Vietnam pharmaceuticals on a high

Hau Giang Pharmaceutical Joint Stock Company (DHG), Vietnam’s largest publicly traded drug maker, has announced a dividend payout rate in cash of 35% for 2015, compared to the 30% offered in 2014 and 2013.

According to DHG general director Pham Thi Viet Nga, the firm made a net profit of VND593 billion (US$27.2 million) on its net revenue of over VND3.6 trillion (US$165.14 million) in 2015. DHG earned a net profit of VND168.5 billion (US$7.5 million) in the fourth quarter of 2015, up 40% year-on-year.

“The high net profit is mainly attributed to the tax breaks of DHG’s Betalactam plant, and this is a key contributor towards the high dividend payout rate,” Tran Thi Hong Tuoi, an analyst at BIDV Securities, told VIR.

Similarly, Traphaco, which is one of the fourth biggest domestic drug makers, has approved its 2015 dividend payout rate of 20% in cash. Traphaco even aims to bring the rate up to 30% in the next five years.

In 2015, the consolidated revenue of Traphaco’s subsidiaries exceeded the target by 6%, while the firm’s profits grew 23% compared with 2014. 

Last year also saw a new development trend for Traphaco as the company signed a co-operation contract with Sandoz, the generic pharmaceuticals division of Novartis, to distribute Sandoz products in Vietnam.

The contract has opened up new directions to increase revenues, profits, and Traphaco’s reputation in the pharmaceutical industry.

Most recently, Vietnam’s third-largest domestic drug maker Domesco announced that it would spend VND53 billion (US$2.43 million) on its 2015 dividend payout rate of 20%.

The business reported a profit of VND141 billion (US$6.46 million) last year.

2016 is expected to be another profitable year for these drug makers which have all raised their revenue and profit targets up from the figures set in 2015.

High dividend payout rates and bright prospects reflect the profitability of the domestic pharma industry, which has attracted many investment fund management firms, including Mekong Capital, Dragon Capital, and JP Morgan, as well as a number of European firms such as Zuellig Pharma Vietnam Ltd, and DKSH.

Global groups hoping to penetrate or expand their operations in the local medicine market have targeted DMC, IMP, DHG, and Traphaco for their nationwide distribution networks and advanced drug production assembly lines.

Jan Rask Christensen, director of Pharma Group-a Sector Committee under EurocCham, told VIR that ‘Vietnam remains an attractive market for our 22 global members, and the year of the monkey will bring about both domestic and international changes, which offer Vietnam the opportunity to position itself as an attractive investment destination-even a regional hub for ASEAN exports-for high quality innovative pharmaceutical manufacturing’.

According to Christensen, the local industry will be able to increase its capabilities through partnership with multi-national corporations, and expand their product portfolio to more valued-added medicines and technology know-how for export-quality medicines.

The innovative pharmaceutical industry should be seen in the context of it being one of the most innovative sectors, with approximately US$137 billion being invested in R&D globally every year, Christensen noted.