2012-06-29 23:42:48 - Hungary Pharmaceuticals and Healthcare Report Q3 2012 - a new market research report on companiesandmarkets.com
The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.As BMI warned it would back in February, the Hungarian government has announced deeper cuts to its pharmaceutical budget for this year and next. Our markedly pessimistic and contractionary outlook for the Hungarian pharmaceutical market, which we have had for well over a year, has been reinforced by the latest version of the structural reform package SzÃ©ll KÃ¡lmÃ¡n Plan 2.0. We have adjusted our forecasts down further, reflecting the changes to budget, though based on the National Healthcare Fund (OEP)´s inability to cut its expenditure
in 2011, we still maintain that the total level of cuts to the reimbursement budget is unachievable, even accounting for the fund´s new and more aggressive prescribing policies.
Headline Expenditure Projections
HUF691bn (US$3.44bn) in 2011 to HUF639bn (US$2.89bn) in 2012; -7.5% in local currency terms and -15.8% in US dollar terms. Forecast revised down from Q212 due to new OEP budget targets and details on more aggressive cutting prescribing policies.
HUF2,013bn (US$10.01bn) in 2011 to HUF1,986bn (US$8.99bn) in 2012; -1.3% in local currency terms and -10.2% in US dollar terms. Forecast down from Q212.
- Medical devices:
HUF117.1bn (US$582mn) in 2011 to HUF117.5bn (US$532mn) in 2012; +0.3% in local currency terms and -8.7% in US dollar terms. Forecast down from Q212. Business Environment Rating:
In Q312, Hungary remains well below its historically high rating, its ranking remains unchanged for now, but is likely to face a downward revision in Q412. Globally, Hungary ranks 34th out of 95 markets.
Key Trends & Developments
The latest SzÃ©ll KÃ¡lmÃ¡n Plan, version 2.0, increases the burden on drugmakers operating in Hungary. Several steps have been taken to increase revenue for the government and reduce expenditure in the pharmaceutical budget. The new targets include an additional saving of HUF10bn (US$45mn) from the pharmaceutical support budget in 2012 and an additional saving of HUF40bn (US$180mn) to be achieved in 2013. While these figures do not appear particularly large, it is worth considering that they are in addition to the savings announced in the original plan.
Funding for Hungary´s predominantly publically financed healthcare system will remain under pressure in 2012 and 2013. While the National Healthcare Fund (OEP)´s annual budget has risen, with the fund now paying for disability and rehabilitation benefits, the remaining resources have actually contracted.
As BMI has previously reported, all of the savings appear to be achieved from cuts to reimbursement drug expenditure. While core healthcare expenditure should remain stable over the next few years, Hungary´s healthcare provision is not particularly attractive to businesses - the authorities will continue to look to make efficiency savings in the system and public funding will remain tight.
In April 2012, Gedeon Richter launched a biotechnology plant with an investment of HUF25bn (US$110mn) on April 19 2012. The facility has been designed to produce samples for clinical tests using mammal cells, according to CEO Erik Bogsch. The facility will also make drugs for treating cancer and inflammation in 2014, as part of the company´s aims to expand its business footprint in biopharmaceuticals in the global market. Bogsch added that the company has invested HUF214bn (US$941mn) during a 10 year period and is the only company in Hungary to have a Europe-wide sales network.
BMI Economic View
Impressive growth in the fourth quarter of 2011 has prompted us to raise our Hungarian growth expectations for 2012. We nonetheless still expect real GDP to contract by 0.5% this year as all components of GDP by expenditure besides net exports experience declines in real terms. The biggest threat to economic growth remains the prospect of greater economic and financial instability which would accompany a prolonged delay in negotiations with the IMF/EU over a new external financing arrangement.
BMI Political View
While the centre-right Fidesz party remains by the far the most popular political party in Hungary, a weakening domestic economy and growing potential for further financial instability over the coming quarters could quickly diminish the government´s public support. Our core view remains that Hungary has no option but to secure a new IMF/EU external financing deal and this will most likely occur in late Q212/Q312.
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