2013-02-01 01:47:37 - New Healthcare research report from Business Monitor International is now available from Fast Market Research

BMI View: Our outlook for Hungary's pharmaceutical market remains negative, given the government's policies that shift the burden of the National Healthcare Fund (OEP) on to drug manufacturers. Pricing pressure and claw-back taxes have squeezed domestic manufacturers' margins and introduced insecurity to an already difficult economic environment, and we continue to expect a contraction in the size of the Hungarian pharmaceutical market in 2012 and 2013. Consequently, Hungarian drugmakers will have to become even more export-orientated. That said, a favourable tax regime for research and development should attract foreign investment, though these multinationals will focus most of their sales efforts on external markets, supporting our view that Hungary's status as a net exporter of pharmaceutical products will increase.


Full Report Details

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Headline Expenditure Projections:

* Pharmaceuticals: HUF691.61bn (US$3.44bn) in 2011 to HUF608.22bn (US$2.71bn) in 2012; -12.1% in local currency terms and -21.2% in US dollar terms. Forecast down from Q412 due to cost-containment measures.
* Healthcare: HUF2,013bn (US$10.01bn) in 2011 to HUF2,003bn (US$8.92bn) in 2012; -0.5% in local currency terms and -10.8% in US dollar terms. Forecast in line with Q412.
* Medical Devices: HUF117.09bn (US$582mn) in 2011 to HUF117.95bn (US$526mn) in 2012; +0.7% in local currency terms and -9.7% in US dollar terms. Forecast in line with Q412.

Risk/Reward Rating: In our Risk/Rewards Rating (RRR) matrix for Q113, Hungary's composite score again stands at 53.1 out of the maximum 100 points, ranking the country 8th out of 20 markets surveyed in the emerging Europe region. We also retain our pessimistic outlook for its pharmaceutical market rewards, on account of government's cost-containment policies.

Key Trends & Developments

* In July 2012, the Pharmapolis Pharmaceutical Scientific Park was established in Debrecen, following an investment of HUF 6bn (US$26.9mn). Of the total figure, HUF 3bn was allocated by the EU under the New Szechenyi Plan framework. The Park involves collaboration between Hungarian Gedeon Richter, the Chamber of Commerce and Industry of the county of Hajdu- Bihar and the Debrecen city, which owns a 25% stake in the Park. The project features a 10,500 square metre modern research base that will act as a research and development as well as an innovation centre. The new project will create 120 new jobs for researchers.
* In September 2012, the Hungarian Chamber of Pharmacists (MGYK) published the list of medicines; the prices of which will be reduced due to the biannual price competition between drug manufacturers in the region. The producer prices of 485 different drugs included by the MGYK in the list will experience a cut of between 65.01% and 0.02%. The tentative drug list, effective from October 1 2012, contains results only of the first round of the competition on August 21 2012. Companies that have been dropped out of the list of drugs available with reimbursement in Hungary in the first round can submit their request to MGYK to allow inclusion of their drugs with lower prices.
* In October 2012, Israeli generic drugmaker Teva Pharmaceutical Industries established a new sterile medicines plant in Godollo, Hungary. The company will invest US$110mn in the new facility, which will produce 160-200mn units of injectables when operating at full capacity. The plant, which will supply medicines to patients in more than 70 countries in North America, Europe and Asia, is to mainly manufacture cytotoxics that are used in oncology therapeutics.

BMI Economic View: Continued deterioration in economic activity in the eurozone, and the failure of the government to thus far reach an external financing arrangement with the IMF/ EU continue to weigh on all areas of the economy. As it stands, net exports will provide some degree of support to headline growth this year given how weak import demand has been. However, risks to our medium-term growth forecasts lie firmly to the downside.

BMI Political View: The government's recent resistance to IMF conditions notwithstanding, we still expect Hungary to reach some form of external financing arrangement with the IMF and EU, most likely at some point in Q113. As it stands, we expect the domestic population to remain most concerned with the harsh economic situation at home, and as a result, we do not anticipate an improvement in the ruling Fidesz party's public support anytime soon. We see a lot of potential for extremist parties such as the farright Jobbik to benefit from an increasingly disillusioned electorate.

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