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.
Doanh Nhan
Business & Investment Opportunities
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