SUSTAINABLE GROWTH OF THE CROATIAN PHARMACEUTICAL INDUSTRY

Taking into consideration the global economy, the pharmaceutical industry is beginning to play an even more significant role. In the past ten years pharmaceutical incomes have almost doubled. That trend has made the pharmaceutical industry the most profitable one. The pharmaceutical industry is highly affected by globalisation and deregulation. Both processes caused increased competition among companies and, consequently, consolidation. Due to the specific characteristics of the pharmaceutical industry, such as high level of risk in R&D, profound capital dependence and high marketing expenses, the major pharmaceutical companies are searching for the sources of growth. Mergers and acquisitions are the most common growth strategies. Croatian pharmaceutical companies are faced with strong international competition. International pharmaceutical companies, thanks to liberal import policies of Croatian government, sell the same drugs as the local firms, but at lower prices. In addition, local companies are takeover targets for several multinational pharmaceutical corporations. Business practices investigated for this paper indicate that takeovers may have some negative consequences for the target companies, for example, reducing production, shortening production lines, cutting off staff or relocating research facilities. The aim of the paper is to investigate the limitation factors of the sustainable growth of Croatian pharmaceutical companies and to propose the measures for the elimination of those factors. A survey was conducted for that purpose. Questionnaires were mailed to all pharmaceutical companies in Croatia. The results have been analyzed and presented in the paper in order to understand and determine the level of the present development and to emphasize the key obstacles to accomplishing a more satisfactory growth and competitiveness. The central hypothesis in this paper is that strategic alliances could have a positive effect on enhancing sustainable growth of Croatian pharmaceutical companies.