Boston, MA -- (SBWIRE) -- 03/07/2013 -- 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.

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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.

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