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Hungary Pharmaceuticals and Healthcare Report Q2 2010
Business Monitor International, Feb 2010, Pages: 84
Business Monitor International's Hungary Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Hungary's pharmaceuticals and healthcare industry.
Regulatory pressures have placed considerable pressures on pharmaceutical companies operating in Hungary in recent years. The introduction of the Pharma-Economic Act in 2007 and subsequent revisions to pricing, reimbursement and prescribing directives have limited attractiveness from a domestic revenue perspective. In BMI’s Business Environment Ratings for Q210 Hungary is eighth of the 20 markets analysed in Emerging Europe, highlighting that despite tough regulations, positive factors remain for drugmakers.
Hungary’s pharmaceutical market is the fourth-largest in the region, with above-average spending on a per-capita basis and as a proportion of GDP. Despite a major market contraction in 2007, growth has returned. Budgetary restrictions within the National Health Insurance Fund (OEP) are likely to increase, particularly over the short term. The OEP health expenditure budget for 2010 includes an increase of just 1.6%.
Of this, reimbursement budget increases for pharmaceutical spending are once again minimal, at just 0.68%, with a total of HUF345bn (US$1,868mn) apportioned. Nevertheless, in spite of overall OEP budget constraints, reimbursement spending in 2009 and 2010 should exceed 2006 levels as a percentage of total spending. However, medical device firms will be hit hard, with budgetary decreases of 8.8% In 2009 drugmakers were budgeted to pay the OEP HUF35.5bn (US$191mn), equivalent to 10% of OEP pharmaceutical spending. BMI notes, however, that results for the first nine months of 2009 show that drugmakers had already exceeded full-year estimates and are set to do so by 19.8% pro rata. Furthermore, the 2010 budget calls for an 8.5% increase in drugmaker payments, to HUF38.5bn (US$207mn). On a positive note for pharmaceutical firms, 2010 should see the introduction of 100% deductions on R&D costs from the 12% tax on reimbursable medicines. This move, along with generally good investment incentives and a highly skilled labour force means that Hungary continues to attract a stream of investment from drugmakers, despite negative market forces.
Israel-based generic drugmaker Teva is to invest over EUR65mn (US$93mn) in a new manufacturing plant in Hungary. Initial production is scheduled for launch in Q311, with the plant becoming fully operational by end-2014. In early 2010 the Hungarian Investment and Trade Development Agency (ITDH) was in talks over another 13 pharmaceutical industry projects, which could attract combined investment of over US$200mn.
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