Drug firms see Vietnam a land of opportunity

High potential
According to Business Monitor International (BMI) Research, after gaining turnover of US$5.2 billion last year, up some 10 percent against the previous year, the country’s pharmaceutical market is continuously on track for steep growth.
  The country’s expenditure is high compared to regional peers, and thus offer long-term benefits to innovative drug companies, BMI said, adding that the growing demand for medicines and medical treatment will be also supported by the expansion of the country’s social health insurance, rapid income growth and improvements in healthcare delivery.
BMI also forecast that Vietnam’s pharmaceutical industry is likely to be worth US$7.3 billion next year. By 2021, per capita spending on pharmaceutical products is expected to be worth US$55, nearly double the current figure of US$30. 
Forecast from Vietnam Report Company also showed that the country’s demand for drugs is expected to rise due to increasing population and income, noting that the average spending of Vietnamese people on drugs rose from US$9.85 in 2005 to US$22.25 in 2010, doubled to US$37.97 in 2015, and US$56 in 2017.
The average growth rate of spending on drugs was 14.6 percent during 2010-2015 and is set to maintain a rate of at least 14 percent until 2025. Spending is forecast to double to US$85 per person in 2020 and US$163 in 2025, the report showed.
Strong investment
Not surprisingly, both local and foreign firms have recently decided to jump in the country’s fruitful pharmaceutical market while drug firms are also stepping up investments to improve their competitiveness.
Vingroup, the country’s leading property developer, has recently set its sights on the sector with the launch of Vinfa JSC. The company plans to spend VND2.2 trillion (US$96.5 million) to set up a 10 hectare drug manufacturing and research centre in Gia Binh district in the northern province of Bac Ninh.
Vinfa’s first priority is research into and production of traditional medicines of Vietnamese origin for both the domestic and export markets. Besides, it will also make functional food, vaccines, and medical equipment of international standards through the collaboration with partners from the US, Europe and Australia to acquire know-how and technology.
Earlier, Vinamilk, the country’s largest dairy producer, and Hau Giang Pharmaceutical JSC (DHG Pharma) signed a deal to collaborate in pharmaceutical research and development.
Under the strategic partnership, DHG Pharma and Vinamilk will jointly build new co-brand products or develop existing ones to serve the healthcare needs of people. The two firms will also coordinate in supplying raw material to produce supplementary food products.
Besides Vinamilk, Japan’s Taisho Pharmaceutical Holdings has recently also planned to invest more in DHG Pharma. Right after DHG Pharma announced that it had completed the procedures to lift the foreign ownership cap from its current rate of 49 percent to 100 percent from July 4, Taisho proposed to purchase an additional 7.06 percent stake in the Vietnamese firm, lifting its ownership to 32 percent in the Vietnamese firm.
DHG Pharma hopes to sustain average revenue growth of 15 percent a year and reach US$300 million by 2020, becoming Vietnam’s biggest generic drug maker and acquiring a 10 percent share of the locally made drug market.
Another major drug company, Traphaco, plans to produce foods such as probiotics for children, and upgrade some of its production facilities to meet EU-GMP/PIC/S-GMP standards this year.
With the upgraded factories, Traphaco aims to become one of the largest drug producers in Vietnam by 2020 with market capitalization of VND10 trillion (US$454.5 million), revenues of VND4 trillion (US$181.8 million).