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BUSINESS JOURNAL BUDAPEST

VOL. 29. NUMBER 7

APRIL 9 – APRIL 22, 2021

SPECIAL REPORT Healthcare

SPECIAL REPORT

Necessity the Mother of COVID Innovation Besides its unambiguous and heavy burden on economies and societies, the coronavirus pandemic has also been a strong driver for Hungarian innovation in the field of healthcare and the medical industry.  10 SPECIAL REPORT

Healthcare: A Strategic Sector With a Long History 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. 11

Headwinds and Aquisitions

SOCIALITE

Zöldveltelini Offers Some Zing for the Spring While it’s the ultra-trendy flagship of Austrian white wine, Grüner Veltliner is also something of a force in the vineyards of the neighboring Czech Republic, Slovakia and also here in Hungary, where it is known as Zöldveltelini.  19

NEWS

Recovery Moves Onto Firmer Ground In spite of the ongoing third wave of the coronavirus pandemic, the International Monetary Fund has improved its projections for the Hungarian economy in its latest report. Across the region, the IMF upgraded its forecast only for two other countries: Romania and Bulgaria.  3

AL R PEC I

EPOR

Gábor Orbán, CEO of Gedeon Richter, one of Central and Eastern Europe’s biggest pharma companies, says he continues to seek acquisition targets, mostly in women’s health and biosimilars. Some pandemic headwinds mean his turnover expectations for 2021 are more moderate.14 BUSINESS

PwC Looks Back and Ahead at CEO Survey Anniversary Hungary’s CEOs show record levels of optimism for the immediate future, but there are still some familiar concerns, a few of which have deepened, consultancy PwC Hungary said at the presentation of its 10th annual Hungarian CEO survey.  7

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THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Kálmán Béres, Zsófia Czifra,

Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth, Bálint Szőnyi, Zsófia Végh. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

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We have been told that “our summer will be sunny and happy” by no less a person than Prime Minister Viktor Orbán. This week, we took the first step toward those “broad, sunlit uplands” (as a different prime minister promised at another time and place, under very different circumstances). There was precious little time between Orbán’s Facebook video (how very 21st century) announcing on Tuesday that Hungary has now given at least a first COVID vaccination dose to 2.5 million of its citizens, and the reopening of shops and services from Wednesday morning, but few will mind that. (For more details of the relaxed restrictions that were triggered by reaching that inoculation milestone, see our regular coronavirus roundup inside this issue.) By sheer coincidence, at about the time our PM was making his announcement, I was registering for my vaccination on the official Hungarian government website. The fact that I had not done so previously does not lie in any antivaxxer sentiment. I get that some people are reticent about putting something so recently developed into their arms. The flu vaccines have been around for decades, the COVID jabs for a matter of months, and we can have no real idea of their long term effects on our bodies at this stage. But it is a big step from that legitimate concern to some of the conspiracy theory antivaxxer nonsense you hear about. It seems to me the only way pathway back to travel and something like normalcy and, equally important, to getting our economies operating again will be through vaccination. No, the reasons behind my reticence lie elsewhere. For a start, since I am not a pensioner, at risk, a front line worker or a teacher, I was never going to be very far up the priority list. Registering when the site was launched was not going to get a needle into my arm any sooner. More than that, though, I want to travel, and not just for a holiday, nice though that would be,

but so I can see my 91-year-old mother in her nursing home in the United Kingdom for the first time in what is now approaching 14 months. And therein lies the heart of my dilemma. The government messaging around the mix of vaccinations Hungary offers has been confusing. Sometimes it has seemed to suggest you won’t get a choice of vaccination, you’ll have to accept what you are offered; on the other hand, the PM himself has said “everyone can choose whichever they trust to be vaccinated with” on more than one occasion, according to Hungary Today. The choice matters because Hungary has ordered a veritable smorgasbord of vaccines to get around EU shortfalls, including doses from Russia and China. I am not indulging in a form a vaccine racism here; I understand that the Sputnik V vaccine works on very similar tried and tested science to that used in the Oxford-AstraZeneca jab, but the fact remains that what the government calls its “Eastern” jabs have not been approved by the European Medicines Agency. That means there must be at least a question mark about whether they will be accepted by destination nations. When a government spokesperson was asked this very question, the rather unhelpful answer was along the lines of “we want vaccines, not certificates, from the EU.” Ignoring a potential problem does not mean it does not exist or will just go away. Interestingly, Croatia, desperate to resuscitate its tourism industry, has said it will accept vaccinations wherever they come from. Who knows, I may be offered one of the European and U.K. approved vaccines, and I can always decline if not. But there is one last concern: The Hungarian certificate apparently does not include the origin of the jab, just the fact that you have had it. Will EU countries or the United Kingdom be as accommodating as the Croatian authorities are apparently willing to be? Robin Marshall Editor-in-chief

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PROMISE OF SUMMER A STEP NEARER

THEN & NOW

Hugo Turcotte, a player with Debrecen-based DEAC, celebrates his winning goal in the finals of the Hungarian Cup on April 3 in Debrecen. In the black and white picture from the Fortepan public archive, ice-hockey players gather for a match on the frozen Lake Balaton in 1967.

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Budapest Business Journal | April 9 – April 22, 2021

News///macroscope

fiscal policy, GKI speculated. According to the research company, employment and unemployment will remain broadly unchanged on an annual average but will improve over the course of the year. Real earnings will increase by 2%, consumption by 3.5% and investments by 6%. GKI sees inflation as rising to 3.9% this year, up from 3.3% in 2020. Average forint/euro exchange rate might

Recovery on Firmer Ground, Both in Hungary and Worldwide

In spite of the ongoing third wave of the coronavirus pandemic, the International Monetary Fund (IMF) improved its projections for the Hungarian economy in its latest report, issued after Easter. Across the region, the IMF upgraded its forecast only for two other countries: Romania and Bulgaria. As for the global economy, it raised its growth projection to 6%, a level unseen since the 1970s. ZSÓFIA CZIFRA

Global prospects remain highly uncertain one year into the pandemic; however, the global economy is on firmer ground now, the International Monetary Fund (IMF) states in its latest World Economy Report, released on April 6. The fund says that the upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccinepowered normalization, and the evolution of financial conditions, the IMF writes. The fund forecasts worldwide output could rise 6% this year, a rate unseen since

the

1970s,

thanks largely to the unprecedented policy responses to the COVID-19 pandemic. Less than three months

reach

HUF 365

International Monetary Fund Global Economic Outlook (2019-2022) Economic growth, percent

Estimation

Forecast

World United States Eurozone Japan China Russia

Source:

ago, the IMF projected that global economy would expand by 5.5%. The recent upgrade mainly reflects a rapidly brightening outlook for the U.S. economy, which the IMF now sees growing by 6.4% in 2021, the fastest there since the early 1980s. That’s up 1.3 percentage points from the IMF’s 5.1% projection in late January and nearly double the rate it estimated in October. The fund said the world economy contracted 3.3% in 2020, a modest upgrade from an estimated contraction of 3.5% in its January update.

U.S. Heft

The outlooks for other advanced economy heavyweights, such as Germany, France and Japan, have hardly improved at all since January; however, with the heft of the U.S. outlook improvement as the main driver, the IMF marked up its advanced economy growth estimate to 5.1% from 4.3%. Among the emerging economies, the IMF raised its forecast by just 0.4 of a percentage point (half of the advanced economy mark-up) to 6.7% from the view in January. As for Hungary, the fund raised its GDP growth projection this year to 4.3%, up from 3.9% in the previous forecast released last

October. In 2020, the Hungarian economy contracted by 5%. For 2022, the IMF projects GDP growth

rising to

5.9%.

Average annual inflation will pick up to 3.6% this year and will slow to 3.5% in 2022, the IMF says. The projection is up from its 3.4% forecast in October. Last year, annual average inflation came to 3.3%. The IMF sees the unemployment rate dropping to 3.8% in 2021 and to 3.5% in 2022. In 2020, unemployment was at 4.3%. The latest forecast by the IMF is more or less in line with the market consensus for Hungary. The National Bank of Hungary (MNB) expects the Hungarian economy to expand by 4-6% this year, according to its Inflation Report issued at the end of March.

Downward Risk

The Budapest-based GKI economic research company also raised its economic forecast, up by 0.6 of a percentage point to 4.3% in its March outlook. It noted that this would bring Hungarian GDP close to, but not yet at, its 2019 level. The main downward risks are that the substantive restrictions caused by the pandemic will persist for a while into the second half of the year, either in Hungary or in its main trading partners. However, next year’s general election might motivate the government to further loosen its

this year, following an average of HUF 351 in 2020. If so, it cannot be ruled out that the MNB will be forced to tighten monetary policy, the GKI notes. The OECD is less optimistic for both Hungary and the global economic expansion. In its interim report in March, it says global GDP growth is now projected to be 5.6% this year, an upward revision of more than one percentage point from its December OECD Economic Outlook. World output is expected to reach pre-pandemic levels by mid-2021 but much will depend on the race between vaccines and emerging variants of the virus.

For Hungary, the fund raised its GDP growth projection this year to 4.3%, up from 3.9% in the previous forecast released last October. For 2022, the IMF projects GDP growth rising to 5.9%. Average annual inflation will pick up to 3.6% this year and will slow to 3.5% in 2022. The projection is up from its 3.4% forecast in October. The IMF sees the unemployment rate dropping to 3.8% in 2021 and to 3.5% in 2022. As for Hungary, the OECD projected an average of 3% growth for both 2021 and 2022 in its December Economic Outlook, and has not changed its projection since.

Numbers to Watch in the Coming Weeks On April 9, the day this paper is published, the Central Statistical Office (KSH) will release March consumer prices, along with retail trade data for February. On April 14, the second estimate of February industrial output will be out (the first estimate was released on April 8). The next day, February construction data is published.

