BMI View: Counterfeit and substandard medicines will remain highly pervasive in Vietnam's pharmaceutical market. While this reflects the limited capacity of regulators to address the problem, its persistence also illustrates the presence of a sizeable market for manufacturers of counterfeit and low quality medicines. We highlight that pharmaceutical products most affected by this practice are small molecule medicines.
Headline Expenditure Projections
Pharmaceuticals: VND80,731bn (USD3.81bn) in 2014 to VND92,719bn (USD4.32bn) in 2015; +14.9% in local currency terms and +13.4% in US dollar terms.
Healthcare: VND234,889bn (USD11.08bn) in 2014 to VND258,648bn (USD12.05bn) in 2015; +10.1% in local currency terms and +8.7% in US dollar terms.
Risk Reward Index
Vietnam's Pharmaceutical Risk Reward Index score for Q315 is 47.9 out of the maximum 100. The country scored above average for some indicators and sub-indicators, including overall market expenditure, sector value growth and pensionable population. Consequently, with this moderate score, Vietnam is ranked 11th out of the 19 key Asia Pacific markets, level with Thailand and Indonesia.
Key Trends And Developments
Vietnam has met international vaccine-management standards and is eligible for exporting its domestically produced vaccines, according to World Health Organization (WHO) representative Lahouari Belghabi. The country's National Regulatory Authorities has scored more than 90% in its critical control functions during an assessment carried out by 14 WHO specialists. The functions include surveillance of vaccine performance in the field, regular inspections for good manufacturing practice and evaluation of clinical performance. The country is among 39 countries that meet WHO's strict vaccine standards, and is expected to become one of the world's leading vaccine producers in 20 or 30 years, Belghabi noted (Vietnamnet).
The Drug Administration of Vietnam has imposed fines and a two-year drug import ban on two foreign firms after they were found to be selling unqualified medicines and pharmaceutical products from unclear origins, reports Thanhnien News. The DAV ordered Hong Kong-based Austin Pharma Specialties and China-based CSPC Innovation Pharmaceutical to submit, from the profits made from these illegal products, USD30,625 and USD29,750 respectively. On top of this, the agency fined the companies VND160mn (USD7,300) each. The alleged materials were used to manufacture omeprazole and pantoprazole, both 'proton pump inhibitors', commonly used to treat acid reflux and ulcers of stomach.
Vietnam Social Insurance (VSI) is set to implement numerous measures in order to simplify health insurance procedures to encourage more people to buy insurance. The development comes after the number of people buying health insurance in Q115 decline by 1.4mn, compared with Q414. The measures are aimed towards achieving 75% health insurance coverage in 2015. Under the plan, the VSI will work with the health ministry to spread awareness of the benefits of health insurance. These measures will be taken in provinces and cities, where currently only 60% of the population is covered under health insurance. Furthermore, health insurance will be allowed to be collected two times in a year, instead of just once as in previous years (Viet Nam News).
BMI Economic View
While the Vietnamese banking sector remains burdened by bad debts and the still-strong presence of state enterprises, sustained rapid economic growth momentum and ongoing banking reform efforts by the government should gradually strengthen the local banks. The retail banking segment will be a key growth engine over the coming years owing to the relatively under-banked nature of the country.
BMI Political View
Despite increasing political and international pressures, China will continue to hold a firm stance on its nine-dash line claims to the South China Sea. Therefore, there remains no end in sight to the ongoing maritime dispute between Vietnam and China. That said, we believe Vietnam will not want to strain ties with China given the latter's increasing economic importance.