63 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE overactive bladder, Sanctura, which launched in the US in 2004 (PLIVA d.d., n.d.). By 2004, the company’s revenue peaked at $1.1B. Despite a concerted effort, PLIVA struggled to replicate the success of azithromycin, and, after the US patent for Zithromax expired in 2005, royalty revenues fell. This vulnerability opened the door to acquisition, and in 2006, US-based Barr Pharmaceuticals purchased PLIVA for $2.5B (Third-Largest Generic…, 2006). Two years later, Barr itself was acquired by Teva Pharmaceutical Industries. Teva poured more than $100M into a new facility in Zagreb, boosting its production capacity by 25% (Manufacturing Chemist, 2013). This expansion, however, also meant that PLIVA became part of Teva’s global cost-reduction strategies, shifting PLIVA from an independent innovator to a manufacturing center with reduced local autonomy over research. PLIVA’s sale marked more than a transfer of shares. For decades, it had been the institutional anchor of Croatia’s pharmaceutical innovation ecosystem, the employer of its best researchers, the engine behind its most advanced science, and the clearest proof that a career in original drug discovery did not require leaving the country. Its absorption into Teva did not end pharmaceutical manufacturing in Croatia. It did, however, end to an extent Croatia’s position as an originator. Within two acquisitions, a firm that once defined its own research agenda became part of a global generics network, taking direction from elsewhere. This transformation fits a broader pattern: Pharmaceutical mergers rarely preserve research intensity and often halt local innovation. Acquisitions tend to result in a decline in patenting and R&D investment alongside falling innovation (Ornaghi, 2009). Across post-socialist Central and Eastern Europe, similar forces were at work. As domestic innovators disappeared, public research funding declined, and cost-containment policies pushed firms toward generic production as the rational strategy (Jakovljevic et al., 2016). Under foreign ownership, the corporations prioritized their global portfolio over national development goals. The firms that remained in Croatia, Belupo and JGL, built credible businesses but could not fill the innovation vacuum left by PLIVA. Regional divergence Elsewhere in the region, a different path emerged. Slovenia’s Krka, Hungary’s Gedeon Richter, and Poland’s Polpharma began in the same post-socialist environment and faced the same transition pressures of the 1990s. Krka remained under partial state ownership and consistently reinvested around 10% of sales in R&D (Krka, 2025), becoming a major multinational generics producer (Krka, 2024). Gedeon Richter similarly preserved research independence under a strategic Hungarian state stake and held a leading multinational position in women’s health and central nervous system therapies (Gedeon Richter, 2024). Polpharma remained under domestic private ownership, resisted acquisition, and expanded into biosimilars markets across more than 40 countries (Polpharma Group, n.d.). These companies demonstrate that the socialist-era pharmaceutical base was not itself the constraint. Instead, the divergence came down to ownership structure, reinvestment discipline, and strategic patience. Croatia and the EU Croatia’s accession to the EU in July 2013 reinforced its trajectory toward generics (European Commission, 2011). EU membership broadened access to therapeutic options and integrated Croatia into the EU regulatory system and international value chains. HALMED, the national regulator, became an active participant in the European Medicines Agency (Hina, 2014) and was set to become one of the first EU inspectorates recognized by the US Food and Drug Administration (HALMED, 2026a). This recognition enabled Croatian manufacturers to participate directly in transatlantic pharmaceutical supply chains, improve on counterfeit issues, and attract significant foreign direct investment in pharmaceutical manufacturing and biologics. Croatia also emerged as a credible clinical trial destination thanks to its scientific heritage, good clinical practice–compliant infrastructure, and position as a linguistic and geographic bridge between EU and non-EU Balkan markets (Aralica, 2009; Cromos Pharma, 2023). However, harmonization also brought constraints that reinforced Croatia’s shift to generics rather than reversing it. The first impact was financial. New member states were expected to align their public finances with EU fiscal rules. Croatia, already in recession and placed under the Excessive Deficit Procedure in January 2014 (Council of the European Union, 2014), was required to cut its deficit from 5.5% of GDP to 2.7% by 2016 (Council of the European Union 2017). The resulting reductions in health spending and pharmaceutical subsidies caused the market to contract in 2014 and 2015 (Ministry of Foreign Affairs in Denmark, 2024). Alongside the compression, the firms also faced significant compliance costs to align with European goods manufacturing practice standards, which required upgrades
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