Pharmaceutical market trends
The pharmaceutical business is a fast growing sector of the national economy. As one of the developing markets in Asia there exist greater tendencies for large financial turnovers. There are local pharmaceutical factories that produce medicines for local consumption. However, numerous preparations are either under produced or not manufactured at all because of lack of the necessary facilities. Such products must be imported from foreign manufacturers to supplement the local market needs. However, before importation, foreign medical products must be registered with the Vietnam Ministry of Health. The latest statistics confirmed that the actual annual supply of essential imported medical products is far less than the demand. Therefore there is room for foreign pharmaceutical companies to market their products successfully in Vietnam.
The Pharmaceutical Market of Vietnam
Opportunities and Challenges
IP laws are still poor in Vietnam. Its industry has little R&D and makes mainly copycat drugs.
The biggest concern of the Vietnamese government is to make healthcare universal and affordable to its populace, and this is particularly true for pharmaceutical prices, which account for a significant portion of annual expenditure on health, but as of 2009, the country is still struggling to keep prices down, even though measures have been introduced.
While the government has focused on developing its domestic production capability, which it now claims supplies just over 50% of the market, it is now faced with another problem with no immediate solution in sight; the rising price of raw materials, of which 90% are imported.
It has been recently reported that just three multinational distributors – Zuellig Pharma, Mega Product and Diethelm – dominate the Vietnamese pharmaceutical market through a complex network which enables them to control the volume, thus prices, of drugs distributed in the country. The government report criticised both foreign suppliers and local importers for adopting strategies such as predatory pricing, boycotts, exclusive deals and patent pooling to block competition from new suppliers and importers.
Most healthcare expenditure is out-of-pocket in Vietnam, with national health insurance only covering a small section of the population. Private expenditure is estimated at around 67.6%. Health expenditure is estimated at US$5.8 billion in 2009 and is projected to reach US$10.9 billion by 2014. Per capita health expenditure should reach US$116 from an estimated US$66 in 2009.
A new law was passed in November 2008, to take effect in July 2009, which will make health insurance compulsory for all citizens by 2014. Under the new law, there are three levels of benefits under health insurance schemes, some will cover all or 100% of expenses at nominated medical facilities, while others will cover 95% and 80% of the expenses with the patient making up the rest.
In 2009, the Vietnamese market for pharmaceuticals is estimated at US$750 million, or US$9 per capita. This is one of the lowest in the world, yet an improvement on the estimated US$1.0 per capita figure a decade or so ago. The overall market size is comparable to Singapore or Bangladesh; in per capita terms, the market is similar to Pakistan and India.