64 PERSPECTIVES ON BUSINESS AND ECONOMICS | VOL 44 | 2026 to documentation, facilities, and regulatory staffing (European Commission, 2022). For multinational firms with existing quality systems, this was manageable. For smaller domestic producers like Belupo and JGL, it meant new fixed costs layered onto already-thin generic margins. The new regulatory framework also reshaped the intellectual property environment for domestic manufacturers, intensifying financial pressures. In 2013, the majority of Croatia’s 10 largest pharmaceutical companies recorded declining net profits (World Bank, 2021). Prior to accession, Croatia’s national pharmaceutical legislation permitted generic manufacturers to enter the market soon after patent expiry, operating under a shorter and more permissive protection regime. Under the EU 8+2+1 framework, originator firms receive up to 11 years of protection: 8 years of data exclusivity, 2 of market protection, and a possible additional year for new indications (Zulfikari et al., 2015). Croatian companies, whose business models relied on rapid generic entry after patent expiration, now faced a significantly longer waiting period before legal competition was possible for any given product and, in some cases, had existing generics withdrawn from the market immediately upon accession (PETOŠEVIĆ, 2013). External reference pricing Croatia’s national pricing policy utilizes external reference pricing, setting maximum drug prices by benchmarking against a basket of reference countries, Italy, the Czech Republic, and Slovenia. When basket countries reduce their prices, Croatian price ceilings fall automatically. External reference pricing lets a small economy like Croatia free ride on the competitive pricing that larger markets generate (Kanavos et al., 2020; Maybury, 2015). Lower ceilings mean lower margins. Lower margins mean less commercial incentive to launch new products in Croatia. When a low price is accepted in Croatia, it can spill over into other markets, as countries reference each other’s prices downward. Manufacturers, aware of this risk, delay or forgo launching in Croatia altogether, a pattern documented across Central and Eastern Europe. By keeping Croatian prices low and tightly linked to richer markets, external reference pricing shrinks the expected return on new drugs and, in turn, weakens Croatia’s capacity and incentive to invest in its own pharmaceutical innovation. In the EU, regulatory approval and national reimbursement are separate decisions. Approval initially is granted at the European level. Whether the Croatian Health Insurance Fund will cover the cost is decided nationally, and that decision remains constrained by the Fund’s budget. The queue of approved but unreimbursed medicines grew, and the wait between approval and actual availability lengthened. By 2015, Croatia’s average medicine launch delay exceeded two years (Büssgen & Stargardt, 2022). Furthermore, Croatia reimbursed only 27% of innovative medicines approved by the European Medicines Agency between 2021 and 2024, compared with 85% in Germany and the United Kingdom (Watt, 2025). In low-price countries like Croatia, parallel trade (the practice of purchasing medicines and reselling them in higher-price markets) creates an incentive for wholesalers to divert supply outward rather than retain it for domestic patients (Bristows, 2018; Nolen & Balling, 2021). The domestic industry met only 35% of local demand by value in the years after accession, with the remainder supplied by imports (International Trade Administration, n.d.). The country that had developed a pharmaceutical industry capable of exporting to global markets found itself importing medicines it could not afford, while its own manufacturers looked outward to survive. Foreign investment after accession reinforced Croatia’s role as a production base. Investment was largely focused on acquisitions rather than on new research capacity, embedding the country more deeply in manufacturing rather than in discovery (European Data Journalism Network, 2026). At the same time, labor mobility accelerated the loss of human capital. EU membership gave Croatian scientists and pharmacists the right to work anywhere in the bloc. Many moved to larger research centers in Western Europe. The country experienced sustained population decline, and the share of university graduates living abroad ranked among the highest in the EU. For a sector dependent on skilled researchers and regulatory experts, this steady outflow reduced the capacity for renewal (Hornstein Tomić & Taylor, 2018). Current dynamics of the Croatian pharmaceutical industry The Croatian pharmaceutical market is estimated at $2.13B in 2026 and expected to reach $2.78B by 2031 (Mordor Intelligence, 2026). Although the sector accounts for about 2% of the national GDP, its fiscal weight is disproportionately large. More than 80% of pharmaceutical expenditure is publicly financed, which constrains the government’s willingness to pay higher prices for innovative medicines,
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