Hungary: Pharma Sector's Long-Term Promise

When economic stability is eventually achieved, the Hungarianpharmaceutical market will present great potential for foreign companies, says a new report from Datamonitor, available through the Marketletter.

The industry is worth about $570 million, and in 1995 the leading local companies held over 50% of it; Egis held 12%, Gedeon Richter 10%, Chinoin 9%, Biogal 9%, Alkaloida 7% and Human 5%. Other domestic producers retained 24%, as did the multinationals. Egis, the largest supplier to the home market, was acquired by Servier in late 1995; the report says the strategy of acquiring an existing producer has proved particularly strong in Hungary.

While the multinationals' 24% market share is expected to continue growing (the number of imports available rose 42% in 1994), the average import costs four times more than a locally-made product, and initial tax incentives for foreign goods have now been brought into line with domestic regulations. The government has reduced drug reimbursement levels as a way of cutting costs which means that, combined with falling incomes, drug consumption has dropped. So although there are already numerous multinational products on the Hungarian market, it will be some time before most of the population can afford them, says Datamonitor.