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Executive Summary
The Serbian government has committed to improving and modernizing the nationalized healthcare system. In recent years, the government has undertaken an extensive program of renovation and equipment upgrades, with the help of external financing from international organizations such as the World Bank.
The healthcare system in Serbia is financed by compulsory health insurance contributions, based on 10.3% of payroll taxes. The system provides easy access to comprehensive health services for the entire population. Despite that, 38% of expenditures for healthcare services in Serbia are paid out of pocket. A majority of hospitals are public (state-owned). However, with the development of the private insurance market, private healthcare services and institutions have experienced significant growth over the last ten years. The public healthcare network in Serbia includes a total of 350 healthcare institutions, including 158 primary healthcare entities, 128 secondary level institutions (40 general hospitals and 34 special hospitals and rehabilitation centers), four clinical centers, and four military healthcare institutions. The total number of beds in state hospitals stood at 41,654 at the end of 2017. According to the official statistics, 10% of the total number of medical practitioners are working in private sector.
The Ministry of Health is the major decision maker in the Serbian healthcare market. It develops health policies and budgets, monitors the work of state-owned health institutions and approves plans for purchases of medical equipment. The Public Procurement Act requires open tenders for all purchases in the state-owned sector. Private medical practitioners present some opportunities for sales of dialysis and diagnostic imaging equipment, though they are not obliged to implement public procurement rules.
The Medicines and Medical Devices Agency of Serbia (ALIMS) (www.alims.gov.rs) oversees issuing marketing authorizations for medicinal products and medical devices.
According to the new Law on Medical Devices, effective as of December 2018, the CE mark will be recognized, while other products must pass the marketing authorization process by ALIMS. Even though Serbia has adopted most of the European regulations, the CE mark has not yet been recognized for innovative pharmaceutical products. All drugs must pass the marketing authorization process. This procedure is more simplified.
United States (U.S.) medical devices and pharmaceutical products have an excellent reputation and a strong market position in Serbia. Best prospects are products and medications for cardiovascular treatments, bone health, orthopedics, cancer treatments, dementia care, and cheaper and more efficient screening and diagnostic technologies.
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Market Entry
Medical Devices
he Serbian market is very receptive to high quality U.S medical equipment. It is highly competitive for its suppliers due to the concentrated size of the Serbian market and the number of diverse importers. In addition, the structure of the public healthcare sector and especially the bureaucratic process of the existing tender system make it imperative for U.S. suppliers to have local partners. Competitive strategies focus mostly on pricing, exchange rates, and payment terms, particularly when dealing with the public hospitals. The market is very price sensitive. When purchasing medical equipment, end-users also look for established companies with reliable after-sales service and customer support. As of December 2018, CE mark will be fully recognized and the procedure for imports will be simplified. Most distributors handle several brands of similar equipment or several lines.
Pharmaceuticals
Presently, most multinationals are involved in the Serbian market through imports of their product portfolios or through licensing and marketing agreements with local players. Roche is one of the leading players on the market, with other multinational companies in Serbia including Merck, GlaxoSmithKline, Pfizer, Sanofi, Novo Nordisk, Abbot, Janssen-Cilag and AstraZeneca. About 70 foreign companies have representative offices in the country, with the majority being members of the Association of Foreign Pharmaceutical Manufacturers in Serbia. Roche remains the only foreign pharmaceutical player with affiliate status, and reportedly records the largest turnover among the international pharmaceutical players in the country.
The appointment of a local distributor will be essential and mandatory to navigate the tendering processes, both for medical devices and pharmaceuticals, and reach end-users throughout the country.
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Current Market Trends
Current market trends reflect increasing life expectancy (74.6 years) and unhealthy lifestyles (obesity and heart disease are on the rise) in Serbia. Devices used to monitor symptoms and manage disease are in increasing demand. The most common cause of death is circulatory system problems (including heart disease and stroke). Serbs continue to be heavy smokers and the air in many industrial cities is somewhat polluted. Growing interest in innovative diagnostic devices and biological treatments could generate new opportunities for U.S. medical equipment providers, as well as pharmaceutical companies.
E-health has been a main topic in Serbia for the last five years. The Serbian Ministry of Health introduced the basic concept through e-appointments and e-prescription, which should help to establish a program for the national introduction of E-health in the future. The introduction of E-health faces challenges including the low motivation of doctors, patients and state institutions, as well as limited legislation in this area and a lack of financing.
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Main Competitors
Medical Devices
Domestic production of medical equipment and devices is small and largely covers medical supplies such as bandages and syringes, as well as low-tech and small amounts of high-tech medical equipment. Most medical devices used in Serbia are imported. Around 90% of the medical device market is supplied by imports, mainly from the U.S. and European Union (EU) countries. The biggest European competitors are Siemens and Philips. The proximity of the European firms to the Serbian market allows them frequent visits to meet end users, to participate in exhibitions and scientific meetings, and to provide prompt after-sales services to buyers. Competition from Chinese companies should be considered a serious challenge for future market entry strategies.
Pharmaceuticals
The Serbian pharmaceutical market is split between domestic production and imports of pharmaceuticals from foreign multinationals, as the country is home to several large generic drug makers, such as Stada subsidiary Hemofarm and Actavis subsidiary Zdravlje. Local Galenika was recently privatized and sold to a new owner from Brazil (EMS SA).