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Budapest Business Journal | April 9 – April 22, 2021

The number of people vaccinated in Hungary at least once has passed the 2.5 million threshold, Prime Minister Viktor Orbán said in a video message posted on his Facebook page on April 6. “From tomorrow, businesses can open and services can re-start,” Orbán said. Hungary’s government had earlier promised that the gradual easing of pandemic restrictions could begin once the 2.5 million target had been reached. NICHOLAS PONGRATZ

According to a government decree issued earlier to come into force once the threshold was breached, the nighttime curfew will be shortened by two hours from 10:00 in the evening until 5:00 in the morning. It will also extend business hours to between 5:00 in the morning and 9:30 at night.

Coronavirus ///roundup Photo by BPANIMALS / Shutterstock.com

Summer Dreams and Vaccination Take-up

Businesses that were shuttered from March 8 to contain the spread of the coronavirus can re-open, but with the number of customers limited to one for every 10 sqm. The decree will not affect the ban on dining in at restaurants or recreational stays at hotels. The restrictions closing nonessential businesses that were initially put in place for two weeks on March 8 had been extended for an indefinite period, Orbán told Kossuth Rádió on March 26. With the threshold for gradual reopening reached, we may have just passed the peak of the epidemic. Virus researcher Miklós Rusvai had told business daily Világgazdaság (Global Economy) as much on March 28. Based on the wastewater data at that point, the virus researcher estimated that we were currently at or near the peak of the epidemic.

‘Sunny and Happy’

Rector of Semmelweis University Béla Merkely similarly told TV news channel M1 on March 29 that the peak was likely upon us. “If we look ahead, we have roughly a month and a half more of this epidemic, after which the numbers will drop significantly,” Merkely predicted. Put another way, he said, “Let’s endure another month and a half and we’ll have a very nice summer when families can be reunited and we can relax freely.” On April 1, Orbán had delivered a similarly rosy expectation for the summer. He said Hungary had “2-3 difficult weeks” ahead of it, adding that “our summer will be sunny and happy.” This was during an interview with news channel M1, when he also stated that Hungarians who had registered for the COVID vaccine could get their first jab by the end of April or early May. By the end of May or early June, there would be enough vaccines to give 7 million Hungarians their first jab, he added.

According to a recent survey from the Central Statistical Office (KSH), the proportion of those who want to be vaccinated or have already been so rose to 52%. Only 21% are reluctant to get the jab against COVID. A website launched on March 25 by the National Health Insurance Fund that allows Hungarians to check up on the status of their COVID vaccination registration was hit by a cyberattack. Róbert Kiss, the deputy head of the command center for the body coordinating Hungary’s response to the pandemic, said vakcinareg.neak.gov.hu could not be reached for a short period as it received more than 600,000 malicious hits in a denial-of-service attack.

“If we look ahead, we have roughly a month and a half more of this epidemic, after which the numbers will drop significantly. […] Let’s endure another month and a half and we’ll have a very nice summer when families can be reunited and we can relax freely.” Despite this setback, Hungary has the second highest rate of vaccination in the European Union, as of April 7. According to the European Center for Disease Prevention and Control, 29.2% of adults in Hungary have received their first dose of a COVID vaccination, with 11.3% having received both.

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News | 5

Workers Tend to Prefer Office to Home Working: Skanska Survey Almost half of all Central and Eastern European employees say they go to the office every day, despite more than 60% of respondents saying that they have comfortable working conditions at home, according to a study conducted on behalf of the Skanska office development unit in the region.

WELL Health-Safety Rating WELL Health-Safety Rating − Influence on sense of security

It would definitely influence It would rather NOT influence

Top2box

It would rather influence I don’t know / hard to say It would definitely NOT influence

Some buildings have a safety certificate (WELL Health-Safety Rating) that is awarded for implementation of specific procedures regarding disinfection, contactless technologies and air quality management systems. To what extent could this certificate positively influence your sense of security at your workplace?

GARY J. MORRELL

The study focuses on the Czech Republic, Hungary, Poland and Romania. The research was conducted by Zymetria on behalf of Skanska; using the computerassisted web interviewing (CAWI) method, responses were collected from 1,200 office workers in the four CE countries. The survey reflects positive attitudes towards the office despite the COVID crisis and would seem to be good news for office developers and owners in the CEE region. In Hungary in May 2020,

44% of

respondents reported that they went to work every day and 17% said they went in to the office two to three times a week. The separation of work and home life is a major factor for nearly half of the employees surveyed. Having the possibility to work in a different place other than home helps

create a natural separation between work duties and private life. Asked what were the biggest disadvantages of working from home, 40% of respondents mentioned an inability to maintain a healthy worklife balance. Other major difficulties indicated are the limited social life and monotony. The possibility of discussing various matters with colleagues face-toface seems to be an extremely important aspect, especially for Hungarian and Romanian workers.

prefer working from home. This tendency is especially true for those who work in a team, as they more often believe that working from home is less effective (54% versus 39% of the total). Despite the ongoing pandemic, offices are still considered safe by two-thirds of all office workers from the surveyed countries; further, nearly 60% of respondents indicate that safety certificates, such as the WELL Health-Safety Rating, have a positive impact on their sense of security at work. For Hungary,

20% of

More Productive

The study suggests that working in an office is viewed by employees as more productive: only 20% of respondents

respondents said it would “definitely” influence their sense of security in the office, while 40% said it would “rather” influence their sense of security. “Despite the pandemic, we can clearly see the undeniably important

role of office space in the working life of many people. As it can be seen, above all, working from the office is a natural way for the employees to set and maintain a healthy line between their career and private life,” comments Arkadiusz Rudzki, executive vice president for leasing and sales at the Skanska commercial development business unit in CEE. “Thus, the possibility to go to the office is a valuable part of everyday life, enabling workers to keep up their effectiveness, creativity and satisfaction from work, which constitute key factors. We are glad that people still perceive offices as safe, and certificates like the WELL Health-Safety Rating, which we have received for our eight properties in CEE, strengthen this confidence,” Rudzki adds.

Top Legal

EXECUTIVES In Hungary

2021 The most influential legal executives in the Hungarian economy

The Top Legal Executives magazine is a special annual publication of the Budapest Business Journal. It forms part of our “Top” brand, and is a sister publication to Top Expat CEOs in Hungary. Like Top Expat CEOs, the magazine has a focus on people rather than policy. It presents the profiles of the most influential legal executives working in the Hungarian economy, focusing on outstanding achievements and how the Hungarian legal market is developing. Those profiles of Hungary’s top “legal eagles” are set against a review of how the Hungarian legal system operates, including the functioning of the Curia (the Supreme Court of Hungary) and the Constitutional Court, as well as the Budapest and national bar associations, among other things.

Why Should I Subscribe? • Provides an essential overview of how Hungary’s legal system operates. • Get an insight into the biggest cases of 2020, and likely legal developments in 2021. • Get to know the personalities behind the legal business. • Read personal accounts from the country’s top lawyers, detailing how they got into law in the first place and what prompted their choice of specialty.

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Kinstellar Appoints Partner

Leading regional law firm Kinstellar has announced the promotion of Budapestbased energy sector specialist Balázs Sepsey to partner. Sepsey has more than 17 years of experience advising Hungarian and international companies on a wide range of energy-sector matters, including M&A deals, power plant development projects, long-term supply agreements, EPC contracts, and EU energy regulatory work.

Balázs Sepsey Having worked for more than a decade in cooperation with with Kristóf Ferenczi, firm-wide head of Kinstellar’s energy and natural resources practice and managing partner of Kinstellar Budapest, Sepsey has been responsible for the day-to-day work of the Budapest energy and natural resources team in Hungary. He has also been instrumental in a suite of cross-border energy sector matters, assisting Kinstellar’s regional energy sector team across the Kinstellar jurisdictions, the law firm told the Budapest Business Journal. The recently promoted partner has been with Kinstellar since 2005. He was promoted to managing associate in 2016 and to Counsel in 2018. He is ranked in Band 3 by Chambers Europe and is recognized as a Rising Star by Legal 500 and IFLR 1000. Patrik Bolf, managing partner of Kinstellar commented, “We are very pleased with the election of Balázs to our partnership. He set a great example for the generation of younger associates as to what a talented colleague can achieve through hard work, determination, persistence, and creativity. We have had the benefit of

seeing Balázs rise through the ranks and very much count on his continued contribution to Kinstellar’s success story as a partner.” Ferenczi added, “Having elected Balázs to become Kinstellar’s newest partner is a truly satisfying moment after almost 15 years of very close collaboration. His talent, commitment to the highest quality of client service, dedication to the energy sector’s challenging legal issues, his sense of responsibility when it comes to our clients’ complex matters, and tireless readiness to walk the extra mile for clients and colleagues alike, make him a role model in our profession. I am honored to have been his colleague and mentor during these years and am very happy to have him now join our partnership, a promotion he has very well deserved.”

Budapest Airport Names CEO Chris Dinsdale took over as CEO of Ferenc Liszt International operator Budapest Airport Zrt. from the end of March, replacing Rolf Schnitzler. Dinsdale has been CFO and deputy CEO of Budapest Airport since 2015. He was responsible not only for finance, but also the procurement, legal and IT departments of the airport operator, and served as the managing director of AFS Ltd., Budapest Airport’s aviation fuel subsidiary. Prior to coming to Budapest, Dinsdale served as CFO at Wildhorse Energy and as a director at KPMG Hungary.

