US$5.2 billion drug market attracts more foreign investors

The Vietnamese drug market, valued at US$5.2 billion, is attracting more foreign investors and multinationals.

us$5.2 billion drug market attracts more foreign investors hinh 0

Business Monitor International (BMI) has reported turnover of US$5.2 billion for the drug market in 2017, an increase of 10% over last year, and has predicted a two-digit growth rate for the next five years.

The demand for drugs in Vietnam has been increasing rapidly thanks to improved income per capita. The average spending on drugs in Vietnam rose from US$9.9 in 2005 to US$22.3 in 2010 and to US$37.8 in 2015. With limited manufacturing capability, Vietnam has to import 55% of drugs it needs every year. In 2016, Vietnam imported US$2.5 billion worth of drugs.

The average annual growth rate in spending on drugs was reported at 14.6% in 2010-2015 and is expected to remain around that rate until 2025. The spending per capita is expected to double to US$85 by 2020 and US$163 by 2025.

Seventy-five percent of surveyed businesses have predicted a 10% growth rate for the the entire pharmacy industry, while the rest said the growth rate would be less than 10%. 

Analysts commented that the market structure would see big changes in 2018 with the participation of tycoons with powerful financial capability, including ones from other business fields. 

The Gioi Di Dong, The Gioi So and FPT Retail, smartphone distributors, and Nguyen Kim, a home appliance distribution chain, have announced they will jump into the drug distribution market. 

Of these, The Gioi Di Dong joined the drug market earlier than the others. In August 2017, The Gioi So joined hands with Vinamedic, officially joining the distribution of food supplements.

Meanwhile, international companies such as Sanofi, Taisho and Abbott have put pressure on domestic manufacturers, creating a more competitive market. 

Eighty-three percent of businesses surveyed by Vietnam Report, a credit rating firm, said developing new products would be the priority strategy for them in 2018.

As many as 67% of businesses said they would expand the OTC (over the counter) channel and strengthen their retail networks.

There are 45,000 privately run drugstores in Vietnam. Most of them operate as separate shops, though many drugstore chains have been set up such as Phano Pharmacy with 49 stores in 12 provinces/cities, Pharmacity and PAK Pharmacy.

According to BMI, the chains hold only 5% of total market share, while the other 95% belong to separate stores.

Vietnamnet

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