Hungary Report: Redefining Sustainability

Jan 01, 2012

This sponsored supplement was produced by Focus Reports.

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(Property of the Hungarian National Gallery, Photo by Tibor Mester.)
With approximately $90 billion flowing into the country (according to the Hungarian Investment and Trade Agency) since it abolished its centrally planned economy and transformed into an open, pro-business economy in 1989, Hungary has been a leading destination for foreign direct investment (FDI) in Central and Eastern Europe (CEE). Together with the automotive and software development sectors, the life sciences sector has been receiving the highest amounts of capital investment in the country.

Prof. Dr. István Nagy, Director of the AIPM
Understandably, Hungary's high-quality infrastructure, highly skilled labor force and central geographic location are often cited as features that have turned the country into an attractive destination for investment. Following historical prominence as a key supplier of pharmaceuticals to the former Soviet Union, the landlocked nation is regularly described as one of the oldest drug industries in the region. It has a rich history that has given rise to a number of successful local drug manufacturers, many of which have been picked up by international MNCs over time, such as Chinoin by Sanofi and EGIS per majority stake by Servier.

Christophe Gourlet, Managing Director of Sanofi
Economic and healthcare reforms no longer come out of the blue, but global cost cutting trends and ongoing structural reforms are a clear threat to investor confidence in some of Europe's smaller and more vulnerable nations. All the more reason for the International Monetary Fund (IMF) to consider Hungary's Széll Kálmán (Structural Reform Plan) as a welcome step towards growth and sustainability. "I do think that the aim of this government is to stabilize the whole economy of the country in the long run," opines Prof. Dr. István Nagy director of the Association of Innovative Pharmaceutical Manufacturers (AIPM). Needless to say that the Plan did cause quite a shakeup in 2011. "It proposes significant decreases in the drug budget by Ft. 83 billion ($372 million) next year and an additional Ft. 40 billion ($179 million) the year after," adds AIPM's deputy director and market access specialist Tamás David. "Do I think it is a threat? Yes. Did we have conversations about whether or not we should stay in Hungary? Yes," adds AstraZeneca's president for Hungary, Jenny Winter. Much like the rest of Big Pharma, Winter points out that the vast long-term potential of Hungary has prevented the British pharma giant from leaving. Instead, the different players are now focusing on defining a new business model that takes these current challenges into account, one wherein sustainability finds a new meaning.

Top 10 Ranking 2011
"Whenever new decisions are announced, it is important that new measures do not put at risk the long-term development of the pharma industry in Hungary, which remains one of the key industries in the country," observes Christophe Gourlet. As country managing director, Gourlet reiterates the economic role the French pharma giant Sanofi plays in Hungary. As the second-largest pharma company employing over 2,500 people and ninth-biggest exporter in the country, he points to the importance of upholding a healthy investment climate.

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