Chris Dinsdale Schnitzler filled the position of CEO at the airport operator for a temporary period from August 2019. Under his management, the company implemented investments of

nearly HUF 60 billion and prepared for the re-start of traffic in the future. Gerhard Schroeder, chairman of the board of directors of Budapest Airport said, “We thank Dr. Rolf Schnitzler for all his efforts in these difficult

I wanted to join this global organization. In my new role, I have the responsibility of building a workforce from the ground up that brings together different backgrounds, levels of knowledge, and ways of thinking. It’s a challenge I’m ready for and quite excited about.” In addition to building the Hungarian workforce, she will lead the software development organization at the Center for Global Product Innovation. She will also guide product modernization efforts across the Diligent product suite as well as work with other technology leaders to help drive growth. Prior to joining Diligent, Szatmári led the development team for software Rolf Schnitzler developer EMARSYS. She also held various leadership positions at Nokia including global R&D and customer times. Thanks to the joint work of support. She completed her studies him and Chris Dinsdale, Budapest in mathematics and information Airport mastered the aviation crisis technology at Eötvös Loránd University. caused by the COVID-19 pandemic “Júlia has very strong technical abilities exceptionally well. With the growing and is an accomplished engineering number of vaccinations globally, the leader. She will be an invaluable addition aviation industry is at the turning to our leadership team as we ramp up point of the crisis. From now on, crisis our workforce in Budapest,” said Ken management is expected to be replaced Surdan, Diligent’s chief product officer. by operational recovery management “Her expertise, knowledge of the local and a return to growth, which Budapest market, and experience in building Airport will implement under the outstanding product development teams leadership of Chris Dinsdale.” will help us expand our footprint in the region and enable us to accelerate our product innovation.” Diligent Picks Global

Product Innovation Center Head

Diligent Corporation, the leader in modern governance with a platform used by nearly 700,000 board directors and leaders, has announced the appointment of Júlia Szatmári as the head of its new Center for Global Product Innovation in Budapest. With more than 20 years of leadership experience in R&D and organizational development, she will serve as the senior vice president of engineering and will take a lead role in building and leading a workforce of approximately 300 Hungarians across a variety of technology functions. “Diligent’s commitment to Budapest is proof that Hungarian professionals are extremely skilled and wellpositioned to drive innovation,” said Szatmári. “Diligent’s mission and focus on sustainability, diversity and equal opportunity, are just a few reasons why

Júlia Szatmári Diligent’s investment in Hungary, which also received support from the Hungarian Investment Promotion Agency, was one of the largest foreign capital investments in the region in 2020. Earlier this year, the company announced that the Szervita Square Building in Budapest will house the Center for Global Product Innovation, which is expected to open in late 2021.

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Business

PwC Looks Back and Ahead at CEO Survey Anniversary

Hungary’s CEOs show record levels of optimism for the immediate future, but there are still some familiar concerns, a few of which have deepened, consultancy PwC Hungary said at the presentation of its 10th annual Hungarian CEO survey. ROBIN MARSHALL

With a decade of data sampling now behind the survey, the 2021 results threw up a number of notable facts. For a start, going all the way back to that first survey, optimism about the rate of global and Hungarian economic growth has never been higher. Half of the respondents expect to increase headcount this year. Next, this was the first time the results of the survey was presented in an entirely online format. The 2020 results had been aired in the hallowed surroundings of the Hungarian National Gallery, up in the Castle District, just weeks before Hungary went into its first lockdown. Partner Barbara Kuncz, who acted as the principal host for this year’s two-hour event,

“‘What if’ prepares you for the future,” Meskó said. “If you can do this, you can respond in the future.”

Honest Appraisal

said the 2021 survey had featured “a record number of participants, and all discussions went online.” She also recalled the press conference for the 2020 survey, when there had been markedly more pessimism among Hungarian CEOs, leading to a suggestion crisis planning would need to take on greater significance. “I was asked ‘What crisis should we be ready for?’,” she recalled. “I said ‘Any crisis!’” She was not claiming to be particularly prescient; the 2020 survey had been undertaken in November 2019 when “no one knew about coronavirus.” But there was “something in the air,” with rising concerns about the possibility of a global crisis and the dangers presented by climate change. And for all the optimism about an economic COVID bounce back once restrictions are lifted, those worries linger, with PwC saying the pandemic has deepened concerns business leaders already had. The percentage of CEOs worried about a higher tax burden has increased to 50% (up from 21% last year), but crisis preparedness, deteriorating

workforce health and the spread of misinformation also rank much higher on CEOs’ list of concerns.

Landmark Event

Having reached a landmark anniversary, there was an inevitable element of nostalgia to the business consultancy’s presentation, with a look back on the mood swings of the CEOs, the words of the year, and the development of the survey itself. Bori Palotai, head of marketing for PwC Hungary, said she had “followed almost all the data for the last 10 years,” and had even been among those asking the questions for the very first survey in 2011. While the process of data gathering might have evolved over the years, the aim has not, she said. “Our objective is to understand you as much as possible, and to use that feedback to inspire you.” The event was not all about the past, however; far from it. In addition to presentations from various senior members of staff, there were two invited guests who took a more long-term view: medical futurist Bertalan Meskó and Blair H. Sheppard, PwC’s global strategy manager. Meskó spends much of his day thinking about what the future of medicine will look like, and what it should look like. He believes core to that is the involvement of the patient “at a high level of decision making.” Indeed, he went as far as to say that doctors “cannot prepare for the future unless they understand who they works for: the patient.” He used the example of one of his favorite authors, Arthur C. Clarke, who was raised on a farm and whose family was too poor to send him to university. Instead, Clarke devoured science fiction works and successfully predicted much of what we see in the world today, including the internet and artificial intelligence, back in the 1960s, simply by repeatedly asking the “what if” question.

Sheppard, author of “Ten Years to Midnight: Four Urgent Global Crises and Their Strategic Solutions,” was in conversation with László Radványi, head of assurance at PwC Hungary, who asked what a CEO’s first step on the journey into the near future should be? Sheppard said that involved an “honest appraisal of yourself and your organization. The more senior we are, the harder that is to do, because we tend to be more protected.” The important thing was to recognize what the trends are, and to respond to them. “What COVID taught us was we can be way faster than we thought we could be, if we focus. Do not spread the peanut butter too thin, as we say here. Concentrate on what really matters. Engage in the first instance, do not do so after the event,” he added.

Tamás Lőcsei Wrapping up the event, PwC Hungary CEO Tamás Lőcsei said Hungarian business leaders would have three things on their agenda in 2021: “Sustainability and environmental consciousness; digital transformation and education and training; and cyber threats and other crisis contingencies.”

For a detailed look at the results of the 10th annual business leaders’ survey , see “PwC: Hungarian CEOs Bullish on COVID Rebound” in the March 26 issue of the Budapest Business Journal.

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Budapest Business Journal | April 9 – April 22, 2021

The Venture Capital Industry in Central Europe Les Nemethy and François Lesegretain’s last corporate finance column was on the subject of mergers and acquisitions (M&A) and concluded that M&A appears very robust over the past few quarters in Central Europe. Here they argue the same conclusion may also be reached for Venture Capital (VC). We will first look at the European VC industry, to provide a frame of reference, and then take a more detailed look at the Central European VC industry. Europe-wide, the volume of financing has increased steadily over the past decade: It seems that at the European level, deal activity was dominated primarily by the software industry, but also the pharma/biotech sector, which together accounted for about 45% of deal activity. COVID-19 was a driver of the push

The Corporate Finance Column

Investment Made in VC in CEE in 2020 (in EUR million)

Investment Made in Venture Capital in CEE in 2020 (in EUR million)

Source: Vestbee. The data disclosed VC rounds that have been made public before the end of the year or provided. It does not include grants and transactions below EUR 50,000. Source: vestbee.com/ blog/articles/vc-fundingin-cee-report-2020

for digitalization, which has been a big benefit for the software industry. VC activity is fairly well spread among Western European and Nordic countries, with only 2% of European VC activity emanating from Central Europe:

VC Deal Activity by Value and Volume in Europe from 2010 to 2020

Source: PitchBook. This chart was prepared based on partial information of deal count being available for 2020, which is the explanation for the curve declining (based on actual numbers) while the estimated number of deals increased.

Despite the small numbers, however, there has been a steady increase in VC activity in Central Europe over the past decade. As the chart below indicates, 2020 saw a major increase in VC activity, with Q4 2020 numbers exceeding the annual 2019 number by a wide margin, despite COVID-19. It seems that both the VC industry and the companies being financed learned to deal with COVID, thanks to Zoom calls and virtual data rooms. It will be interesting to see whether the most recent wave of the pandemic will cause any setback in VC financing during the first half of 2021. Poland was the dominant country in the Central European VC industry, thanks to its population. Estonia packed an amazing punch, way beyond its population, and Hungary ranked third: The Polish breakdown above demonstrates the dominance of Q3 and Q4 VC activity in that country. In Estonia, Q2 was the strongest quarter. Follow-on rounds represented over 90% of the overall value of European VC deals in 2019 and 2020.

It seems that COVID-19 has not curbed valuations or round sizes in the European venture capital ecosystem. It is important to note that investing in VC is very risky. As of 2019, European startup failure rates are around 90%: 21.5% of startups fail in the first year, 30% by the second year, 50% by the fifth year, and 70% by the 10th year, according to National Business Capital and Services. Quite a few venture funds themselves go out of business. However, high risk comes with high returns. In Q3 2019, European VC’s clocked an 8.3% quarterly return, just slightly lagging their U.S. venture capital counterparts, which returned 8.6%, according to Refinitiv – Europe Venture Capital Review. For those interested in investing into the VC space, there are at least three levels of investment. • One can invest direct into start-up companies. Under this scenario, given the high number of ventures that go bankrupt, it is best to invest in a portfolio of companies, to diversify risk. • One can invest into a private VC fund. • There are also a number of publicly listed entities that perform investments into startups; although we are not aware of any such public vehicle in Central Europe, there are a few in the United States. It is heartening to see the evolution of the VC markets in Central Europe. Every successful exit contributes to a class of new investors, the “smart money” that can help with subsequent startups, as well as a group of young entrepreneurs who would like to emulate the success. Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm. A former World Banker, he is author of Business Exit Planning (www.businessexitplanningbook.com) and a past president of the American Chamber of Commerce in Hungary.

