Healthcare: A Strategic Sector With a Long History

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The Hungarian Investment Promotion Agency (HIPA) talks to the Budapest Business Journal about how important the healthcare sector is to the Hungarian economy, and how much foreign direct investment it attracts.

BBJ: How important is the healthcare sector in terms of attracting FDI and jobs to Hungary? Is this a growing trend?

HIPA: The healthcare sector (which takes in pharmaceutical and medtech) is one of the strategic sectors of the Hungarian economy, with a rich history, strong competences, outstanding education and a future with high growth potential. HIPA has a dedicated team of consultants specializing in medical technology and the pharma industry.

BBJ: What are some of the biggest players in Hungary and where do they come from?

HIPA: The largest players include Richter Gedeon, TEVA, Sanofi-Aventis and Egis-Servier. These companies are considered as the four largest pharmaceutical companies in Hungary and while three of them are owned by foreign mother companies, they are building on the traditions of Hungarian companies sometimes more than 100 years old. Other major players from the pharma sector are Mylan, GSK, CEVA-Phylaxia, Béres and Xellia. The medtech sector is strongly represented as well, with major international players such as Coloplast, B Braun, Coopervision and Hoya. Based on this list, we can say that French, German and U.S.-based companies have a strong presence. At the same time, we are also proud of companies in 100% Hungarian ownership such as Gedeon Richter and Béres.

BBJ: Where are the majority of healthcare investments made? Are you able to prioritize less developed regions in Hungary?

HIPA: While the hub for pharmaceutical investments was traditionally Budapest, cities such as Miskolc, Debrecen and Gödöllő also have decades of history with traditional pharmaceutical companies operating their manufacturing facilities there. Meanwhile, both pharma and medtech companies are present all around the country. The leading universities in medical sciences are located in Budapest, Szeged, Debrecen and Miskolc: they attract investments to these cities and also offer a wide range of cooperation options for companies. Less developed regions are prioritized via the general rules for state subsidies that allow higher maximum aid intensity ratios in these geographical areas.

BBJ: What are the most important healthcare trends demonstrated through recent FDI projects?

HIPA: The most significant trend – and at the same time challenge on the healthcare sector – is of course the COVID-19 pandemic. Through recently announced or planned projects shared with HIPA, we have witnessed how many of the sector-related companies have transformed their activities, by either enlarging their capacities of existing products or altering their portfolio and starting new activities to adjust to the demand. For example, the German owned company SCHOTT Hungary is launching an investment project on its site in Lukácsháza (232 km west of Budapest, close to the border with Austria), producing primary pharmaceutical glass packaging materials to store and contain the vaccine against COVID-19.

BBJ: Are foreign investors getting involved in the state healthcare sector (if so, how), or are they rather concentrating on the private sector?

HIPA: FDI related projects – investors from abroad – are not directly involved in the state-owned healthcare sector but, of course, their products are used in the healthcare system. We can report on several investments aimed at the private sector, both FDI projects but also investments of Hungarian companies. In line with the comprehensive economic response of Hungary to support businesses affected by the coronavirus outbreak, HIPA is managing the related call for subsidies to improve the competitiveness of companies. Through this call, a total of 37 projects from the healthcare sector have successfully applied for funding, with a total investment volume of more than EUR 57 million. These projects undertook to maintain 5,689 jobs.

This article was first published in the Budapest Business Journal print issue of  April 9, 2021.

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