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Teva reconsiders Hungarian biotech facility on drug law concern

Teva Pharmaceutical Industries Ltd., the world's biggest maker of generic medicines, is reconsidering a plan to build a biotech center in Hungary because of the country's new drug-financing law.

Teva Pharmaceutical Industries Ltd. Chairman Eli Hurvitz informally discussed building a biotech facility in the southern university town of Szeged with Hungarian Foreign Minister Kinga Göncz on her official trip to Israel on February 1 and 2, foreign ministry spokesman Viktor Polgár said in a telephone interview. Two days before Göncz went to Israel, Teva's Hungarian unit warned that the new law would „endanger” its plans to invest $100 million in Hungary, without elaborating.
Teva belongs to an industry trade group that says the law, which forces drugmakers to help fund the state health budget, is unconstitutional. „It's part of the reconsideration process” for Teva, said András Buchler, spokesman for the Israeli Embassy in Budapest. The biotech center is still in the very early planning stages, and no formal proposal has been made, he added. Under the law, drugmakers must pay state-monopoly health insurer a 12% rebate on government reimbursements for their products.
Should the state exceed its annual drug budget, as it has done every year since 1994, companies will have to pay down almost all the overrun. The press officer at Teva's Hungarian unit, Viktória Orosz, said she had no information on any biotech center plans. Keren Golan, a press officer at the company's Petah Tikva, Israel, headquarters, declined to comment in an e-mail.

Biotech medications, which use bacterial cells to produce human proteins, are some of the costliest on the market. In the US, Teva's main market, lawmakers last week introduced legislation that would allow generic companies to make copycat versions of biotech medicines. Generic competition for off-patent biotech drugs could reduce prices by almost a third and cut into the profits of brand-name companies such as Amgen Inc. and Genentech Inc., analysts said.
Teva is working with Sweden's Active Biotech AB in the race to develop an oral treatment for multiple sclerosis against Novartis AG, Serono SA and other drugmakers. A facility in Szeged would allow Teva to use students from the city's university, which has a reputation for turning out strong scientists, Buchler said. Prime Minister Ferenc Gyurcsány pledged to make Hungary an international center for biotechnology in his 2006 political campaign.
The government supports the industry with billions of forint, said Peter Maroti, office manager at BioPolisz Kft, a Szeged-based intellectual property rights management company. „The government has designated Szeged as the center of biotechnology in Hungary,” he said in a telephone interview. „We have the know-how and we have the labor force.” (Bloomberg)