms.
* Healthcare: HRK26.44bn (US$4.53bn) in 2013 to HRK27.14bn (US$4.44bn) in 2014; 2.7% in local currency and -1.9% in US dollar terms.

Risk/Reward Rating

Full Report Details at

Croatia's Risk/Reward Rating is unchanged from Q114. Despite the country's accession to the EU, market dynamics remain subdued, with weak growth over the long term. Croatia scores 45.5 out of 100 in our Risk/ Reward Ratings, making it the 18th most-attractive pharmaceutical market in Central and Eastern Europe.

Key Trends And Developments

* In December 2013, the Croatian parliament approved a draft budget for 2014 that reduced healthcare spending, in order to rein in the country's large budget deficit.
* In July 2013 Croatian healthcare workers lost their collective bargaining rights, paving the way for potential cuts to the number of doctors and health workers, or across-the-board wage cuts for medical staff employed by public hospitals.
* In June 2013 the Croatian government decided to terminate all agreements for services from private hospitals. Previously, the HZZO paid almost HRK500mn (US$87mn) to private providers for services provided, but these will now migrate over to public polyclinics, which are expected to come under stress from an influx of new

BMI Economic View: We hold a below-consensus forecast on Croatian economic growth in 2014, with a sluggish recovery to be undermined by ongoing deleveraging in the consumer and government sectors. We forecast real GDP to expand by just 0.4% in 2014, and caution the risks to our outlook remain weighted firmly to the downside, with the country having made only limited progress rebalancing its economy since the financial crisis.

BMI Political View: We believe a referendum result preventing same-sex marriages will modestly damage Croatia's international reputation, as well as weakening the position of the ruling Kukuriku Coalition in 2014. Furthermore, the vote is likely to increase the chances of other referenda being pursued by interest groups, which could further damage Croatia's already strained relationship with the EU.

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