Your essential Guide to Investing in Hungary including articles looking at the benefits available, case studies, EU funding, and commercial property investment.

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Budapest Business Journal | April 9 – April 22, 2021

Special Report

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Healthcare

What are the latest trends for healthcare provision in Hungary, how does the private sector dovetail with the state, and how is COVID driving innovation?

Necessity the Mother of Hungarian COVID Innovation

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Healthcare: A Strategic Sector With a Long History

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Private Health a Long-term Business Investment

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Gedeon Richter: Headwinds and Acquisition Targets

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WMC: Hungary Entering ‘new era’ in Healthcare

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Budapest Business Journal | April 9 – April 22, 2021

“In the Chinese language, the word ‘crisis’ is composed of two characters, one representing danger and the other, opportunity,” said John F. Kennedy in his famous campaign speech in 1959. However, linguists later revealed that the second character in isolation means something more like “change point.” The saying is more relevant today than ever. ÉVA KASZAP

Besides its unambiguous and heavy burden on economies and societies, the coronavirus pandemic has also been a strong driver for Hungarian innovation in the field of healthcare and the medical industry. Minister for Innovation and Technology László Palkovics says that the National Research, Development and Innovation Fund (NKFIH) has earmarked more than HUF 182 billion in R&D funding for 2021, some 25% more than the amount last year. This year’s budget will, however, have two special priority points of focus, namely healthcare and the defense sector. The NKFIH has allocated HUF 3 bln in its newly established COVID Fund to support 27 healthcare-related R&D projects this year, which have already yielded considerable results, such as the development of a Hungarianmade ventilator and the advances in mathematical virology. In this article we have collected some of the most brilliant healthcare inventions, developed by Hungarian scientists as a response to the pandemic, showcasing the power of creativity, and innovative thinking in times of massive uncertainty.

MassVentil Project Óbuda University and Semmelweis University The concept of the MassVentil project was to develop a mass ventilator where patients are connected to a modular or monolithically designed centralized ventilator system. The system is designed for the combined management of inhalation and exhalation gases. The air is filtered in both directions in one or more steps, says massventil.org. The aim

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Necessity the Mother of Hungarian COVID Innovation

of the development is to create a system that, under critical circumstances, can be used to simultaneously ventilate a large number of coronavirus patients in a critical condition, adds masventil.org. The planned device can be used in an emergency camp environment as well.

Hungarian Ventilator Budapest University of Technology and Economics The ventilator, developed by the Budapest University of Technology and Economics (BME) is suitable for both invasive and non-invasive ventilation and has been designed for long term oxygen supply for any type of respiratory problem (chemical, bacterial, or viral, including COVID-19). The university had been commissioned to create a life-saving device but the research and innovation team of BME went far beyond the original plans and developed a ventilator that has an array of other advanced features as well. It offers ventilation profiles that are less stressful for both the patients and their lungs, beyond the traditional ventilation methods. Furthermore, the oxygen levels may be controlled much more precisely than in other currently available devices. The development is expected to be patented soon, the university website says.

Population Movement Monitoring A joint study by Hungarian and international researchers, universities, and telecom operators Dr. Miklós Szócska, dean of the Faculty of Health and Public Administration together with Martin McKee, professor of European public health at the London School of Hygiene and Tropical Medicine, have recently published a study on a countrywide population movement monitoring system in which they use mobile device-generated big data. The two professionals created a “mobilityindex” and a “stay-at-home/resting index” based on aggregated anonymous call detail records (CDR) of almost all mobile

phone subscribers in Hungary. Research experience in Hungary has shown that CDR-based mobility and staying-at-home indices provide a means to monitor the effectiveness of restrictions on mobility and to highlight geographical areas where further measures are necessary.

Hyperacute AntiCOVID–19 Serum OrthoSera Kft. According to latest studies, critically ill COVID–19 patients often suffer from a so-called “cytokine storm syndrome”, which is an overactivation of the immune system to the virus infection. It occurs when large numbers of white blood cells are activated and release inflammatory cytokines, which in turn activate yet more white blood cells. According to studies, the cytokine storm syndrome is much milder in coronavirus survivors as their blood produces antibodies that defeat the virus. The blood and antibodies of survivors has often been used to support critically ill patients. The patented hyperacute serum technology of the OrthoSera Kft. might have further therapeutic effects in addition to the antiviral antibodies. The research team of OrthoSera Kft. suggests that their technology can counter the excessive cytokine response, as well.

The NKFIH has allocated HUF 3 bln in its newly established Epidemiological Analysis and COVID Fund to support Modelling Response Team 27 healthcare-related R&D Partnership of several universities projects this year, which and institutes of Hungary Led by Gergely Röst, associate professor have already yielded at the University of Szeged, and established by the Ministry for Innovation considerable results, such and Technology, the Epidemiological as the development of a Analysis and Modelling Response Team Hungarian-made ventilator is using mathematical models to predict and project the development of the and the advances in epidemic in Hungary, thus helping public mathematical virology. health decision makers to define, evaluate and compare the best strategies to control the outbreak. These mathematical frameworks, which use systems of differential equations, can help decision makers to understand the speed and pace of the infection and the effectiveness of governmental measures.

Virus Detection from Municipal Wastewaters University of Pannonia, University of Pécs and MOL Zrt. The University of Pannonia, in partnership with the University of Pécs and Hungarian oil and gas firm MOL, developed a method which can estimate the extent of viral infection patterns in communities by detecting viruses in wastewater samples. Coronavirus can be detected in wastewater three days after the infection, even before the symptoms start. Scientist can warn public health professionals at an early stage of the infection, thus all the necessary measures can be taken on time before the widespread outbreak. The project develops a useful database to track and follow the spread of the COVID19 infection and predict any potential re-emergence and hotbeds.

Development and Clinical Testing of Favipiravir Eötvös Loránd Research Network (ELKH) Research Center for Natural Sciences, Első Vegyi Industria Zrt., Richter Gedeon Nyrt., MEDITOP Gyógyszeripari Kft., University of Pécs, INTEGRA Consulting Zrt. The first phase of the project will develop pharmaceutical products containing an antiviral medication called “favipiravir.” It will also cover the creation of appropriate infrastructural background for manufacturing, such as laboratories and analytical processes. Various task forces will be established in the field of analytics and clinical tests to coordinate and manage the work of the project consortium. In the second phase, the University of Pécs will implement and monitor the testing, lead consultations, and ensure compliance with deadlines. Even though favipiravir is a simple molecule, its production is quite complicated. Researchers must find the best possible option in the shortest possible time to roll out manufacturing.

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Budapest Business Journal | April 9 – April 22, 2021

PRESENTED CONTENT

Special Report | 11

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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 EgisServier. 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.

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

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.

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

The key figures of healthcare industry The two sectors together give more than 9% of the total manufacturing value added.

The FDI stock in the pharma industry amounts to EUR 3.5 billion.

Pharma and medtech industries employ more than 40,000 people. BBJ Infographic

Out of 1,800 enterprises, almost 180 are engaged in export-driven medtech manufacturing.

Pharma companies have around 300 clinical trials registered each year. Hungary is the largest exporter of medicinal and pharma products in the region. 5.3% of total exports.

Number of students/ graduates in life sciences in tertiary education is 22,000 and 3,100 respectively. Source: HIPA

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.

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Special Report

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Budapest Business Journal | April 9 – April 22, 2021

Private Health a Long-term Business Investment Anita Gurney, managing director of Duna Medical Center, talks with the Budapest Business Journal about the challenges facing private clinics, the opportunities for growth, and the sector’s relationship with state healthcare. Anita Gurney

ZSÓFIA VÉGH

BBJ: How profitable is private healthcare today?

Anita Gurney: Private healthcare, as a business, is still a long-term investment. It is CAPEX heavy, the initial investment necessary to equip a facility is high. One also needs to factor in infrastructure and equipment amortization, after sixto-seven years, which means additional costs. This hasn’t changed in the past years. Those specializing in outpatient care will see profits sooner, but facilities similar to ours in terms of size and the service offered count on becoming profitable in the longer run. BBJ: Smaller practices still account for the majority of the Hungarian private healthcare market, though transparent data on their revenues is still not available.

AG: The introduction of EESZT [the Elektronikus Egészségügyi Szolgáltatási Tér or Electronic Health Services Area) and online cashiers have contributed largely to the whitening of this segment. It is true that, in the past, we mostly had to rely on data based on estimations but with more stringent and more trackable online reporting, we will see a clearer picture. The market is becoming more transparent and information, including revenues, are becoming more easily traceable. Patients also demand more transparent services: They are less likely to accept that they are not given an invoice, for example. As a result, demand for well documented, legal and traceable operations are growing.

BBJ: What is the edge that a facility such as DMC has in this market?

AG: We provide outpatient, hospital care and diagnostics as well, which means we can handle a problem on site. It is rare when a problem can be detected with the

involvement of only one professional or field; it is crucial that experts can discuss with each other and take a comprehensive approach. I believe this mindset and our complexity is where our edge is. BBJ: Does this approach translate into costs? How do you set the prices?

AG: We operate as a business; we have costs to cover (salaries, etc.) and we also consider the market and our competition when setting prices. There are, of course, fields where competition is high and we face challenges due to highly competitive market pricing. Ultrasound diagnostics, for example, is a field where there are a lot competitors and we see a tough price competition. BBJ: What effect will the recent changes in legislation regarding gratuities [the practice of “tipping” healthcare workers, especially doctors] have on the revenues of private organizations? Will people use that money to cover private healthcare services?

