VietNamNet Bridge – The Vietnamese medicine market has always been attractive to foreign firms not because of its increasingly high demand, but also because of the weakness of domestic pharmacy firms.
Market surveys have pointed out that Vietnamese would spend 33.8 dollars per head by 2014. Meanwhile, a report by BMI said Vietnam’s medicine imports would exceed 1.37 billion dollars by 2013.
If Vietnam exports one tablet of medicine, it would import two tablets from foreign countries. And in order to make the tablet, Vietnam has to import materials.
Vietnam attractive enough to foreigners
According to the Ministry of Heath, Vietnam is one of the biggest medicine importers in the world with the pharmacy market growing by 25 percent per annum.
According to the Vietnam Pharmacy Enterprises’ Association, in the first five months of 2012, domestically made medicine products was worth 282 million dollars, while the imports value was 439 million dollars, and Vietnam imported 50 million dollars worth of materials.
The Vietnamese market has always been very potential in the eyes of foreigners. This explains why foreign firms have always been targeting Vietnam, even though they are not allowed to distribute medicine products in the market themselves.
Not allowed to distribute medicine products in Vietnam, but foreign firms still find their ways to increase their presence in the lucrative market.
Rod Ward, CEO of Roche Vietnam, a 100 percent foreign invested company belonging to Hoffmann La Roche, has said the company hopes to obtain the turnover of 30 million Swiss francs in Vietnam in 2012
Do Viet Cuong, Deputy President of MSD Global Group, has also said the group has set up many development plans in Vietnam, where the pharmacy market has been growing even more rapidly than China, South Korea or Brazil.
MSD spent 8 billion dollars on the research and development work in 2011. It plans to churn out five new products in 2013 and 18 more products in the next four years.
Cuong said that no pharmacist in Vietnam can meet the US’ FDA standards, and very few pharmacists can meet European GMP standards. Therefore, he hopes MSD can cooperate with Vietnamese enterprises to make out the best quality products.
Foreign big pharmacy firms have been penetrating the Vietnamese market through different ways. Chilean CFR International SPA, for example, has become a strategic partner of Domesco Vietnam, holding 44 percent of Domesco’s shares.
In February 2012, Vietnam Azalea Fund Limited publicly offered to buy 1.24 million shares of Vietnamese Traphaco, raising its ownership ratio in the company to 35 percent.
Prior to that, a lot of merger and acquisition deals occurred in 2011. This included the case where Dutch Stada Service Holding B.V bought 25.29 percent of Phymephrco’s stakes from Thailand-based Wellite International Ltd. After the deal, Stada Service Holding holds 49 percent of the chartered capital of Pymepharco.
What do domestic firms live on?
Not financially capable enough to organize production and not resistant enough to follow research and development work, a lot of Vietnamese pharmacy firms believe that they would be better to serve as the links in the foreign firms’ networks to distribute foreign medicine products in the Vietnamese market.
Some pharmacy firms have even bought small local firms to expand their networks of distributing foreign products. This is really a profitable kind of business for the firms. In general, domestic firms offer the discount rate of 20 percent for distributors, while foreign firms would offer up to 40-50 percent.
The Vietnamese medicine market is believed to have the value of 2.4 billion dollars, of which domestic firms just make up less than 50 percent, though Vietnam strives to obtain 60 percent of the market share by 2015.
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