Foreign investors are making bank in Vietnam’s pharmaceutical industry

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Foreign investors are making bank in Vietnam’s pharmaceutical industry

Vietnam’s pharmaceutical industry remains resilient as the market continues a stable growth rate of 10-15 percent annually.

At present, there are 30 pharmaceutical firms that have listed their shares on the Hanoi and Ho Chi Minh City stock exchange with a total value of USD 65.6 million (VND 14.8 trillion) as of April 2016, with many of these companies reporting to have made bank from satisfactory business results.

There are thirteen healthcare firms listed on two main stock exchanges, of which 11 have high state ownership of 35 percent and 51 percent of charter capital, such as Hau Giang Pharmacy, Traphaco, Imexpharm and Domesco.

In Vietnam, there are around 178 medicine manufacturers making generic medicine of low value, whereas foreign companies make more specialized products. The average spending on medicine is around USD 35-37 per head per annum, a much lower rate than that in Thailand (USD 60) and in China (USD 100).

Vietnam imports 80-90 percent of its medicine from China and India, and uses 60,000 tons of medicinal materials of different kinds. In terms of R&D (research and development), Vietnamese companies spend 5 percent, while foreign companies spend 15 percent of their revenues.

“Vietnamese companies are suggested to invest more in R&D or cooperate with foreign pharmaceutical firms to improve competitiveness,” says Michael Sieburg, Associate Partner of Solidiance, an Asia-focused management consulting firm.

The high demand for healthcare services, combined with a high economic growth rate, will boost business optimism in the sector in upcoming years. In 2013, total medicine consumption was worth USD 3.3 billion and reached USD 4.2 billion two years later. By 2020, the market is expected to rise to USD 8-10 billion.

Foreign companies looking to enter Vietnam’s pharmaceutical industry can capitalize on the burgeoning market as higher demand for specific medicine is expected to exceed OTC (over the counter) drugs.

Not only are healthcare manufacturers and foreign investors showing interest in Vietnamese pharmaceutical firms, drug distribution is also attractive to investors. Earlier this year, SAM (Saigon Asset Management)  announced that they purchased a stake of 15 percent of My Chau JSC, a company which owns the My Chau drug store chain.

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