AG: I’d rather not speculate. At this point, there are a number of factors affecting private healthcare. One is the coronavirus pandemic: With state healthcare overburdened with COVID-patients, some services are limited, which make many turn to private facilities. There is an economic uncertainty, we don’t how purchasing power will be. The changes in legislation will also impact the role of the private market. The elimination of gratuities means that, as of now, no one can pay to skip ahead in the line. Also, doctors willing to do second jobs need permission, which makes it is questionable how they will be able to work in this segment. There are accelerators and breaks in the system, but overall, ever more people are turning to private care. The vast majority who start to use our services return and remain with us.

BBJ: Do you also employ doctors who work part time? How difficult is it to hire someone full time?

AG: I believe this “duality” will not disappear from our healthcare system, though the conditions of work will change; it will be subject to authorization. This, together with the above mentioned legislative changes, will help whiten the sector. We also have a contractual relationship with most of our professionals, but some of our doctors work for us in full-time employment.

“We operate as a business; we have costs to cover (salaries, etc.) and we also consider the market and our competition when setting prices. There are, of course, fields where competition is high and we face challenges due to highly competitive market pricing. Ultrasound diagnostics, for example, is a field where there are a lot competitors and we see a tough price competition.” BBJ: Do you find this a good practice?

AG: It allows us to work with a larger pool of professionals. With this option, we are not taking anyone out of the state healthcare but providing an opportunity for patients to access these doctors. If

this is carried out in a well-structured and transparent fashion, I find this is a viable option. We need to implement some filters as well and work with those who meet the standards. State and private healthcare have a symbiotic relationship and thus are sharing resources. In fact, we should not look at it as two different healthcare systems; we are [both] part of one. Similarly, patients are part of them both. BBJ: There are fields such as oncology, traumatology, or addictology that have always been solely in the state system. Why is that?

AG: In theory, there is no reason why they could not be part of private care as well, with the exception of transplantation perhaps. The question is how profitable they are and whether patients could afford to incur the costs of, for example, chemotherapy. Also, some of them would be difficult and costly to organize: to handle emergency cases in the countryside, far more complex private service providers would be needed. BBJ: DMC is one of the largest private hospitals in the country, but the number of beds in its hospital inpatient division is still low, which seems a universal trend in private facilities.

AG: We are a private healthcare provider with services available in all segments: outpatient, hospital and diagnostic. We currently have a 14-bed hospital section that we are planning to double soon, and eventually grow it to 130. After moving to our new building at the beginning of this year, we are progressing at a gradual pace. We decided to forgo the inauguration due to the pandemic as well. Still, we have some ambitious goals for this year as well: Our obstetrics section is due to open in a few months.

Special Report | 13

increased significantly to fight against the epidemic and due to various items from the Economic Protection Fund.

because they were driving less last year, because of travel restrictions introduced in the spring and again in the fall, the insurer noted. Indeed, the number of road accidents in Hungary fell 17% to 13,778 last year, according to data compiled by the Central Statistical Office (KSH). The number of traffic injuries declined 18% to 18,176. Around 26% of those injuries were serious and 2.5%, or 460, resulted in death. Alcohol was a factor in close to 10% of road accidents last year. Motorists in Hungary are prohibited from drinking any alcohol when behind the wheel.

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Budapest Business Journal | April 9 – April 22, 2021

News///in brief Healthcare

Listed company Masterplast, a building materials manufacturer that entered the healthcare supplies business during the pandemic, has won a government grant to build capacity for finished personal protective equipment at a fleece factory it is building in Sárszentmihály (75 km southwest of Budapest), according to an announcement on the website of the Budapest Stock Exchange. Masterplast said in a disclosure yesterday that a Hungarian unit of the company has won a grant covering 80% of the HUF 2.6 billion investment. Earlier, Masterplast was awarded a government grant covering 80% of the cost of a HUF 9.5 bln fleece plant at the base.

Public Spending on Healthcare to Remain High The proportion of spending on the healthcare sector this year may jump to levels not seen for decades, health economist Eszter Sinkó told business daily Világgazdaság (Global Economy). After the

cost of controlling the epidemic, an increase in doctors’ wages could swell the health insurance fund this year. Public health spending may remain persistently high, Sinkó said. It could reach 6-6.5% of GDP this year and may even grow in the coming years. Last year, health expenditures

The National Ambulance Service has received a significant donation of HUF 380 million, according to profitline.hu. The amount was donated by Groupama Insurance. One of the few positive effects of the coronavirus epidemic has been that people caused fewer accidents

Richter Takes ‘Initial Steps’ to BGS Bond Issue Pharmaceutical company Gedeon Richter says its management has taken “initial steps” to participate in the Bond Funding for Growth Scheme (BGS) of the National Bank of Hungary (MNB), according to an announcement on the website of the Budapest Stock Exchange. A decision on participation in the scheme, with the issue of a 10-year bond, will be taken by Richter’s board. The company’s decision related to the potential scale, coupon and timing of such an issue will be taken at a later date, Richter said. The blue chip pharma added that it had initiated

a review of its external funding framework “in order to improve [its] acquisition capabilities.” The MNB launched the BGS in the summer of 2019 with the aim of beefing up Hungary’s relatively small corporate bond market. The program allocation stands at HUF 1.15 trillion. Meanwhile, the board of Richter will propose to shareholders payment of a HUF 225-per-share dividend on last year’s earnings, according to AGM proposals posted on the website of the Budapest Stock Exchange. The dividend is equivalent to 40% of consolidated after-tax profit. Richter

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Masterplast Wins Gov’t Grant for PPE Plant

Groupama Donates HUF 380 mln to National Ambulance Service

paid a HUF 63-per-share dividend on 2019 earnings. Richter’s AGM is slated for April 15, but the board will approve resolutions on the agenda in lieu of shareholders if a ban on gatherings is still in force, as allowed by a government decree issued during the state of emergency.

UV-C Sanitizer: Discover how Tungsram can Help Everyday Disinfection Tungsram presents a peek into to the very near future with its new, innovative UV-C Sanitizer box that is coming to the market to kill off or inactivate all germs on objects. UV light technology is one of the most effective and trending tools right now to eradicate COVID19 and, in fact, all other viruses and bacteria. The UV-C Sanitizer Cabinet by Tungsram can eliminate harmful bacteria and viruses from the surface of tools and business tools in just five minutes. The highly reflecting material inside the box ensures maximum disinfection or using the hooks installed in the box will guarantee that every part of the inserted item will be clean of harmful pathogens.

and application areas are diverse; it is suitable for sanitizing items in your home, commercial areas, wellness and even healthcare. It is Safe

The UV-C Sanitizer Cabinet allows businesses to provide a clean and safe environment for their customers and employees by properly sanitizing their products and tools of business. It is Cost Effective

By using Tungsram’s UV-C Sanitizer Cabinet, costs of regular sanitization will decrease.

We are Dedicated to Quality

Adjustable radiation time is perfect for those whose items require more exposure than the original, fiveminute default setting; to ensure the disinfection of bigger items, the UV-C Sanitizier box is available in two sizes. What are the main reasons why you need the Tungsram Sanitizer box? It is Green

The sanitizier uses UV-C light to kill pathogens, which is proven to be an excellent solution as this light exists naturally, creating no waste from

by-products. The lamps within the box are recyclable. UV-C light kills 99.99% of known pathogens and it is 100% safe for everyday use. It is Fast

Besides the 3,000-hour lifetime (or 1,000 cycles for application), the UV-C Sanitizer Cabinet, based on UV-C radiation intensity measurements within the Sanitizers, needs only five minutes to eliminate 99.99% of most common pathogens It is Simple

There is no need for any special training as it is easy to operate by any employee

Tungsram’s sanitizer box is ozone free, meets the requirements of various certified approvals (CE, RoHS, EN 60335-1, EN 60335-2-65, EN 62471-2008, EN 55014) and it has high efficiency electronic ballast. We use high-quality European components and the products are manufactured in Tungsram’s own factory in Nagykanizsa (215 km southwest of Budapest). Two-year warranty is ensured (excluding lamps) and with serial number registration an extra 12 months of limited warranty is provided. Keep your customers and employees safe, and your business moving with highly effective UV-C disinfection by Tungsram.

For more information, please visit uvsanitizier.tungsram.com

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Special Report

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Budapest Business Journal | April 9 – April 22, 2021

Gedeon Richter: Headwinds and Acquisition Targets Gedeon Richter, one of the biggest pharmaceutical companies in Central and Eastern Europe, continues to seek acquisition targets mostly in women’s health and biosimilars, CEO Gábor Orbán tells the Budapest Business Journal. He sees some headwind caused by the pandemic and his expectations for turnover are more moderate. GABRIELLA LOVAS

BBJ: The board proposes a HUF 225 per share dividend on last year’s profits. Why is there such a big jump in dividends compared to previous years?

Gábor Orbán: Given the strong free cash flow expected from our specialty business including Vraylar, as well as the strength of our balance sheet even after the Evra closing in January, the board decided to propose to the AGM a pay-out ratio at the higher end of the 25-40% range announced in 2018. The increase in HUF terms is also driven by the significant rise in after-tax profits. BBJ: What does the management expect for 2021?

GO: I can only cite here what was said in the 2020 Q4 earnings call. On the revenue side we intend to signal consolidated revenue expectations with a focus on the performance of our specialty drugs, while on the cost side we will continue to update investors and analysts as we move forward in the year. BBJ: What are the main challenges and plans for this year?

GO: Last year we experienced sharp variations in orders because of the pandemic, which was difficult to

BBJ: What are your expectations regarding Evra?

