Many valuable M&A deals in the pharmacy sector have been made recently.

Vietnamese pharmacy firms mostly make functional food and generics, while specialized medicines are made only by foreign companies. M&A proves to be the shortest way for Vietnamese firms to improve competitiveness and carry out research and development activities.

According to Phu Hung Securities, Decree 60, which lifts the foreign ownership ratio ceiling in public companies to 100 percent, has offered more opportunities to Vietnamese firms to find foreign partners.

Hau Giang Pharmacy and Domesco have pioneered lifting foreign ownership ratios in their companies. Japanese Taisho holds 56.68 percent of share in the company after buying 28.35 million more shares last April.

Domesco’s story is similar to CFR International Spa, a subsidiary of Abbott, has raised its ownership ratio to 51 percent. Prior to that, in 2016, it took over Glomed, a Vietnamese drug manufacturer.

The other M&A deals include the takeover of Cuu Long Pharmacy by FIT Group, the increase of Stada’s ownership ratio in Pymepharco to 49 percent, and the purchase of 70 percent of Dat Vi Phu’s shares by Adamed Group worth $50 million.

Sources said Nguyen Kim, a home appliance distribution chain, is planning take over Lam Dong Pharmacy.

Meanwhile, Imexpham and Traphaco are believed to be the two potential names of the M&A market. Foreigners hold 48.55 percent of shares in Imexpham and 45.7 percent in Traphaco.

Experts believe that more M&A deals in the pharmacy sector would be made in the time to come, as the State Capital Investment Corporation (SCIC) is going to divest from Traphaco, Domesco Dong Thap and HCMC Medical Equipment.

According to Nguyen Thanh Danh from BMG Business Training HCMC, foreign companies merge with Vietnamese pharmacy firms for specific purposes. One of the reasons for Taisho to buy Hau Giang Pharmacy is to distribute Japanese products in Vietnam through Hau Giang’s distribution network and make Japanese-developed drugs in Vietnam.

As for Abbott, it bought Domesco and Glomed because it wants to enter Vietnam’s generics market.

In many cases, foreign companies need to join forces with Vietnamese partners to bid for the rights to provide medicine to hospitals as required by the new Pharmacy Law.

According to IMS Health, Vietnam is among 17 markets with highest growth rates, which are the major driving force for the world’s pharmacy industry development. The markets are expected to account for one-third of total drug consumption in the globe instead of one-quarter as currently.

Thanh Lich

Capital flow to pharmacy industry speeds up

VietNamNet Bridge - Following Domesco, Hau Giang Pharmacy has become the next destination for foreign investors.