67 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE frastructure and stricter quality systems and face less direct price competition from Asian producers (Fischer et al., 2023). Importantly, the regulatory pathway is established and well mapped, and the manufacturing investment required, while substantial, is achievable at the scale of a firm like JGL (EBRD, n.d.-a). Several Central European manufacturers in Poland and Slovenia followed this complexity ladder during the 2010s, utilizing EU funds to finance facility upgrades and access Western European and US export markets. Step three: entering the biosimilar manufacturing segment. Biosimilars represent one of the fastest-growing segments of European pharmaceutical manufacturing. Unlike novel biologics, biosimilars do not require original drug discovery; they require sophisticated manufacturing capability and rigorous regulatory preparation, both of which can be developed from Croatia’s existing technical workforce and good manufacturing practice infrastructure with targeted investment. Poland’s Polpharma and Hungary’s Gedeon Richter entered biosimilar manufacturing through this route. The market opportunity is substantial: Dozens of major biologics will lose patent protection through the late 2020s, and European demand for locally manufactured biosimilars is growing amid supply security pressures. Biologics generating over $200B in annual revenue are set to lose patent protection by 2030. Step four: more engagement as a contract development and manufacturing organization (CDMO) for the regional and European market. Once Croatia has demonstrated complex dosage form and biosimilar manufacturing capabilities, the logical next step is to open that capability to third-party clients in need of EU-based production. This CDMO transition is what Ireland, with Eirgen Pharma, and Korea, with Samsung Biologics, have deliberately pursued (IDA Ireland, 2026; Samsung Biologics, 2026): using industrial policy to enhance manufacturing reputation and regulatory credibility and then leveraging that track record to attract fee-for-service contracts from multinational firms seeking to reduce overreliance on a single manufacturing region. At this stage, Croatia’s production base generates export revenue from manufacturing services while cultivating the organizational and technical sophistication needed for the final step. Step five: developing proprietary specialty products. The endpoint of the pathway is a domestic pharmaceutical sector with genuine proprietary product capability, able to compete in international markets through innovation rather than relying on low-cost production. This trajectory can be seen in the case of Denmark, where Novo Nordisk grew from two small domestic insulin producers founded in the 1920s into a global leader in specialty biologics. The government invested in cluster infrastructure, offered targeted R&D incentives, and maintained a policy environment that rewarded domestic firms for moving from manufacturing into proprietary innovation. For Croatia, this means firms like JGL developing and seeking regulatory approval for specialty medicines in niche therapeutic areas where development costs are manageable and the competitive landscape is less crowded than in mainstream therapeutic categories. Orphan drugs, rare disease treatments, and niche oncology products are the natural targets, categories where a small market size is less of a disadvantage and where EU regulatory incentives, including extended market exclusivity and fee reductions, partially offset development costs and national needs. This fifth step is a long-horizon ambition, not a near-term deliverable, but the pathway described here is what will make it possible. The pathway is sequential by design, but each step carries real constraints worth naming. Step one enters a low-margin segment that Asian producers dominate on cost, and step two demands facility investment at serious scale just as the EU funding window that once helped Poland and Slovenia has narrowed. Steps three and four (biosimilar manufacturing and CDMO positioning) will require institutional capacity that Croatia does not currently have at scale: sustained public–private coordination, a research workforce it has been losing to emigration, and a regulatory agency stretched by existing responsibilities. Step five remains a long-horizon ambition contingent on all prior steps succeeding. Without a dedicated pharmaceutical upgrading strategy—one that links HAMAG- BICRO grant instruments to manufacturing complexity targets, ties Investment Promotion Act awards to therapeutic-area priorities, and establishes a national retention program for scientific talent—the pathway will stall at its earliest stages.
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