GO: Evra’s sales will already appear in Richter’s revenue this year in a transitional arrangement, with approximately 50% (estimated at USD 40 million) of revenues recorded in our top line. In this interim period, lasting until about the end of 2022, Janssen will be paying a “re-license fee”, while still providing the supply services (manufacturing and distribution). During this time we will gradually integrate the brand into our operations.

Gábor Orbán accommodate. In 2021, at least for the first half of the year, we expect to have some headwind caused by the pandemic, i.e. more uncertainty, and our expectations for turnover are more moderate. One of the main focus areas this year will be to continue to expand our portfolio in gynecology. Related to this will be the launch of two innovative products this year. One of them is an oral contraceptive containing oestetrol and drospirenone, which will be marketed under the brand name Drovelis® and for which the European Medicines Agency (EMA) Committee for Medicinal Products for Human Use (CHMP) issued a favorable opinion on March 26. Subject to the decision of the European Commission, the product is expected to receive a marketing license valid for all EU member states by the end of the second quarter of 2021. The other drug that could get a license this year is relugolix, for the treatment

Analyst Opinion

“The current stock price level indicates that Richter’s management has successfully turned the negative market sentiment following the Esmya fallout into a positive,” KBC Securities head of research Norbert Cinkotai says. The decision by European authorities to restrict the use of uterine fibroid treatment Esmya due to side effects was a blow the Hungarian drug maker, which saw its share price plummet. The stock price recovered from HUF 4,800 levels to more than HUF 9,000, driven primarily by improving

of uterine fibroids. In gynecology, maximizing the market potential of the newly acquired Evra patch is also an important task. In addition, several of our important clinical trials will begin this year both in biosimilars and small molecule original CNS [central nervous system drugs]. BBJ: AbbVie said that it expects Vraylar peak sales to approach USD 4 billion within its currently approved indications of schizophrenia, bipolar I disorder, and bipolar depression. How realistic are these expectations?

GO: The product has proved its worth on the market, by now a substantial body of real-world evidence supports the value it brings to patients, with a very clean side effect profile compared to competitors. Abbvie’s professionalism and the resources it dedicates to the commercialization effort are strong signals that the product’s success story will continue.

sentiment rather than fundamentals, Cinkotai says. He thinks that the stock is no longer cheap for the company’s fundamentals. KBC’s fair value estimate is at HUF 8,400, although he doesn’t rule out a five-digit price in case of an optimistic scenario. The higher dividends do not impact the stock’s valuation, according to Cinkotai. “Richter has not been and will not be priced as a dividend stock,” he says. The dividend yield is still not too high at the current price level, he adds. “Richter has to consolidate its latest big acquisition, Evra, first,

“Last year we experienced sharp variations in orders because of the pandemic, which was difficult to accommodate. In 2021, at least for the first half of the year, we expect to have some headwind caused by the pandemic, i.e. more uncertainty, and our expectations for turnover are more moderate.” BBJ: How will COVID affect the company’s sales/operations this year?

GO: We see headwinds in many parts of the world as patient-doctor contacts fell, the flu season was by and large skipped, and we have constraints on our promotional activities. This is a limiting factor, particularly in the case of recently launched specialty brands. BBJ: Are there any planned acquisitions?

GO: The strength of our balance sheet as well as our manufacturing and commercial capabilities make us well-placed to take advantage of inorganic growth opportunities, mostly in women’s health and biosimilars. We continue to screen the market for divestments or partnering opportunities.

before chasing new targets,” Cinkotai says. “After the Esmya fallout, it was forced to make a move to strengthen its women’s health portfolio,” he adds. “Now there’s no such pressure, especially not with the current growth rate.” Richter bought Janssen Pharmaceutical’s Evra assets outside the United States for USD 263.5 mln last year. With the acquisition, Richter added a patch to its existing contraceptive solutions, which includes oral and emergency contraceptives as well as an intra-uterine device.

www.bbj.hu

Budapest Business Journal | April 9 – April 22, 2021

Special Report | 15

WMC: Hungary Entering ‘new era’ in Healthcare the patients really understand what is happening to them and get the attention they deserve. If a professional cannot adopt these core values, we prefer not to work with them. Many of our doctors worked abroad, in the U.K., for example, and they have brought with them patient centered, up-to-date, guideline dependent, good medical practices, many of which we have also adopted.

Legislation has helped launch a new phase in Hungarian healthcare, Dr. Róbert Mári, managing director of Wáberer Medical Center (WMC) Kft. tells the Budapest Business Journal. He believes private complex care facilities are well placed to benefit.

BBJ: Do patients have to pay more for this type of care?

RM: No, our prices are incredibly competitive. Our method of operation does not cost more, it just requires a different mindset from the healthcare professionals.

“At the center, we have done away with decadelong clichés of bowing to professors and hierarchy; what matters is that the patients really understand what is happening to them and get the attention they deserve.”

ZSÓFIA VÉGH

BBJ: What makes WMC different from other players?

Róbert Mári: When we came up with the idea of the WMC, we aspired to create a private health center that is the place to go for both our patients and us. We spent a lot of money on creating the 2,500 sqm private clinic with two fully equipped operating rooms, a 15-bed hospital wing, modern diagnostic imaging (CT, MRI, etc.) to serve our clients both in out- and inpatient care. We created the capital’s leading private center for cardiology and established a special orthopedic division. We think in profiles, in hospital-like, systemic care and we take patient pathway management very seriously. Yet still, it is our doctors and nurses who make the difference. Their professionality, combined with WMC’s fundamental patient-centered healthcare approach, is what makes us special in this market. We hire people that fit in with this concept; many of them return from abroad and they stick around. They like it here, because we do not only offer a modern facility and good salaries, but also professional development, openness to individual initiatives and the lack of title-based hierarchy. WMC has a so-called “walk-in center,” an urgent care clinic that is one of a kind in Hungary. As its name suggests, one can walk in with a problem and not only be diagnosed but also receive treatment within an hour, even if it is an emergency. (There is a list of conditions we can and cannot treat here.) To do that, we have the necessary ER and diagnostic background as well as the inpatient unit and the operating

Dr. Róbert Mári theaters. The fact that right after diagnosis the patient is referred to the specialists in-house is something that is virtually impossible to manage in an average state facility or a less complex private clinic. Last month, we had a case where a patient with lower abdominal pain checked in. It turned out he had progressed appendicitis which we operated on immediately thanks to the above features and our dedicated team. We had two more similar cases in March and were able to treat them both. This is not to say that we are specialized to deal with such cases but, if need be, we are. BBJ: What ensures WMC’s place in an expanding and ever more competitive market?

RM: By hiring the best experts in their field, a hospital can only go so far; the edge or profits you gain by doing so is only temporary. What is crucial is that our experts really work as a team. This teamwork is inspiring: our professionals have come up with a lot of innovative ideas. Such initiatives led to our signature patient pathway optimization, the foundation of a tertiary-level cardiology center, as well as to drafting and implementing the concept of our unique walk-in center. Our doctors also take part in keeping our infrastructure up to date. For example, we have one of the best local experts in fetal echocardiography.

Per her request, we have recently upgraded to a more state-of-the-art ultrasound machine to take diagnostics to the next level. We have ever more operating surgeons. We expect them to be available not only for performing surgeries, but also for consulting with patients before and after surgery. Working with multiple, skilled surgeons in many fields (including general surgery, trauma and orthopedics, urology, gynae, vascular surgery) means that our patients do not have to wait weeks for an appointment. In surgeries, the “knowledge of the terrain” is also crucial. Since the start, we have been able to cut back on operation time by more than a half thanks to modern surgical techniques and the complex “fast recovery protocol” in place. Our patients are able to go home, for example, in only two-tothree days following a hip replacement surgery. This is only possible if all team members are excellent professionals, know each other and also know and enforce international guidelines. BBJ: Overall, does it matter if you employ experts who worked abroad or only in Hungary?

RM: What is key is that they share the same values and work ethic. At the center, we have done away with decadelong clichés of bowing to professors and hierarchy; what matters is that

BBJ: Is all private healthcare moving in this direction?

RM: Bigger players have started to shift, but there are still a large number of less complex facilities providing outpatient care, a lot of at-home private practices and professionals who work both in state and private care. Many of these small private providers operate in the “grey zone” of the market: they do not write invoices or pay taxes, fail to offer patient guarantees and typically channel the costs of examination and treatment to the state system. No surprise that more and more patients are turning to facilities that provide complex care from diagnostics to surgery and also offer peace of mind in terms of guarantees and safety. This is a tendency that will bring market consolidation in the midterm. Recent changes in legislation, including the sanctioning of gratuities, marks the beginning of a new era in healthcare. Professionals who used to operate nonstop in state hospitals no longer have the incentive to do so. They will look for other options and the complex care private facilities may provide a solution for them. BBJ: Do existing private health insurance schemes boost this process?

RM: Currently, the majority of patients are covered by corporate insurance; only a handful of individuals pay for their own. I believe this is going to change: people will create a certain demand for schemes that will allow individuals to use private services as well. There are some good examples for that in outpatient care.

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | April 9 – April 22, 2021

Private Hospitals and Clinics(1)

aFFidea diagnosztika www.affidea.hu

11,019 (2019)

Affidea Magyarország Kft.

mediCoveR egészségközPont

10,525 (2019)

Medicover Egészségközpont Zrt.

Hospital operations, health insurance, dentistry, vaccination center, MRI, CT, ODM international medical tourism

1993

667

MI Hungary Kft. (100) –

lászló benedek, katalin Juhász, János Rózsás – –

1134 Budapest, Váci út 29–31. (1) 465-3100 info@medicover.hu

8,661

Budai Egészségközpont Kft.

