Right after Hau Giang Pharma JSC (DHG) announced that it had completed the procedures to lift the foreign ownership cap from its current rate of 49% to 100% from July 4, Japan’s Taisho Pharmaceutical Holdings proposed to purchase an additional 7.06% stake in the Vietnamese firm, lifting its ownership to 32%, according to a disclosure by the Ho Chi Minh Stock Exchange.
The Japanese pharmacy company has planned to make a public offer of 9.23 million shares with voting rights, which is equivalent to a 7.06% stake in DHG. At the proposed offer price of VND120,000 (US$5.26) apiece, Taisho was calculated to have spent about VND1.1 trillion (US$47.7 million) to buy the shares.
Taisho is currently a major shareholder of DHG with over 32.6 million shares, equivalent to 24.94% of the company’s charter capital. After the sale, the number of shares will increase to over 41.8 million, equivalent to 32% of the charter capital.
The Vietnamese pharmacy market has also witnessed several M&A deals in recent years, such as Abbott acquiring 51.7% of shares in Domesco and buying Glomed Pharmaceutical; Adamed Group, Poland’s second largest pharmaceutical group, acquiring 70% of shares of Davipharm in a deal worth US$50 million; and Sanofi from France signing an agreement on expanding strategic cooperation with Vinapharm.
Win-win cooperation
The revenue of Vietnam’s drug market was US$5.2 billion in 2017 and the figure is expected to reach US$7.7 billion in 2021. The market is set for double digit growth within the next five years, according to Vietnam Report Company.
The country’s demand for drugs is expected to rise due to increasing population and income. 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% during 2010-2015 and is set to maintain a rate of at least 14% until 2025. Spending is forecast to double to US$85 per person in 2020 and US$163 in 2025.
Operating in the growing market, Vietnamese pharmacy firms have been also prospering with two-digit growth rate, prompting more and more foreign pharmaceutical firms to join the Vietnamese market through M&As, experts said.
Meanwhile, local pharmacy firms have also needed supports from foreign firms to be more competitive.
According to analysts, Vietnamese drug firms are at a disadvantage as they have to import materials. Their production heavily depends on input material supply, prices and exchange rates. Vietnamese firms also have limited R&D capability.
According to Vu Thi Thuan, chairwoman of Traphaco JSC, about US$1 billion is needed to use more active drug ingredients, but this goes beyond enterprises’ financial capability.
Some pharmaceutical firms are trying to cut production costs by reducing active elements in drugs. As a result, their drugs have low effectiveness and this has encouraged people to use foreign rather than made-in-Vietnam products.
To improve competitiveness in the drug market, some domestic firms have found ways to proceed through the cooperation with foreign counterparts.
Joining hand with Taiso, DHG can now compete with big rivals thanks to the Japanese firm’s large distribution network, capital and experience,.
Domesco has also cooperated with many foreign companies to buy input materials and export finished products to other markets through foreign partner relationships.
Japan’s Taisho Pharma expects to lift its ownership at DHG Pharma to 32%.
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Taisho is currently a major shareholder of DHG with over 32.6 million shares, equivalent to 24.94% of the company’s charter capital. After the sale, the number of shares will increase to over 41.8 million, equivalent to 32% of the charter capital.
The Vietnamese pharmacy market has also witnessed several M&A deals in recent years, such as Abbott acquiring 51.7% of shares in Domesco and buying Glomed Pharmaceutical; Adamed Group, Poland’s second largest pharmaceutical group, acquiring 70% of shares of Davipharm in a deal worth US$50 million; and Sanofi from France signing an agreement on expanding strategic cooperation with Vinapharm.
Win-win cooperation
The revenue of Vietnam’s drug market was US$5.2 billion in 2017 and the figure is expected to reach US$7.7 billion in 2021. The market is set for double digit growth within the next five years, according to Vietnam Report Company.
The country’s demand for drugs is expected to rise due to increasing population and income. 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% during 2010-2015 and is set to maintain a rate of at least 14% until 2025. Spending is forecast to double to US$85 per person in 2020 and US$163 in 2025.
Operating in the growing market, Vietnamese pharmacy firms have been also prospering with two-digit growth rate, prompting more and more foreign pharmaceutical firms to join the Vietnamese market through M&As, experts said.
Meanwhile, local pharmacy firms have also needed supports from foreign firms to be more competitive.
According to analysts, Vietnamese drug firms are at a disadvantage as they have to import materials. Their production heavily depends on input material supply, prices and exchange rates. Vietnamese firms also have limited R&D capability.
According to Vu Thi Thuan, chairwoman of Traphaco JSC, about US$1 billion is needed to use more active drug ingredients, but this goes beyond enterprises’ financial capability.
Some pharmaceutical firms are trying to cut production costs by reducing active elements in drugs. As a result, their drugs have low effectiveness and this has encouraged people to use foreign rather than made-in-Vietnam products.
To improve competitiveness in the drug market, some domestic firms have found ways to proceed through the cooperation with foreign counterparts.
Joining hand with Taiso, DHG can now compete with big rivals thanks to the Japanese firm’s large distribution network, capital and experience,.
Domesco has also cooperated with many foreign companies to buy input materials and export finished products to other markets through foreign partner relationships.
