Challenging Times for Hungary’s Pharmaceutical Sector

Dr. László Szabó, CEO
Dr. László Szabó, CEO

Teva, the world’s biggest manufacturer of generic pharmaceuticals, chose to enter the Hungarian market 18 years ago by acquiring two of the country’s top pharmaceutical enterprises. CEO Dr. László Szabó explains that Teva took part in helping Hungary’s pharmaceutical sector thrive once again through making major investments – a total €852 million (HUF230 billion) to date – and implementing the latest technologies and expertise.

“Under Teva’s ownership, the output of the two Hungarian companies we acquired has risen by tenfold over the past 18 years,” he says. Teva regards Hungary as a key area for its investments. It is open for further investments and to create jobs in Hungary, but would require a more investor friendly environment in the pharma sector.

Certainly the company understands the financial situation of the country, the challenges the government is facing and agrees that cost reduction is a must. As Dr. László Szabó says: “Pharmaceutical companies have been key contributors to the state budget. Drug producers started to pay extra taxes several years before other industries. Furthermore while another company, e.g. a car manufacturer is incentivised for creating a workplace for workers with elementary or mid-level education, we are punished with extra taxes for creating jobs for well educated people as a sales representative. Besides the taxes we are struggling with continuous price reduction measures despite the fact that Teva markets its high quality products at 50% of the average drug price in Hungary.” The new drug reimbursement measures of the government on generic medicines could not lead to considerable cost saving in the long run.

On the contrary, the irrationally low prices keep the generic companies away from the market and the Health Fund has to finance the expensive original medicines because the lack of cheaper generics. Furthermore the planned so called blind bid could cause serious supply problems, because companies will not be able to keep the relevant amount of products, or after winning the bid and stocking out their drugs, the small and cheapest companies will not have the interest to maintain the supply, so patients will be forced to change therapy and it could cause additional health risk and cost for the Health Fund.

“The four biggest pharmaceutical companies, including Teva contribute 50% of Hungary’s total research and development, and we have a considerable contribution to the export as well. We will continue the cooperation with the government and we hope that our voices will be heard because our role in Hungary is essential both from an economic and public health point of view,” expressed Dr. László Szabó.

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