Complex spinal reflexology, inpatient care, preventive screening tests, management screening, arteriography, laboratory tests, company health programs, R&D

2000

540

Bonitás 2002 Zrt. (75), Medikomp Kft. (25) –

Pál Péter varga Anett Végh Szabolcs Üveges

1126 Budapest, Királyhágó utca 1–3. (1) 489-5200 info@bhc.hu

2007

143

– Cross Border Management Holding GmbH (100)

kornél Papik – –

1051 Budapest, Széchenyi tér 7-8. (1) 377-6737 info@drrose.hu

ComPany Website

www.medicover.hu

budai egészségközPont www.bhc.hu

otHeR seRviCes

yeaR establisHed

Outpatient care, corporate health programs, prevention screening, male and female screening packages, manager screening, lab screening

1991

no. oF Full-time emPloyees on maRCH 1, 2021

name oF oPeRating ComPany

Rank

total net Revenue in 2020 (HuF mln)

Ranked by total net revenue in 2020

oWneRsHiP (%) HungaRian non-HungaRian

toP loCal exeCutive CFo maRketing diReCtoR

addRess PHone email

371

– Affidea Diagnostics B.V. (100)

györgy leitner – –

1054 Budapest, Szabadság tér 7. (1) 803-6464 –

dR. Rose magánkóRHáz

3,348

Dr. Rose Magánkórház Kft.

Complex inpatient care, diagnostic tests, prevention screening tests, annual card packs, surgeries, rehabilitation, corporate health services, health insurance packages, occupational health care, international vaccination center

RóbeRt káRoly magánkóRHáz

3,215 (2019)

Róbert Károly Magánkórház Zrt.

Gynecology, infertility center

2011

162

MedAlliance First Kft. (100) –

lajos károly Fábián – –

1135 Budapest, Lehel utca 59/C (70) 377-4845 info@robertkorhaz.hu

Duna Medical Center Kft.

Hospital (inpatient) and one-day surgery in the following fields: vascular surgery, ear, nose and throat, gastroenterology, general surgery, neurosurgery, gynecology, orthopedic proctology, ophthalmology, urology, bariatric (obesity)

2014

147

– International Medical Centers B.V. (100)

anita gurney, vitalii volskyi András F. Radeczky Bertalan Bognár

1095 Budapest, Lechner Ödön fasor 7. (1) 790-7070 info@dunamedical.com

2001

Individuals (49) MedLife SA (51)

dr gyula Csermely Zsuzsanna Kadala Kinga Tihanyi

1026 Budapest, Gábor Áron út 74-78. (1) 392-0505 info@rmc.hu

2004

(100) –

andrás kókay Félix Gábor Gombos Alma Fazekas-Arató

1117 Budapest, Hunyadi János út 9-11. (1) 505-8888 info@pet.hu

Varga és Társa Befektetési Kft., PMSZO Holding Kft. (100) –

botond Halmai – –

1118 Budapest, Ménesi út 57. (1) 250-5505 info@sasszemklinika.hu

https://drrose.hu/hu

www.robertkorhaz.hu

duna mediCal CenteR kFt. www.dunamedicalcenter.org

2,100

RózsakeRt mediCal CenteR

2,063

RMC Group

Full spectrum of outpatient care and same-day surgery in internal medicine and pediatric specialties from 8 a.m. to 8 p.m. and on Saturdays, complex screening packages, services for expectant mothers, services for mom & baby, health and beauty, COVID tests and post-COVID screening, International Vaccination Center

PozitRon-diagnosztika közPont

1,700

PozitronDiagnosztika Kft.

Mammography, ultrasound, endocrinology, cardiology, gastroenetrology, psychiatry,vascular surgery

www.rmc.hu

www.pet.hu

k-med kFt.

www.sasszemklinika.hu

1,674 (2019)

K-Med Kft.

–

1999

www.bbj.hu

sWiss PRémium egészségközPontok

name oF oPeRating ComPany

otHeR seRviCes

yeaR establisHed

1,171

Swiss Medical Hungary Zrt.

Endoscopy tests in anaesthesia, gastroscopy, colonoscopy

2010

www.swissclinic.hu

Special Report | 17

no. oF Full-time emPloyees on maRCH 1, 2021

ComPany Website

total net Revenue in 2020 (HuF mln)

Rank

Budapest Business Journal | April 9 – April 22, 2021

oWneRsHiP (%) HungaRian non-HungaRian

toP loCal exeCutive CFo maRketing diReCtoR

addRess PHone email

(100) –

andrás kirschner – –

1123 Budapest, Táltos utca 15/B (1) 323-7000 info@swissclinic.hu

FiRstmed - FmC kFt.

1,135 (2019)

Firstmed-FMC Egészségügyi Szolgáltató Kft.

2011

– American Clinincs International Inc. (100)

dennis diokno Andrea Vízvári –

1015 Budapest, Hattyú utca 14. (1) 224-9090 info@firstmedcenters.com

emineo magánkóRHáz www.emineo.hu

1,085 (2019)

Emineo Kft.

Screening, weight ambulance, research and development, health insurance consulting, rehabilitation

2009

Zsolt Knoll, Kálmán Fábián, Veronika Börzsei-Knoll (100) –

veronika börzseiknoll, zsolt knoll – –

1117 Budapest, Nádorliget utca 8/B (1) 773-3333 emineo@emineo.hu

WabeReR mediCal CenteR

1,000

Wáberer Medical Center Kft.

Fixed fee annual card packages, manager screening and corporate health card services

2019

150

HIGH YIELD Zrt. (72.73), individuals (27.27) –

Róbert mári Ádám Varga Zsuzsa Szűcs

1123 Budapest, Alkotás utca 55-61. (1) 323-7000 info@wmc.hu

istenHegyi magánklinika

653 (2019)

Istenhegyi Magánklinika Zrt.

–

1994

(100) –

lászló Rudas – –

1125 Budapest, Istenhegyi út 31/B (1) 224-5424 info@ihklinika.hu

527

MeDoc Egészségközpont Egészségügyi Szolgáltató Kft.

–

2008

Andrea Szegedi, Tamás Módos, Rock Data Kft. (100) –

tamás módos, ádám bálint – –

1132 Budapest, Visegrádi utca 74. (1) 783-6004 info@medocklinika.hu

243

Oxygen Medical Kft.

–

2008

Kornél Sándor, Katalin Éva Bohn (100) –

katalin brigitta Putz – –

1042 Budapest, Árpád út 47. (20) 554-1498 recepcio@springdaymedical.hu

230

Professional Orvosi Kft.

–

1990

András László (50), Edit Kelemen (50) –

andrás lászló – –

1037 Budapest, Bécsi út 85. (1) 317-0631, (20) 951-1615 info@professionalrendelo.hu

191 (2019)

Gáspár Medical Center Egészségügyi Szolgáltató Kft.

–

1996

Lajos Gáspár (100) –

lajos gáspár – –

1085 Budapest, József körút 37-39. (1) 317-8175 info@gasparmed.hu

Kelen Kórház kft

–

1998

(100) –

tamás székely, zsuzsanna kövesd – –

1119 Budapest, Than Károly utca 20. (1) 205-0205 kelen@kelen.hu

www.firstmedcenters.com

www.wmc.hu

www.ihklinika.hu

medoC egészségközPont egészségügyi szolgáltató kFt. www.medocklinika.hu

sPRingday mediCal magánoRvosi közPont www.springdaymedical.hu

PRoFessional oRvosi kFt.

gásPáR mediCal CenteR

kelen kóRHáz

www.professionalrendelo.hu

www.gasparmed.hu

www.kelen.hu

notes: (1) The speciality areas of the private clinics and hospitals can be found on the respective websites.

www.bbj.hu

Budapest Business Journal | April 9 – April 22, 2021

Socialite Springtime Walking in Budapest As I have said before, the best way to explore any city is to deliberately get lost, something that is admittedly getting harder to do these days when we’ve got dear old Google Maps to hand. This is as true of Budapest as it any other great city.

Transport Allsorts

DAVID HOLZER

Around this time last year, before COVID19 began to bite, I put my theory into practice with a marathon walk through “the eighth” (District VIII), beginning at the Hotel Astoria end of Bródy Sándor utca and ending at Keleti Railway Station. In case you don’t know, Sándor Bródy (as we would order his name in English) was a Hungarian-Jewish writer born in 1863. He died in 1924. When his father’s various business ventures hit hard times, the family moved to Budapest from Eger, an ancient town 133 km northeast of the capital, in the center of one of Hungary’s great wine-growing regions. Eger was ruled by the Turks for 91 years from 1596. Their legacy remains most tangibly in the form of a 17th century minaret that marks the northernmost point of the Ottoman Empire.

and restaurants are closed, which makes it impossible to stop and watch the district go by or use a restroom – essential on a wander of this length. Instead, I’ll head up into the hills above the Buda side of the city. I’ve been inspired to do this by a conversation I recently had with a friend of mine who is the reason I came to Hungary in the first place. We met at Burning Man, the psychedelic festival held at Black Rock City in northwestern Nevada. He escaped from communist Hungary in 1987 but returned to the motherland as often as he could. I accepted his invitation to visit him in Hungary at New Year’s 2014 and started coming here more regularly a couple of months later. My friend told me that, when he was a teenager, he would hike in the Buda Hills with a gang of his friends that often numbered as many as 30 people. They would spend all day in the hills, doing whatever it was that that teenagers did in the communist era. I’d always imagined it was difficult to get up into the hills, but he assured me that it took under an hour by bus from where he lived, on the far side of Óbuda, heading towards the atmospheric town of Szentendre on the Danube.

