Hungary's export-focused drugmakers are expected to benefit from an expansion of Russia's list of state-subsidised medicines. Russia had initially planned to remove all subsidies on imported pharmaceuticals after December 1, but officials appear to have rethought their strategy.

Hungarian drugmakers had been alarmed by earlier Russian plans to reimburse only locally-made drugs, in view of their limited local manufacturing presence. However, it now appears that the subsidy programme will be expanded to include a number of foreign-made drugs. In 2005, two leading Hungarian manufacturers active in Russia reported local sales growth of over 50%.

Russia's new reimbursement system which was introduced at the end of 2004 has been controversial. Under the new guidelines, consumers will receive a monthly financial package of ROB440 (US$15.31) for drugs, bringing overall government drug spending to RUB53bn (US$1.8bn) per year. After sustained public pressure, the government was obliged to boost the number of subsidised APIs from 300 to 457 in early 2005.

Industry observers claim that maintaining subsidies on selected foreign medicines may be an attempt to curb the illicit trade in cheap imported drugs, which has flourished due to the slow pace of official approval for imports.