Optimism and caution are the key words with which we enter the year ahead. This certainly applies to JGL, and I believe that the rest of business Croatia has the right to moderate optimism, despite the complex and challenging environment. The year behind us, like several previous ones, was marked by the continuation of global geopolitical tensions and economic uncertainties.
The continuation of the war in Ukraine, the brutal conflict between Israel and Palestine, inflation, volatility in energy markets, and technical recession in the eurozone are just some of the challenges we experienced in 2023. These challenges are of high complexity and intensity that political leaders and managers in this part of the world have not faced for decades. All these crises continue from the period of the coronavirus pandemic, so we have been living for years in conditions of a kind of state of emergency where only the causes of shock change.
In such an environment and historically complicated social relations, it is not easy to predict what awaits us in the year ahead. Especially since 2024 will be marked by a kind of blurring of reality, specific to the time before democratic elections. If we have referred to the years behind us as ‘pandemic’, ‘crisis’, and ‘war’, then we can rightly call the year ahead ‘super-electoral’. Citizens of the Republic of Croatia are expecting three types of elections – European, parliamentary, and presidential, while presidential elections are also being prepared in America and Russia, pressure is rising for elections to be held in Ukraine, and the replacement of Benjamin Netanyahu from the position of Prime Minister in Israel is likely. All these circumstances will strongly influence economic policies in the year ahead.
Pressure to Lower Prices
In addition to global and regional instabilities, there are more and more factors that directly affect the Croatian economy. The recession in Germany, one of our most important economic partners, and minimal growth rates in the rest of the European Union weaken the purchasing power of the population and increase uncertainty in all segments of the domestic economy, including of course the pharmaceutical industry. Another obstacle to stronger growth of high-tech companies in Croatia is certainly the continuation of excessive tax burdens on the salaries of highly educated personnel. Such tax policy reduces capacities to attract new talents, but also to retain existing ones in Croatia, which we have been struggling with for decades. Highly qualified workers are the drivers of innovation and creators of new value and are therefore key to Croatia’s long-term economic competitiveness. Therefore, tax relief for the highly educated is not just a matter of fairer distribution of the tax burden; it is also a strategic move that can ensure a better perspective for the entire economy.
A specific problem in the pharmaceutical industry is the continuous increase in regulatory requirements along with simultaneous pressure to lower drug prices. In conditions of high inflation, most other industries had the opportunity, at least partially, to correct their prices while prescription drugs continue to experience pressure to lower prices. This situation is unsustainable as more and more manufacturers will be forced to abandon formulations that cannot be produced at those prices – and we will have an even greater problem with the availability of medicines. This is already happening and is visible in many shortages of certain therapies. To preserve the viability of the pharmaceutical industry and maintain drug production on our own soil, we must preserve profitability as it is the only guarantee of regular supply to the healthcare system and patients. The pharmaceutical industry has strategic importance for Croatia: it is one of the strongest industrial sectors and leading exporters, has about 6,000 employees and 18,000 indirect jobs, with revenues exceeding 700 million euros.