Bródy Sándor utca next to the Hungarian National Museum in District VIII, Budapest, as seen in October 2020. Photo by a_makrai / Shutterstock.com

Perhaps I’m being overly romantic but, Jews in Eastern Europe website, he was to me, the Turkish influence is also present “among the first in Hungarian literature to in the feel of the historic streets below the focus attention on the urban proletariat, castle on the higher ground of the town. and the first to introduce the coarse and I’d say it’s also there in the features and pungent vernacular of the big city into complexion of the people of Eger. literary works.” I would assume that for Bródy, Eger would have been an idyllic place to grow up, Highly Influential particularly if his family was comfortably His first collection of stories, “Nyomár” (Privation), published in 1884 when he off. So it must have been somewhat of was just 21 and set among a milieu of poor a shock to be dropped into the middle workers and prostitutes, caused a literary of the poorer depths of Budapest. sensation. The stories were much admired The change in the Bródy family’s circumstances was reflected in his writing. by the liberal Hungarian intelligentsia of the time and highly influential. According to the YIVO Encyclopedia of I knew nothing about Sándor Bródy’s life and work when I walked the streets of the eighth last spring. Now that I do, I can’t help but feel that the street is most appropriately named. From the museums and faded grand residences at the top end of Bródy Sándor utca, where it meets Múzeum krt., the street narrows and becomes rather scruffy and down at heel. At one point, it crosses an open area that I could imagine being a former bomb site. As I gradually turned east, in the direction of Keleti, it wasn’t hard to picture the neighborhood as it must have been at the turn of the 19th century, bustling but filled with lowlife. The street, it seems, mirrors the progress of its namesake writer’s life. This April, as I contemplate another The Children’s Railway, snaking its way walk through Budapest, I won’t be through the Buda Hills in September 2019. repeating my marathon schlep through Photo by skovalsky / Shutterstock.com District VIII. For a start, the bars, cafés

According to the websites I’ve consulted, part of the fun of getting up into the Buda Hills is the variety of forms of transport you have to take. The Lonely Planet website tells me I have to take the M2 underground from the center of Budapest to the Széll Kálmán tér metro station. I then either take the 56 or 61 tram for a couple of stops, or head west along Szilágyi Erzsébet fasor until I reach the Hotel Budapest. (If you’re wondering, this is not the hotel that inspired Wes Anderson’s movie “Grand Hotel Budapest.” That was, apparently, a copy of the Corinthia Hotel, once called the Grand Hotel Royal, not far from Király utca in the center of the city.) Opposite the Hotel Budapest is the lower terminus of the Cogwheel Railway, built in 1874, and which I’ve never ridden. This is now officially known as tram 60 (though it looks nothing like the city’s other trams) and it climbs for around 14 minutes up to Széchenyi-hegy. From there, I can take the narrow gauge Children’s Railway for 11 km and eight stops to Hűvösvölgy. Or I can get off at János-hegy, the fourth stop and the highest point in the hills. The Children’s Railway was built in 1951 by Pioneers, the socialist version of the Scouts. I wonder if they got a special railway-builders badge to sew on their sleeve. At János-hegy, I’m told, there are plenty of walks to explore. When I’ve wandered enough, I can take the Chairlift down to Zugligeti utca and the 291 bus over Margaret Bridge to Nyugati (Western) Railway Station. Perfect.

For more Budapest walking options, check out www.lonelyplanet.com

www.bbj.hu

Budapest Business Journal | April 9 – April 22, 2021

Socialite | 19

Zöldveltelini Offers a Little Zing for the Spring While it’s the ultratrendy flagship of Austrian white wine, Grüner Veltliner is also something of a force in the vineyards of the neighboring Czech Republic, Slovakia and also here in Hungary, where it is known as Zöldveltelini. ROBERT SMYTH

Zöldveltelini grape. Photo by MTÜ

While the grape remains very much in the background locally, its distinctive character does come through nicely in various Hungarian terroirs. It can pretty much be considered as an indigenous variety and, for my palate, warrants serious consideration. Grüner Veltliner is a natural crossing of Traminer and an obscure grape variety that was tracked down to St. Georgen in Austria’s Burgenland, and then named after its place of discovery, since it didn’t actually have a name. The grape bears no relation to either Roter Veltliner or Frühroter Veltliner. While this mid-ripening grape favors relatively warm conditions, it struggles in very dry periods. It can be used to make wine that’s anything from light and zesty when harvested in early September, to rich and full bodied when left out until October. According to Austrianwine.com, it became the most widely planted grape in Austria in

the

1950s

because of the introduction then of Lenz Moser’s Hochkultur (High Culture) training system. It thrives in loess-based soil, as in Austria’s Wagram wine region, which importantly retains water to quench the grape’s considerable thirst, as well as in the clay of Niederösterreich and mixed soils of the northern Burgenland. It is instructive to travel to the Kamptal and Wachau regions of Austria, where Riesling tends to be planted in the steep, terraced vineyards composed of primary rock, or Urgenstein, of gneiss, granite and/ or schist, with Grüner Veltliner planted in the loess, which is usually lower down. Bert Salomon of Salomon Undhof told me that the rocky soils are for Riesling, while Grüner Veltliner is less drought resistant and favors loess and mixed soils. However, there are always exceptions, with some winemakers

getting good results (and leaner wines) from the rock. The grape variety also does very well in the limestone soils of the Traisental region.

Hungarian Vines

Meanwhile, in Hungary, there are some 1,500 hectares of Zöldveltelini planted in Hungary (from an overall total of 64,000 hectares of vineyards) compared to 13,000 in Austria, according to Borbázis Borkereskedés. The wine distributor has just launched Zöld Tavasz Veltelinivel! (Green Spring with Veltelini), which is a three-pronged campaign that’s putting the focus on the first green buds of spring, the grape variety itself, and the environment; bottles can be returned to Borbázis, whose team will have them recycled, and also give members a HUF 50 discount of their subsequent purchases. Borbázis estimates that 17.250 kWh energy, 16 tonnes of carbon dioxide, 50 tonnes of waste, and

tonnes

of raw material have so far been saved with its bottle-return program (to sign up go to borbazis.hu/uvegvisszavaltas). Sustainability is a burning issue in the wine world and the amount of bottles that are simply chucked in the garbage is no doubt quite staggering, and initiatives of this sort have to be applauded. As bottles are not recycled in household waste in Budapest, I personally lug my bottles to a bottle bank, which appear to be few and far between. A trio of Zöldveltelini wines courtesy of Borbázis showed good quality and different aspects of what the grape can do. It was also nice to see what the grape makes of volcanic soils, which abound in Hungary. From the basalt soils of Badacsony, Büttner Winery’s Zöldveltelini 2019 was vinified solely in the tank, as most Zöldveltelini is. Pale lemon in color, it

is medium-bodied, varietally pure and vibrant, offering trademark aromas and flavors of white pepper, lime and lemon zest, grapefruit, dill and fresh cut grass, with a delicious touch of white pepper rounding it off on the zesty finish. It initially feels that it has only medium length but it has a buzzing acidity that returns to tingle and take the wine that bit further. It costs HUF 3,120 (with various discounts for members) from Borbázis.

“It’s a strong variety and easy to handle. You can make crispy, fresh wines from it when you harvest in early September, but you can also make fuller wines if you leave it out until October.”

Coming from close to the Austrian border, Steigler Pince’s Zöldveltelini 2019 is an organic wine from mica and brown forest soil. Harvested on September 24, it was fermented in 225liter Zemplén oak barrels, then aged for eight months on the fine lees. It has a deep lemon color, with ripe Williams pear, lemongrass, lime zest and lemon, some tropical fruit, green herbs and a touch of vanilla from the oak on the quite pronounced nose. It is rich and dense on the palate, although it has fairly soft acidity, which delivers a medium rather than long finish that nevertheless winds down with a refreshing touch of lime zest. Expect to

pay

HUF 4,450

from Borbázis Borkereskedés. Zöldveltelini clearly has an affinity with volcanic soils. Villa Tolnay on Csobánc hegy in the Tapolca Basin is a winery that makes exciting wines from the variety, including a singlevineyard bottling from the Panoráma vineyard that overlooks Lake Balaton Itt és Most Pince Zöldveltelini 2018 (the 2019 is just out and costs comes from Mátra, where the topsoil HUF 4,950 from Bortársaság). is water-retaining clay over volcanic bedrock. It was spontaneously fermented It is also good in the loess soils on the other side of Balaton in the in stainless steel tanks and kept on the Balatonboglár wine region. fine lees for three to four months of its The limestone of Etyek and Mór also one-year ageing in the tank. yield some great Grüner. “It’s a strong This family cellar currently has 1.8 hectares out of a total four hectares yielding, variety and easy to handle. You can make crispy, fresh wines from it when and plans to grow pre-phylloxera varieties on the rest, winery owner Tibor Hofmann you harvest in early September, but you can also make fuller wines if you leave tells the Budapest Business Journal. it out until October,” Mór winemaker Deep Lemon Csaba Miklós of the Mikloscsabi His 2018 Zöldveltelini has a deep pincéje tells the BBJ. lemon color, with fairly intense citrusy A marketing whizz with super aromas of lemon and lime peel, acacia creative labels, Miklós Csabi (as he is flower, lemon, honey and creamy peach, more usually known) calls his laterwith similar notes on the slightly oily harvested version GimmeMór. A and complex palate that shows a spontaneously fermented tank sample nice bit of age. It is excellent value of the 2020 revealed pure varietal at HUF 2,540 from Borbázis. notes and a dense, oily structure.

, T R A T S H S E R F

S N O I T U L O S T S E B , T E E L NEW F

ng i s a e L al n o i t a Oper g nt n e i c m n e a g n na a m Fleet fi & ns o i t u l o Fleet s tal n e r m r e t t r Sho budgethu

budgethu

budgetflotta.hu/en budgetflotta@budget.hu +36 1 700 4864 Fuel consumption: 1,6-1,4 l/100 km, CO2 emissions: 41-38 g/km, current consumption: 18,0-15,7 kWh/100 km.

An old companion for the long run