New Market Study Published: Croatia Pharmaceuticals & Healthcare Report Q3 2014

The HZZO is moving many drugs from full reimbursement status to partial reimbursement status, as it continues to cut expenditure and shift costs onto patients. Heavy price cuts and margin restrictions within the pharmaceutical supply chain threaten to cause drug shortages and weaken the supply chain within Croatia. 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. Liquidity issues and payment terms will remain unfavourable in 2014, but we believe that EU influence should see this ease over the medium term.

Headline Expenditure Projections

* Pharmaceuticals: HRK6.95bn (USD1.19bn) in 2013 to HRK6.59bn (USD1.07bn) in 2014; -5.2% in local currency and -9.8% in US dollar terms. Forecast evised downward from Q214
* Healthcare: HRK27.22bn (USD4.66bn) in 2013 to HRK26.84bn (USD4.37bn) in 2014; -1.4% in local currency and -6.2% in US dollar terms. Forecast revised downwards from Q214 forecast.

Full Report Details at
- http://www.fastmr.com/prod/807709_croatia_pharmaceuticals_healthcare_report_q3_2014.aspx?afid=301

Risk/Reward Rating

Croatia's Risk/Reward Rating has been upgraded from Q214. Despite the country's accession to the EU, market dynamics remain subdued, with weak growth over the long term. Croatia scores 46.7 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 April 2014 the HZZO revised its primary reimbursement list, including new drugs but also revising the recommended prices downwards.
* In February 2014 the HZZO moved several drugs from full reimbursement status to partial reimbursement status, including diabetes medicines.
* New margin limits were imposed on pharmacies and wholesalers in March, with businesses complaining that they will become unprofitable and the country will experience a shortage of medicines.

BMI Economic View: Croatia's economy will contract for the sixth consecutive year in 2014, as household and corporate deleveraging scuppers any chance of a significant economic recovery. We forecast real GDP to contract by 0.3% in 2014, and the country will remain on a low growth trajectory unless significant structural reforms are implemented over the next few years.

BMI Political View: Regional tensions will remain elevated in 2014, due to Croatia's ongoing disputes with both Serbia and Hungary. Croatia's relationship with the EU is also likely to remain under strain, as the country's position within the bloc comes under pressure from the fallout from a difficult first year as a member.

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