We expect 2014 to be yet another challenging year for the industry, as a harsh business environment and regulatory burden weigh on market growth. Pricing pressures and slow uptake of new medicines will continue to present near-term headwinds to pharmaceutical sales. We anticipate growth will return to the market over the long term, albeit gradually.
Headline Expenditure Projections
- Pharmaceuticals: HUF566.71bn (US$2.53bn) in 2013 to HUF570.95bn (US$2.52bn) in 2013; +0.7% in local currency terms and -0.4% in US dollar terms.
- Healthcare: HUF2,141bn (US$9.55bn) in 2013 to HUF2,087 (US$9.20bn) in 2014; -2.5% in local currency terms and -3.6% in US dollar terms.
Risk/Reward Rating: Our proprietary Risk/Reward assessment tool has been gradually adjusted to be increasingly transparent and sensitive to potential Rewards. Therefore, as its market opportunities have been constrained, Hungary has slipped down the regional table, and currently ranks eighth out of the 20 regional markets profiled in the Central and Eastern Europe (CEE) region. For Q214, its ranking has risen by one position from ninth to eighth due to our expectation for moderate improvements in the pharmaceutical market. While its Risks profile is generally predictable, its Rewards have worsened over the past years, and we envisage slow but gradual change in the long term.
Key Trends & Developments
- A draft ordinance by the Ministry of Human Resources is set to ease the blind-bidding auction rules for establishing reimbursement, allowing more loose drug prices with respect to the reference prices set by the Ministry of Health.
- A new law passed in December 2013 by the Hungarian parliament allows the OEP to grant beneficiary status to drugs that significantly improve outcomes and are irreplaceable.
- According to local press reports from October 2013, Hungarian hospitals are suffering from chronic shortage of anesthesiologists and surgeons due to a HUF60bn (US$274.18mn) deficit in the state hospitals budget. The government has recently decided to raise the salaries of around 95,000 healthcare workers by end-2013 to stop the ongoing 'brain drain' of Hungarian health professionals, although it remains to be seen if the move has been successful.
BMI Economic View: Strong net exports and rising fixed investment will continue to bolster Hungary's economic recovery during the course of 2014 and 2015, with positive PMI readings and improving consumer confidence pointing towards economic acceleration. However, we do highlight that a poor business environment and a continued decline in house prices could slow the pace of improvement
BMI Political View: Prime Minister Viktor Orban's Fidesz Party is placed to win Hungary's Spring 2014 general election. However, Fidesz is likely to lose its supermajority in parliament due to lower support than in 2010 and alterations to the electoral system, denying the party the ability to alter the constitution without cross-party support.