"Several local media have reported on Thursday that the 12% tax drug producers pay on revenues for reimbursed drugs in Hungary has or will be abolished. Portfolio.hu has learned that this is not true.According to Portfolio.hu's information, the 12% tax Hungary's drug makers are obliged to pay on reimbursed products has not been cancelled and there are no plans it will be either.
The government put into effect a number of measures on 15 January 2007, aiming to rein in rising pharmaceutical spending. These included a) a new 12% tax on sales of reimbursable drugs (shared between the pharma companies and distributors); b) a requirement for producers to cover the entire reimbursable drugs budget overspend if the budget is exceeded by 10% or more; c) a HUF 5 million registration fee for each pharmaceutical salesperson; d) changes to drug subsidy levels for the different reimbursement groups; and d) a new tiered pricing structure for generics.
MP György Podolák has submitted a law amendment proposal to Parliament that would allow local drug producers pursuing research and development activities to deduct their R&D expenditure up to 100% of the 12% tax under certain conditions. The goal would be to give an incentive for pharmaceutical producers in Hungary to step up their R&D activities.
According to Portfolio.hu's sources, no consultation with the affected parties preceded the submission of the proposal. We have also learned that there is a ministerial decree in the making that would allow the deduction of R&D expenditures up to 20% of the tax, which would affect payments in 2009.
The latter scenario would be positive both for Richter and Egis, but the impact is not earth shattering: the positive profit impact at Egis would be 2% and a mere 0.6% at Richter due to its substantial export exposure."
Source: Portfolio Online Financial Journal
18.06.2009