Oct 23, 2012

Vietnam - Part 2 - Pale Vietnamese pharmacy firms have to take bitter medicine

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VietNamNet Bridge – While many domestic pharmacy firms have shifted to trade products instead of manufacturing, others have gone bankrupt, there are still the brave companies which continue spending money on R&D to develop their own products.

According to IMS, which provides strategic information to the pharmacy industry, the three foreign wholesale distributors in Vietnam, namely Zuellig Pharma, Mega Products, Diethelm Vietnam, alone hold more than 50 percent of the market share. Meanwhile, the other half has been held by the 1200 other foreign and domestic distributors.

The stories of Vietnamese firms

Mekophar, which understands well the lucrative profit from the distribution work, has decided to delist its shares from the bourse in order to be eligible for distributing medicine.

Traphaco, the best-known oriental medicine brand in the north, is considering marching towards the south, publicly offering to buy 51 percent of shares of the Dak Lak Pharmacy and Healthcare Material Company to take over the company.

Pharmacy is considered a lucrative business field which stays unhurt in the economic downturn. Only some firms fell into troubles due to their seriously wrong decisions.

Vien Dong Pharmacy, for example, has got bankrupt after it failed to take over the Ha Tay Pharmacy Company.

Meanwhile, the Cuu Long Pharmacy Company has fallen into decay, reporting the loss of 30 billion dong. The problem has been attributed to the internal uncertainties and the wrong decisions in using financial instruments to make investments.

Very few domestic firms spend money on research and development, explaining that Vietnamese consumers always turn their backs to Vietnam-made medicine products, even though the products are cheaper and have the same quality as foreign ones.

Pham Thi Viet Nga, President of Hau Giang Pharmacy, also said that Vietnamese consumers favor foreign products, thus leaving domestic products unsalable. Therefore, the companies would never take back the investment capital spent on research and development.

“Fifty percent of medicine products available in the market are foreign made. 90 percent of the materials needed to make medicine are imports,” Nga said.

In order to make domestic products salable, some pharmacy firms make products overseas and then import the products back to Vietnam to sell as import products, though they are by nature, Vietnamese medicines.

In fact, domestic firms hesitate to inject money in research and development also because this is beyond their capacity. Vietnamese pharmacy industry remains incapable enough to make specifics. Unofficial statistics showed that only five percent of Vietnam made specifics are being used at the HCM City Eye Hospital, Tumours Hospital, Heart Institute.

The pioneers

Though anticipating the big difficulties, many Vietnamese pharmacy firms still spend money to develop new medicine products.

When asked about their decision, the firms said in the current conditions, if they only focus on the distribution, or aiming to the short term benefits, they would not have sustainable development.

Some Vietnamese companies have become more powerful, since they are both the manufacturers ad distributors. Hau Giang Pharmacy is one of them. However, there are not many companies like Hau Giang in Vietnam.

Nga said Hau Giang kicked off the construction of a new factory in Tan Phu Thanh Industrial Zone in Hau Giang province, which is expected to be completed by the fourth quarter of 2013. Once the factory becomes operational, the company’s production capacity would be double.

Le Quoc Dinh from Imexpharm said the company now focuses on making liquid antibiotic injection products. To date, the products have been always in high demand but still cannot be provided by domestic firms. Imexpharm has built a new factory in Binh Duong province which would make products in accordance with the latest European standards.

Doanh Nhan

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