Price Cut Stirs Drug Market

Several pharmacies tried to sell off their previously purchased drug stocks before 1st April to minimise losses expected from an official, 15% price cut taking effect on that date.

The Hungarian Pharmacists’ Chamber (MGYK) estimates pharmacies’ losses to exceed HUF 8 billion, including devaluation in stocks worth HUF 3 billion. Pharmacies’ revenues could fall by HUF 5 billion–HUF 6 billion if the price cut lasts for 180 days, as announced by the Ministry of Health, Welfare and Family Affairs.

The health ministry has agreed to pay pharmacies HUF 2.5 billion as compensation. Pharmacists can also apply for interest-free loans worth HUF 3 billion. According to the Chamber, a number of pharmacies will not be able to survive such a shortfall in revenues, especially those already close to bankruptcy.

Wholesalers’ daily turnover has also fallen below HUF 300 million from the regular HUF 450 million–HUF 500 million since the government decision. According to Hungaropharma Rt. CEO Ferenc Szabó, who is also chairman of the Drug Wholesalers’ Association, losses of wholesale companies can add up to HUF 4.5 billion–HUF 5 billion as a result of the price cut on April 1.

Drug manufacturers insist that about 150 staple medicines could disappear from the market, since their production will slip into the red due to the 15% price cut. Sources close to drug manufacturers were expecting a shortage of some insulin products.

According to press reports, the government had bought large stocks of insulin products, estimated to last for half a year, in oreder to prevent a shortage. Only the well-to-do can replace missing medicines from abroad, since medicines on average costs twice-three times as much there, as in Hungary.

The current price cut further increases the difference between average prices in Hungary and other EU countries, leading to the flourishing of so-called parallel drug imports. Parallel imports mean buying up drugs imported into Hungary and reexport them at higher prices to Western Europe. Several wholesalers are ready to take advantage of these sales which are not banned in EU countries, László Hozmann, CEO of Medico Uno Drug Trading pointed out.

Source: HVG


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