March drug subsidy budget deficit in Hungary remained slightly below HUF 25bn (versus HUF 31bn a year ago), prompting the YTD deficit to reach HUF 88.1bn, less than the time proportionate target of HUF 91bn of the Health Ministry - according to business daily Napi Gazdaság. The 1Q07 figures will be lowered with the drugmakers time proportionate contribution from the 12% drug subsidy tax, which is flowing in to the National Health Fund (OEP) with a time lag. Moreover, the 1Q07 data contains a stockpiling effect before the 15 January price changes, which suggests the next quarter's spendings can be even lower than in 1Q07.
Our view: We see the news positively for Richter
and Egis, as the news could imply Hungarian drugmakers will not have to contribute to the overspending of the drug subsidy budget this year. We shall consider eliminating from our models HUF 1bn contribution for Egis and Richter
on the back of the positive developments.