62 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 44 | 2026 market access and foreign partnerships accelerated industrial development. It was in this window of opportunity that Gustav Janeček, a visionary chemist and professor at the University of Zagreb, entered the pharmaceutical space as cofounder of a pharmaceutical factory known as Kaštel d.d. (Inić & Flegar, 2021). Early success at this plant was driven by a strong commitment to research, notably under Professor Vladimir Prelog, who initiated organized research at the site in 1936. Prelog, later a Nobel Prize winner in chemistry, founded the Zagreb School of Organic Chemistry and raised the standard of pharmaceutical research in Croatia. An early example of their manufacturing success was with the drug Streptazol, establishing Croatia as a pioneer in the sulfonamides era. After German-born researcher Gerhard Domagk identified the antibacterial effects of sulfonamides in 1935, Kaštel d.d. moved quickly, manufacturing and marketing Streptazol, becoming one of the first sulfonamides producers in the world (The Croatian Museum…, 2021). The factory was brought under state control in 1941 and consolidated as PLIVA. In 1952, PLIVA established its own research institute (Banić Tomišić & Inić, 2024; PLIVA d.d., n.d.). The new center led to the creation of patented processes for manufacturing vitamins C and B12. The company’s most significant breakthrough came in 1980: Dr. Slobodan Đokić and his team discovered azithromycin, the first azalide antibiotic. PLIVA quickly secured patents locally and internationally, making Croatia one of the few countries to develop a new antibiotic (PLIVA d.d., n.d.). Pfizer later identified PLIVA’s azithromycin patents through international patent filings and entered a licensing agreement, securing marketing rights for the US and Western Europe under the brand name Zithromax. Meanwhile, PLIVA retained regional commercialization rights and sold the product under Sumamed in Central and Eastern Europe. Azithromycin was later included on the World Health Organization essential medicines list (World Health Organization, 2017) and has grown into a multi-billion-dollar product. Although Yugoslavia was a socialist country, its pharmaceutical sector operated differently from those in the Eastern Bloc. State-owned companies such as PLIVA combined operational autonomy with government funding, stable capital, and public infrastructure (Liebman, 1986; Yusuf, 1977). As a result, PLIVA grew into a global innovator within a socialist framework, unlike regional counterparts constrained by government control. The dissolution of Yugoslavia in 1991 forced Croatia to enact the 1991 Law on the Transformation of Socially Owned Enterprises, which mandated swift privatization toward a market economy and marked the end of the workers’ self-management model (Hiller & Dresga, 1996). Croatia retained two major firms from the federation era, PLIVA in Zagreb and Belupo in Koprivnica. A third, Jadran Galenski Laboratorij (JGL), was established as the country’s first fully private pharmaceutical company (JGL, 2011). By 1995, most companies had been privatized, while some strategic firms operated under mixed ownership. In 1996, PLIVA became the first Eastern European industrial company to be listed on the London Stock Exchange, raising $140M in an initial public offering following the signing of the Dayton Peace Agreement. By the late 1990s, Croatia’s pharmaceutical industry had reemerged as diverse and export oriented, with sales of approximately $400M. Backed by strong investor confidence and high sales revenues from azithromycin, PLIVA had expanded through acquisitions in the Czech Republic, Poland, and the United Kingdom (PLIVA d.d., n.d.). Throughout that process, both the Croatian government and the European Bank for Reconstruction and Development (EBRD) reduced their ownership stakes in 1998 to redirect capital to other priorities, signaling a shift away from state involvement in the pharma- ceutical sector. How Croatia lost its pharmaceutical prowess Despite all this success, market complexity and new threats began to appear. The global restructuring amid rising R&D costs and the challenges posed by the patent cliff led to a wave of consolidation across the industry. In fact, between 1995 and 2015, the industry consolidated from approximately 60 significant firms to just 10. Companies whose revenue was concentrated in one or two products were the most vulnerable to being targeted for acquisition and PLIVA was no different (European Commission et al., 2020). The patent revenue cliff and the road to acquisition By 2000, azithromycin made up one-quarter of PLIVA’s sales. In anticipation of the expiration of its patent, the company started diversifying through acquisitions in Germany and the US and partnering with GlaxoSmithKline to develop new antibiotics. PLIVA tested new drug candidates across multiple therapeutic areas, including a successful treatment for
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