In our previous article, we examined the market effects of mandatory margin caps affecting drugstores. Now, we focus on a similar phenomenon: the voluntary price cap commitments by pharmaceutical market players. From July 1, 2025, several manufacturers and distributors have committed to voluntarily reducing the prices of over-the-counter products—such as painkillers, vitamins, and certain dietary supplements—to their December 31, 2024 levels, maintaining these prices until the end of June 2026[1]. The affected products include 34 over-the-counter and 10 prescription-only, non-state-subsidized medicines. These products do not receive social security support; their prices are determined entirely by market conditions and margins. In contrast, the prices of state-subsidized medicines are partially regulated by the government.
The pricing of state-subsidized medicines also demonstrates that the pharmaceutical market is already a strictly regulated sector. For market participants, adapting to various constraints is almost a part of their operations. The current price freeze primarily aims to ease the burden on the population amid inflationary pressures. Such goals can be meaningfully achieved through voluntary commitments if they do not impose disproportionate burdens at a systemic level. However, price freezes at the company level can have significant effects, even if companies appear as socially responsible market players.
The entire distribution chain participates in the voluntary price cap: several pharmaceutical manufacturers have introduced lower wholesale prices for certain products, wholesalers are working with reduced margins, and both the Hungarian Chamber of Pharmacists and pharmacies are applying the new prices.
Direct Effects on the Pharmaceutical Chain Participants
The direct effects are, in some respects, similar to those described in our previous article about drugstores. For manufacturers, this generally means decreased revenue, which may require efficiency-improving measures in production, development, or marketing costs. Wholesalers must operate with narrower margins, forcing them to function more efficiently. At the same time, increased demand may require more frequent deliveries, leading to logistical challenges and increased costs. Among pharmacies, especially smaller, less capitalized ones may feel the impact, although they are not expected to adhere to the voluntary price cap[2]. In our view, alongside reduced margins, their turnover may not increase enough to cover inventory and operating costs. The prices of subsidized medicines have remained practically unchanged for years despite rising inflation, so pharmacies have been recording losses on these products, which they have so far compensated with non-subsidized products.
Market concentration is expected to increase further, as larger, efficiently operating chains can more easily adapt to such measures. Despite the absence of small-volume pharmacies, structural challenges may persist. This gives larger players a competitive advantage and may, in the long run, lead to the exclusion of smaller ones.
How Have Price Caps Shaped the European Pharmacy Market?
In several EU countries—such as France, Germany, and Spain—laws have long regulated the profit margins pharmacies can apply. Generally, the system works so that cheaper medicines allow for higher margins, while more expensive ones have lower margins, and extra discounts are typically not permitted. The main goal of this regulation is to ensure predictable prices and stable medicine supply. Due to price caps, smaller, less capitalized pharmacies have found it harder to adapt, accelerating market concentration and strengthening larger players. For example, in France, the state has supported rural pharmacies through special programs, while in Germany and Spain, many smaller pharmacies have been acquired by larger companies. Manufacturers and wholesalers have also had to adapt, often improving efficiency and strictly monitoring costs. Overall, this regulatory environment has contributed to the market increasingly falling into the hands of larger, integrated chains, while smaller pharmacies have faced greater difficulties[3]. Although market changes cannot be attributed solely to price caps, these regulations have certainly accelerated the processes.
Domestic Situation
In Hungary, majority of the pharmacy market still consists of smaller, mainly family- or individually-owned pharmacies, especially in rural areas. According to the Central Statistical Office’s 2024 data, around 2,132 community pharmacies operate in the country, and including branch pharmacies, there are about 2,900 such units in total. In recent years, their number has slightly decreased, while larger pharmacy networks and chains have been capturing an increasing share of the market. This significantly complicates the situation for smaller, independent pharmacies, as they face growing competition and pressure to adapt. The wholesale market shows a similar trend: a few large companies dominate much of the market, making it increasingly difficult for smaller suppliers and wholesalers to survive. Concentration can also be observed among manufacturers and importers, mainly due to the dominance of large international pharmaceutical companies. This setup supports acquisitions and mergers, further increasing market concentration. Overall, in addition to pharmacies, this trend of concentration and the resulting pressure for more efficient operation and adaptation appears among other participants in the supply chain as well.
M&A as a Possible Scenario
All this means that voluntary price reductions are expected to impact not only pharmacies but the entire pharmaceutical supply chain. Competition may intensify further, especially for smaller, less capitalized players, for whom adapting to lower margins—even on a voluntary basis—can be a significant burden. The current market pressure and narrowing margins may favor acquisitions and consolidation, making the intensification of M&A processes and ownership changes realistic scenarios in the coming period. This process may bring new situations for companies, so it is advisable to have someone experienced in these matters alongside them. Our company not only supports the exploration of revenue-increasing opportunities, cost rationalization, or supply chain optimization but also assists in post-acquisition integration. We have successfully led complex integration projects spanning multiple countries and sectors. Our expert team actively participates not only in strategy development but also in practical implementation, enabling our clients to maximize synergies.
[1]Hungary’s Government (July 1, 2025). Voluntary Price Cap on Medicines. Available at:
[2] Hungarian Chamber of Pharmacists (June 16, 2025). Report on the June Meeting of the Board. Available at: https://www.mgyk.hu/beszamolo-az-elnokseg-juniusi-uleserol6.html
[3] Vogler S., Zimmermann N., & Habl C. (2013). Pharmaceutical pricing and reimbursement policies in European countries. Nemzetközi Egészségügyi Szervezet (WHO). Elérhető: https://pmc.ncbi.nlm.nih.gov/articles/PMC3798161/
