1. Overview
There has been an optimistic trend in pharmacyand healthcare industry in
Vietnam. This industry is irreplaceable as the education level and
life expectancy of Vietnamese have been significantly improved. However, due to
some challenges, pharmacy and health care industry desires for a change in
legal framework, thus creating favourable conditions for development in the
futures.
2. Vietnam – next growing pharmacy and healthcare
market
With the population of around 94 million, 44%
monthly increasing income, 30% urbanisation rate with 3.4% growth rate per
year, 6% GDP growth per year, the demand for better development of pharmacy and
healthcare industry has been significantly increased.
Business Monitor International (BMI) in
their report “Vietnam Pharmaceutical and Healthcare” revealed that
annual total value of pharmacy market $3 billion with annual growth of
15.5% period 2014-2018. The same report also showed that the total healthcare
spending reaches $13 billion in 2015 which account for 5.8% GDP- highest in
ASEAN, is expected to grow to $24 billion in 2020s.
Vietnam has recently taken part in several
trade agreement which allow foreign companies to easily enter Vietnam. Firstly,
Vietnam has cut tariff on 47 tariff lines of pharmaceuticals. Also by
encouraging foreign investment to enter Vietnam in various forms, among 171
pharmaceutical companies operating in Vietnam, 9% are foreign invested
enterprise, 4% are joint ventures.
Secondly, in terms of healthcare sector, the
data of Ministry of Health stated that there are 137 operational private
hospitals, including six foreign invested hospitals, and about 30,000
consulting rooms. These six foreign invested hospitals have the initial
investment capital of 94 million dollars. Vietnamese government had licensed to
a lot of foreign invested projects in the healthcare sector which included a
total investment capital of 1.16 billion dollars. In addition, the government
has allowed the investors in healthcare sector to enjoy 10% corporate income
tax for the whole life of the project, tax exemption for 4 years and lower land
leasing fee for years.
- Pharmaceutical
products heavily rely on import
Local pharmaceutical production was valued at
nearly US$920 million which satisfy 48 % of the needs in Vietnam. Imported drugs
account for the remaining 52 %. Vietnam imports pharmaceuticals mainly from
France, India and Korea. The medicine lines from this countries is stable and
price competitive. In terms of domestic companies, the three largest public
pharmaceutical companies are DHG Pharmaceuticals JSC (DHG), Traphaco JSC (TRA)
and Domesco Medical Import-Export JSC (DMC).
Around 90 of raw material input are imported
from foreign countries, in which 57% are from China, 18% from India and other
countries such as Austria, Spain, Germany, France, Italy, and Sweden …
- Vietnam’s
consumer behaviour
Vietnamese consumer has a strong preference of
foreign medicines. The statistics have revealed that in the doctor
prescription, 18 -20% domestic medicines are used for the patients even though
the imported medicines are more expensive than domestic ones. Vietnameseconsumer has
more confident in terms of quality of foreign products.
Only 20%-30% of Vietnamese consumers buy
medicines with prescription. However, BMI expected that the usage percentage of
medicine through prescription will increase to 74.6% in the next 5 years.
3. Challenges
- Poor
regulation standards
Price management and intellectual property
protection of the government have not been managed closely. Therefore, the
price of products still increases every year and the counterfeit medicines is
still floating in the market, around
0.1% in 2012 (Drug Administration of Vietnam)
Around 28% of pharmaceutical companies have
the Global Manufacturing Practice (GMP) certification, which states the minimum
requirements that a pharmaceutical manufacturer must meet in order to prove
that their products are of high quality and do not pose any risk to consumers.
Particularly, in 2013, there are 79 out of 105 foreign medicine manufacturing
enterprises and 5 of 80 domestic manufacturing enterprises that qualify GMP due
to the fact that most of the enterprise are small in terms of sizes and capital
investment. This indicates that Ministry of Health needs to take more
aggressive actions to encourage the companies to meet the standards.
- Specific
patented medicines is weak
Even though there are plenty of investment
projects in pharmaceutical and healthcare industry with support from
government, producing patented medicines are still too expensive in terms of
time and manpower. In fact, lack of medical qualification, infrastructure
development and material sources are factors leading to underdeveloped
circumstance in this sector.
- Lack
of accessibility in healthcare industry
There has been 1090 public hospital and 175
private hospitals in Vietnam in 2014, is expected to increase to 1204 and 200
respectively. However, there are 25.1 hospital beds per 10,000 inhabitants and
7.9 doctors per 10,000 inhabitants, which are still a question mark that has
not been handled.
ANT Consulting is here to assist you from the
outset; providing corporate intelligence, risk advisory,
management consulting services that assist market entrance, and ensure efficient
business start-up operation.
We strive to save your cost by guiding you
towards economical solutions that comply with local legislation and procedures.
We support you through early logistic solutions and carry you through as
your business grows.
We aim to bridge the gap between international best practices and local
cultures and assist foreign companies and organizations entering Vietnam market
to overcome commercial and regulatory issues.
We could be reached at email: ant@antconsult.vn or tel: +848
3520 2779 . To learn more about us, please visit www.antconsult.vn
.jpg)
