HUNGARIAN DRUG PRODUCTION CONTINUES TO DECLINE

Official data indicates that Hungary's pharmaceutical output has continued to decline, as the sector suffers ongoing structural pressures. The country's Central Statistics Office reports that production was 4.8% lower year-on-year in the first half, following a 2.7% decline in January through May. Turnover reported by local firms -- which includes the impact of declining export sales -- fell 6.7%, with exports dropping 9.1% in the six-month period.

At the same time, domestic prices rose with the end of Hungary's drug price freeze in early 2005. Retail drug prices increased 2.1% in July - making average selling prices 13.3% higher than in July 2004, despite near-zero inflation across the economy as a whole.

More worryingly for domestic firms, sales increased only 0.5% in the first six months, reflecting consolidation in the generics sector and the ongoing impact of EU regulations. Several local firms have also claimed that new import regulations in Russia have also damaged prospects for 2005 and beyond, while it appears that foreign firms are gaining a bigger slice of the local market's rising imports and consumption.