Multinationals Wary of Croatia's Patent Structures

Croatia is shortly due to bring its drug registration practices into line with European Union (EU) directives. The introduction of the new regulations is likely to be welcomed by the international drug industry, which considers the drug registration system one of the chief barriers to market entry.

The new legislation shortens registrations to eight months or 210 days, with companies able to submit their dossiers in English. The previous term of 900 days is understood to have implied a significant advantage to generic drugmakers in allowing early-stage production while registration was ongoing. The cost of the process has also fallen to EUR2,000 (US$2,646) in addition to the fee for first batch analysis, a marked reduction on the previous charges.

Nevertheless, the general nature of patent law remains lax. Leading local generics maker Pliva launched a version of Pfizer's erectile dysfunction treatment Viagra in late September 2004 on the domestic market, with the company claiming that it can be legally sold in Croatia as Pfizer had not protected its product due to a relatively small market size, expected to reach just reach US$700mn at retail prices by 2009.

Nevertheless, despite the introduction of a harsh new pricing system, foreign company activity is expected to increase in Croatia. EU directives should improve market entry conditions and improve competition. However, given Croatia's on-off EU accession status, the likely pace of harmonisation is uncertain and rising incomes, rather than a swift improvement in the regulatory environment, will largely drive drug market growth in the medium term.