R&D Activities Remain Strong in 2020 Despite COVID-19

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Although the impact of COVID-19, most notably lockdowns and an economic activity blackout, have weighed heavily on the local research and development sector, with the Hungarian government earmarking financial aid for researchers, the first half of the year saw some intriguing activity, laying the cornerstones of many projects, and inaugurating some others.

By Christian Keszthelyi

Hungarian startup-turned international navigation firm NNG announced on January 20 that it is developing a cloud-based navigation system for electric vehicles with approximately HUF 600 million in support from the National

Research, Development and

Innovation (NKFI) Fund. The new system will incorporate battery charge levels and the distances between charging stations when planning journeys, which could help EV drivers significantly, as battery life and charging infrastructure are both in the infancy, relatively speaking, and conscious planning is an important factor when driving an electric car. NNG says it expects to develop and test the product in three years. The announcement signaled the start of a busy year for the local R&D scene, further strengthened in February when the National Competition Council recommended the government amend the local business tax to encourage economic growth, proposing that businesses could off-set a bigger part of R&D, up to five times the current level, Minister of Finance Mihály Varga said after a meeting of the council.

The beginning of the year saw further R&D buzz when automotive supplier Vitesco Technologies, formerly Continental Powertrain, inked a research cooperation pact with the Hungarian Academy of Science’s Institute for Nuclear Research (Atomki) in Debrecen (230 km east of Budapest), where the supplier is building a plant through an EUR 100 mln investment. Vitesco will set up measuring instruments worth EUR 2 mln in Atomki’s labs, while Atomki will help Vitesco scale up its tech. Vitesco says it is planning to add 450 new jobs by the end of 2020. Another automotive firm, Chineseowned Starters E-Components

Generators Automotive Hungary

(SEGA), laid the cornerstone of a 25,000 sqm production hall at its logistics base in Szirmabesenyő (187 km northeast of Budapest), where the component-maker will carry out research activities, too.

Similarly, state-owned cereal research company Gabonakutató Nonprofit laid the cornerstone of a HUF 300 mln planting seed unit at its base in Szeged (175 km southeast of the capital), funded from a HUF 460 mln capital raise, to reach exports markets faster, chasing a “serious competitive advantage”, according to Minister of Agriculture István Nagy. Hungary is the fifth-biggest planting seed exporter in the world. On March 6, around the time COVID-19 was becoming established in the country, but before the pandemic had placed a red light on the local economy, the National Scientific

Policy Council, a research, development and innovation (RDI) body, held its inaugural meeting. The RDI council is chaired by Minister for Innovation and Technology László Palkovics and co-chaired by former German European Commissioner Günther Oettinger, who was to participate in meetings after he had been cleared by a European Commission compliance probe. The council has nine members, beyond the two chairs, representing the state, business and scientific sectors in equal parts.

ALTERED PRIORITIES

The economic environment, however, was quickly overtaken by the effects of the coronavirus and priorities changed. Prime Minister Viktor Orbán and innovation minister Palkovics stressed the need for drug production and stockpiling with coronavirus research groups, including the country’s top academics and the chair of drug maker Gedeon Richter, at the dawn of April. The prime minister called for the development of medicines that could ease COVID-19 symptoms.

As the local RDI sector started looking for remedies for the disease, the government turned to supporting the various players of the national economy. Palkovics said on April 7 that the government would cover 70% of wage costs for reduced hours at businesses hardest hit by the

“The coronavirus pandemic is causing an awful lot of difficulty for everyday routines, but it also highlights that Hungarians have not lost their good will or their readiness to help. There are stories in the news, one after the other, of private individuals, organizations and businesses that have selflessly helped others, often through creative solutions and innovative ideas.”

pandemic, which would include 40% salary coverage for engineers working in research and development.

Just a week later, State Secretary Sándor Bodó, of the Ministry for Technology and Innovation, announced wage subsidies covering 40% of super-gross wages up to HUF 318,920 per month for some 33,000 researchers at businesses in the RDI private sector would be available.

By April 20, the EC had approved an EUR 88 mln aid scheme to support researchers in all sectors in Hungary, concluding that the scheme was “necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state.” Meanwhile, the

National Research, Development

and Innovation Office (NKFIH) called for fresh ideas to tackle the challenges the coronavirus pandemic has caused, together with the innovation ministry, offering a total of HUF 60 mln in funding for universities, business incubators and organizations supporting businesses.

