DRUG PRICES IN HUNGARY BEGINNING TO STABILISE AS SALES DECLINE

Retail drug prices in Hungary during August were 13.9% higher than in the same period last year, and over three times the level of inflation across the whole economy, according to official statistics. However, drug prices have not increased on last month's levels, fuelling rumours that they are finally beginning to stabilise. The soaring prices are widely considered to be a result of the end of Hungary's freeze on drug prices in early 2005.

Sales for domestic drugmakers declined 8.7% in the first seven months of 2005, on a year-on-year comparison, caused primarily by an 11.6% drop in exports. Although entry to the European Union will provide access to Western markets and help exports recover in the long term, many local observers are worried that the cancellation of Russian import subsidies on pharmaceuticals from December 2005 will have a serious negative impact in the near future. Meanwhile, drug imports rose 13.3% in H105 to reach US$657mn, thanks to rising domestic consumption and a growing demand for high-tech foreign drugs.