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Hungary Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Aug 2011, Pages: 99
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.
BMI View:
The report continues to project that the Széll Kálmán structural reforms plan, which aims to achieve savings of HUF120bn (US$580mn) over three years from Hungary’s medicine budget will lead to year on- year (y-o-y) contractions in 2012 and 2013. However, the research stresses that the 30% contraction in public reimbursement funding will not lead to an equivalent contraction of drug market expenditure. BMI notes that the method the government will employ to achieve these savings have yet to be revealed, creating considerable complexity in the forecast scenario, although the report expects fresh details to be prepared by the authorities by the end of September 2011.
Headline Expenditure Projections:
- Pharmaceuticals: HUF678bn (US$3.27bn) in 2010 to HUF690bn (US$3.76bn) in 2011; +1.8% in local currency terms and +14.7% in US dollar terms. Forecast broadly unchanged in local currency terms, up significantly in US dollar terms from Q311.
- Healthcare: HUF1,942bn (US$9.38bn) in 2010 to HUF1,993bn (US$10..85bn) in 2011; +2.6% in local currency terms and +15.7% in US dollar terms. Historic data revised, forecast broadly unchanged in local currency terms, up significantly in US dollar terms from Q311.
- Medical devices: HUF112.23bn (US$542mn) in 2010 to HUF115.67bn (US$630mn) in 2011; +3.1% in local currency terms and +16.2% in US dollar terms. Forecast up moderately due to analyst modification.
Business Environment Rating:
Details of eighth-placed Hungary's structural and budget reforms have now emerged. However, the BER scores had already been substantially revised downwards as part of the publisher’s Q311 analysis and this has resulted in relatively stable scores for the markets in the Q411 BER analysis. Hungary is now eighth place in BMI’s ranking system for CEE, with its score of 56.1 broadly unchanged.
Key Trends & Developments
- The Hungarian parliament passed legislation relating to changes to the burden on pharmaceutical producers on June 27 2011. The laws were in line with previous expectations: levies paid by pharmaceutical companies will increase from 12% to 20%. It is estimated that the levy will bring in HUF4.3bn (US$21.7mn) during 2011. The parliament has also confirmed that the fee paid after a medical sales representative meets a doctor is to be raised from HUF5mn (US$25,300), to HUF10mn (US$50,600).
- The structural reform package (the Széll Kálmán Plan) will significantly cut reimbursement expenditure and BMI has previously warned this will result in a year-on-year (y-o-y) market contraction in 2012 and 2013. BMI notes that it is still unclear how the government will achieve its targeted expenditure savings, particularly if the principles of not increasing the cost to the consumer for the period 2012-2014 are adhered to. In July 2011 it emerged that the measures to achieve the level of cuts proposed are set to be prepared by the end of September 2011, the current lack of detail adds to the complexity in the medium term projections.
- The Hungarian government has combined five of its national healthcare bodies into a single organisation named the National Institute for Quality and Organizational Development in Healthcare and Medicines, or GYEMSZI. The centralised organisation comprises of the National Institute of Pharmacy, the Institute for Healthcare Quality Improvement and Hospital Engineering (EMKI), the National Institute for Strategic Health Research, the Institute for Basic and Continuing Education of Health Workers, and the National Centre for Healthcare Audit and Inspection.
BMI Economic View:
The report has revised up the 2011 growth forecast for Hungary to 2.9% from 2.3% previously given firming demand in Germany and the strong trade linkages between the two countries. However, while BMI did expect export-oriented industries to continue fairing well over the coming quarters, household consumption is unlikely to enjoy a strong recovery until 2012, given the still-sizeable headwinds facing the sector, whereupon BMI see headline growth rising to 3.1%.
BMI Political View:
Hungary's ruling Fidesz party passed a new constitution through parliament on April 18 which opposition parties claimed was yet a further attempt at power consolidation. While the new legislation has the potential to worsen relations between Hungary and the EU and provoke further protests from opposition groups at home, the report believes that Fidesz's still-robust popularity will preclude a major shift in the administration's policy stance for the foreseeable future.
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