BMI View: Ongoing regulatory reform and the relaxation of the 49% cap on foreign ownership will continue to increase the appeal of Vietnamese pharmaceutical equities to foreign investors. This trend will reflect the government efforts to attract foreign investment in order to de velop the pharmaceutical sector as well as foreign companies aim to gain a competitive edge in the domestic market. However, due to public procurement bias towards local producers, the rise of domestic pharmaceutical companies will also present competitive threats to multinational drugmakers operating in the country, eventually leading to varia tions in their business models.
Headline Expenditure Projections
Pharmaceuticals: VND92.5trn (USD4.2bn) in 2015 to VND105.6trn (USD4.7bn) in 2016; +14.2% in local currency terms and +11.7% in US dollar terms. Forecast in line in local currency terms and revised slightly upwards in US dollar terms compared to the last quarter.
Healthcare: VND304.5trn (USD13.9bn) in 2015 to VND333.6bn (USD14.9bn) in 2016; +9.6% in local currency terms and +7.2% in US dollar terms. Forecast revised slightly upwards compared to the last quarter.
|f = BMI forecast. Source: WHO, National Sources, BMI|
|Pharmaceutical sales, USDbn||3.810||4.220||4.710||5.230||5.850||6.610||7.440|
|Pharmaceutical sales, % of GDP||2.05||2.20||2.33||2.37||2.39||2.41||2.41|
|Pharmaceutical sales, % of health expenditure||29.0||30.4||31.7||32.7||33.5||34.1||34.5|
|Health spending, USDbn||13.130||13.890||14.890||16.000||17.450||19.390||21.580|
Risk Reward Index
In Q416 Vietnam's Pharmaceuticals Risk/Reward Index score remains unchanged at 48.3 out of a maximum of 100. Vietnam remains ranked 13th out of 19 countries monitored in the Asia Pacific region in terms of market attractiveness to pharmaceutical investors. Vietnam scores above the regional average for overall market expenditure and sector value growth; however, the score is dragged down by low spending per capita on medicine and subdued patent respect.
After the official lifting of Domesco's 49% foreign ownership cap, US-based Abbott Laboratories, through its subsidiary CFR International (Chile), registered to increase its ownership in Domesco to 51.7% in September 2016 from 45.49% previously.
In addition, Abbott acquired Vietnamese pharmaceutical manufacturer Glomed in August 2016, reflecting Abbott's determination to strengthen its manufacturing capacity in Vietnam.
Also in August, French-based Sanofi signed an agreement to extend and strengthen its partnership with Vinapharm. Covering all locally manufactured medicines marketed by Sanofi in Vietnam and products exported to countries in the Asia Pacific, the agreement includes Vinapharm investment in Sanofi's recent and third manufacturing plant in Vietnam (a USD75mn plant which represents Sanofi's largest investment in the market to date).
In July 2016, Japan-based Taisho Pharmaceutical bought a 24.5% stake in Vietnam's Hau Giang Pharmaceuticals (DHG Pharmaceutical), the country's top drug distributor, for VND2.2trn (USD97mn).
In June 2016, the Vietnamese government launched an initial public offering for an 18% stake in Vietnam Pharmaceutical Corporation (Vinapharm) for approximately VND443bn (USD19mn), which is expected to be the first of several Vietnam-based companies selected to be privatized.
BMI Economic View
Due to a weaker-than-expected GDP growth performance in H116, we have downgraded Vietnam's growth forecast to 5.9%, from 6.3% previously. However, we expect growth to accelerate over the coming quarters spurred by a recovery in agricultural output, as well as robust growth in the industrial and services sectors.
BMI Political View
The PCA's ruling on the Philippine arbitration case on July 12 will have wider implications for other claimant countries in the South China Sea, particularly Vietnam, as the conclusions that were drawn will help to set legal precedent for similar maritime disputes in the region. We believe that Vietnam will likely stand to benefit vis-a-vis China by using the ruling to clinch concessions from Beijing as a counterbalance to nationalist domestic sentiment.
The Vietnam Pharmaceuticals & Healthcare Report features BMI Research's forecasts for drugs and healthcare expenditure and imports and exports, focusing on the growth outlook for the prescription, OTC, patented drugs and generics market segments.
BMI's Vietnam Pharmaceuticals & Healthcare Report provides industry professionals, strategists, company executives, investors, analysts and sales/marketing heads with independent forecasts and competitive intelligence on the Vietnam pharmaceutical and healthcare industry.
- Benchmark BMI's pharmaceutical and healthcare market forecasts for Vietnam, to test other views - a key input for successful budgeting and strategic business planning in the Vietnamese pharmaceutical and healthcare market.
- Target business opportunities and risks in the Vietnamese pharmaceutical and healthcare sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Vietnam.
- Assess the activities, strategy and market position of your competitors using our company profiles (including SWOTs, KPIs and latest activity) and competitive landscape tables.
BMI Industry View
An at-a-glance perspective on the latest regulatory developments, key forecast indicators and major corporate developments, covering the prescription, OTC and generics markets. The pharmaceuticals and healthcare SWOT outlines strategic factors that affect the basic assumptions underpinning BMI’s forecast analysis, and taken together with BMI’s political, economic and business environment SWOTs, it gives a complete overview of market climate.
BMI Industry Forecast Scenario
Industry forecasts to end-2019 for all key indicators, supported by explicit assumptions, plus analysis of key downside risks to the main forecasts:
- Healthcare: Total healthcare expenditure (USDbn), healthcare expenditure (% of GDP), healthcare expenditure per capita (USD), hospital beds, doctors, and birth & mortality rates (all per ‘000 population).
- Pharmaceutical Market: Drug expenditure in USDbn, % of GDP and per capita (USD).
- Patented Drug Market: Prescription drug sales (USDbn & % of total sales).
- Generic Drug Market: Generic product sales (USDbn), generic sales (% of total sales).
- OTC Drug Market: OTC sales (USDbn & % of total sales).
- Macroeconomic Forecasts: Nominal and real GDP, % real GDP growth, % private consumption growth, % industrial output growth, % consumer price index, % GDP price deflator, exports, imports, trade balance, current account balance, foreign direct investment, exchange rate against USD, government expenditure and external debt.
BMI’s Pharmaceuticals and Healthcare Risk Reward Index
BMI’s Risk Reward Index provides investors (both national and multinational) looking for opportunities in the region with a clear country-comparative assessment of the market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points to provide indices of highest to lowest appeal to investors, with each position explained.
A snapshot of key market characteristics, including total size of the pharmaceuticals and healthcare segments, growth drivers, leading therapeutic areas and the competitive landscape
A focus on government healthcare reforms, epidemiological trends, mergers and acquisitions, product launches, market entries, FDI activity, R&D, biotechnology, clinical trials and supply chain issues.
Details of the industry regulatory framework and key legislation covering the licensing of new products/services, pricing and reimbursements, intellectual property, taxation and advertising, as well as analysis of the overall regulatory burden.
The competitive landscape section provides comparative company analyses and index by USD sales and % share of total sales – for the total pharmaceutical sector, as well as the OTC, generics and distribution sub-sectors.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate Company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.