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Current Demand
Medical Devices
In 2018, the Serbian market for medical equipment and supplies was estimated at USD 250 million, or $28 per capita. The market grew five% cover the previous year. Further growth of 3/5%, annually, between 2019 and 2023 is expected, reaching USD 300 million. Imports account for approximately 88% of the market, in part because of the implementation of health reforms that increased demand for new equipment. Approximately 10% of medical equipment imports are from the U.S., although the actual share of U.S. imports is higher as some are shipped from their European subsidiaries. Chinese companies have become very active in the Serbian market, with one now in charge of providing medical equipment to the newly renovated Clinical Center Niš.
Private medical practices have expanded in Serbia over the last ten years. Most of them were developed in Belgrade in cooperation with a successful pan-European medical service provider specializing in diagnostics investigations, clinical laboratories, and cancer treatment services. According to the association of private healthcare services providers, half of diagnostics equipment, such as MRIs and scanners, is used by the private sector. Some examples are: Bel Medic, Euromedic, Medi-Group, Affidea, and Vizin. This segment of the market will present medium-term procurement opportunities in Serbia, while reconstruction of state-owned hospitals will remain in the long-term plans. U.S.-manufactured medical equipment enjoys an excellent reputation in Serbia for its state-of-the-art technology, quality, and reliability. The best sales prospects for U.S. medical equipment include:
- Linear accelerators
- Cardiovascular diagnostic equipment
- Non-invasive surgical devices
- Anesthesia and intensive care equipment
- Diagnostic imaging (CTs, MRIs)
- Radiation therapy equipment
- Ultrasound equipment
- Urology equipment
- Laboratory and testing equipment
- Tissue and blood bank related equipment
- Ultra-violet/infra-red equipment used in medical, surgical, dental, and veterinary sciences
- Apparatuses based on the use of X-rays of alpha, beta or gamma radiation treatments
- Medical lasers
Pharmaceuticals
Serbia’s overall pharmaceutical market is relatively underdeveloped, seeing regular medicine shortages and somewhat long waiting times for patients. The total market for pharmaceutical products in Serbia was estimated at USD 1.110 billion in 2018, recording small growth compared to the 2017 level. Serbia’s pharmaceutical market is dominated by prescription drug sales, which account for 89.70 percent of the total value of the market, primarily generic medicines, which in turn constitute 69.00 percent of prescription drug sales and 61.90 percent of the total value of the market. Over-the-counter (OTC) medicines are the smallest segment of the market, accounting for 10.28 percent of total pharmaceutical sales. Patented drugs are also a considerable segment of the pharmaceutical market, worth some 27.78 percent of the market in value terms. Serbia’s Republic Health Insurance Fund provides full and partial reimbursement to insured citizens for pharmaceuticals placed on its positive reimbursement list. Currently, the reimbursement list consists primarily of generic drugs and the market segmentation reflects this.
Local distributors indicate that there is a large demand for diagnostic tests for drugs, pregnancy, and various illnesses, and express interest in importing what they call “hit” products, i.e., new U.S. products with no European equivalents. Digitalization of various technology processes in hospitals and optimization of the IT systems and improvement of hospital management systems will continue to be on the agenda.
Dental Equipment and Supplies
Serbia has dental practices and dentists that offer high quality dental services with affordable prices, which has resulted in an increase of dental tourists. The Serbian dental equipment and supply market is dominated by German, Scandinavian, Italian and French suppliers. However, it provides market potential for U.S. suppliers of teeth whitening systems, lasers, optical instruments, small equipment for implants and root canal treatment and orthodontics devices.
Over The Counter (OTC)
The Serbian Law on Drugs prohibits the sale of any pharmaceuticals, including OTC, outside of pharmacies. Customs-free access to some markets such as Russia, former-Yugoslav countries, and the EU provide many opportunities for both medicines and medical devices, such as export-oriented green-field investments, contract manufacturing and outsourced small-batch production. Serbia’s leading pharmaceutical companies have modern technological solutions that comply with good manufacturing practices.
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Registration Process
The Medicines and Medical Devices Agency of Serbia (ALIMS) oversees issuing marketing authorizations for medicinal products and medical devices. Although Serbia is not yet an EU member, it has adopted most European regulations. For medical devices, EU certification and approval is mandatory as of December 2018, under Medical Devices Law (2017). The registration process for pharmaceuticals is more complicated and time consuming (ALIMS).
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Reimbursement
Pricing and reimbursement policies in Serbia are regulated by two acts: The Price Decree for Drugs for Human Use and the Decree on the Criteria and Procedure for the Reimbursement List. These decrees established the criteria for setting maximum prices for all medicines, whether reimbursed or not reimbursed/purchased by the state. The maximum wholesaler price permitted is set at an adjusted average of wholesaler prices in three reference countries: Slovenia, Croatia and Italy. Based on the Law on Drugs and Medical Devices, guidelines for the positive drug list (PDL) for the reimbursement of drugs consists of products grouped under their anatomical-therapeutic-chemical (ATC) code.
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Barriers
There are no restrictions on imports, provided the medicines are registered/approved for use in Serbia. The import duties range from 1-5%. Customs duties are not applied to imports from countries with which Serbia has signed Free Trade Agreements. According to Serbian tax regulations, all products regardless of origin are subject to a 20 percent value added tax (VAT), which is borne by the final customer (hospital or patient), except orthotic and prosthetic devices and medical devices - products that are surgically implanted in the body, which are subject to ten percent value added tax.
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U.S. Commercial Service Contact Information
Name: Zorica Mihajlovic
Position: Senior Commercial Specialist
Email: Zorica.mihajlovic@trade.gov
Phone: +318 65 384 8990