“The coronavirus pandemic is causing an awful lot of difficulty for everyday routines, but it also highlights that Hungarians have not lost their good will or their readiness to help,” said State Secretary Tamás Schanda. “There are stories in the news, one after the other, of private individuals, organizations and businesses that have selflessly helped others, often through creative solutions and innovative ideas. That’s what we want to support with this tender,” he added.

A lab technician at the Szeged ELI super laser.

As workers started returning to their jobs in May, positive RDI news emerged once again. Minister of Foreign Affairs and Trade Péter Szijjártó announced a HUF 6.5 billion investment by Turkish farm machinery manufacturer Yaris Kabin in Iváncsa (58 km southwest of Budapest), creating 150 jobs, where the firm will also undertake research and development operations. A Pécsi Brewery-led consortium, in announced in May it was embarking

on an R&D project to utilize byproducts from brewing through an investment of HUF 1.7 bln, supported by a HUF 1.2 bln joint EU and national grant. Zoltán Szemerey, a board member, forecast the research would turn brewing byproducts into value-added food products to reduce environmental footprint.

SUPER LASER

In mid-May, Szeged’s Extreme Light Infrastructure (ELI) super laser research center and its Czech sister laboratory, together with Italy and Lithuania, applied to the EC to create a European Research Infrastructure Consortium (ERIC).

“This application is a significant milestone after a decade of planning and construction,” said Allen Weeks, director general of the ELI Delivery Consortium. ELI’s Hungarian center focuses on ultrashort light pulses experiments, while the Czech sister center carries out ultrahigh intensity light.

“Operating the two facilities will be more efficient and enable joint development. But the biggest impact for scientists is getting access to so many quality lasers through one organization,” Weeks said.

Elsewhere, Hungarian researchers established the laboratory conditions to make the antiviral favipiravir successfully used to tread COVID-19 patients in Asia. The innovation ministry said production of the drug would start in the fall. The procedure was developed by the Natural Sciences Center and the active ingredient would be produced by Első Vegyi Industria and Gedeon Richter, leaving the production of the final medicine to Meditop Gyógyszeripari, after three phases of clinical testing wound up by the beginning of fall. The NKFIH supported the project with more than HUF 370 mln.

In June, the University of Debrecen laid the cornerstone of a HUF 8 bln vaccine plant and innovation center in its industrial park, which is

expected to turn out small batches of vaccines to further strengthen the educational institution’s cooperation with the industrial sector. University chancellor Zoltán Bács said the threestory innovation center would be an important meeting point for startups, research and companies to serve as a “community innovation marketplace.”

To keep the sector going, the government gave a greenlight to ITM’s RDI strategy in May, earmarking HUF 53 bln for innovation projects from a HUF 145 bln NKFIH fund to serve job creation, job retention and strengthening the RDI capabilities of SMEs. The ministry, furthermore, promised to allocate more support to market-oriented RDI projects, and make it easier to apply for patents and intellectual property protection.

Innovation minister Palkovics also hinted that the central budget may see an additional allocation of HUF 22 bln in 2021, to the currently available HUF 17.5 bln, which was cut by 69% from 2019, for the research institutes of the

Eötvös Loránd Research Network

(ELKH), which was established in 2019 to take over the previous network of the Hungarian Academy of Sciences.

The summer served up more good news relating to funding. In July, Palkovics revealed plans to spend almost HUF 14 bln on establishing 18 national laboratories, focusing on R&D activities centered around industry, digitalization, culture, family, health, society and the environment to support autonomous systems, efforts against climate change, the development of artificial intelligence and virology.

In August, the government reallocated budget funding of HUF 31.4 bln to achieve the 2020 goals of the NKFIH from the Economic Defense Fund, chiefly to fight the negative impact of the pandemic and support economic growth. At the time, funding allocation stood at almost HUF 145 bln to support market-driven innovation, startups, and private and public sector research centers. June’s European Innovation Scoreboard report found that Hungary’s innovation performance has been growing relative to that of the EU, particularly accelerating since 2017, putting the country at 66.4% of the European average. Compared to its Visegrád Four peers, Hungary finished ahead of Poland (58.9%) and was slightly behind Slovakia (66.6%), with the Czech Republic well clear of them all (at 84.3%). The annual report identified employment, sales and an innovation-friendly environment as the country’s strongest factors, while the weakest dimensions were the number of innovators, human resources, and finance and support.