Capital keeps flowing into pharmacy industry

Hau Giang Pharmacy, which has the highest revenue among listed pharmacy firms, is being eyed by Taisho Pharmaceutical from Japan. 

Taisho has announced it plans to spend VND3.4 trillion to acquire the controlling stake in Hau Giang Pharmacy, or 57 percent of total shares. 

If the deal occurs, Hau Giang Pharmacy would become the next pharmaceutical company to be taken over by foreign enterprises.

Recently, a subsidiary of Abbott successfully raised its share ownership ratio to 51 percent to become a strategic shareholder of Domesco.

Securities companies say that securities and pharmaceutical companies bear less influence from the market. 

The industry sets strict requirements in terms of technology and high market entry barriers. However, the business field has witnessed many big M&A deals in the last five years.

In the case of Domesco, which ranked sixth in revenue on the bourse, is now controlled by CFR International SPA of Abbott. The group in 2016 bought another pharmaceutical firm, Glomed.

Soon after Pymepharco, a pharmaceutical firm established in 1989, announced the lifting of the foreign ownership ratio ceiling to 100 percent in late 2018, foreign investors rushed to buy more shares.

Stada Service Holding has received approval to raise its ownership ratio to no more than 72 percent, enough to have a decisive voice in Pymepharco’s operations.

Imexpharm and Traphaco, with foreign ownership ratios of over 47 percent, are expected to be named in the next M&A deals. 

VnExpress reports that half of the top 10 listed pharmaceutical companies have foreign shareholders holding a controlling stake or nearly 50 percent of shares.

Vietnamese pharmaceutical companies are attractive to foreign investors because of the stable growth of the drug market and the low production costs.

“More and more foreign drug firms are cooperating with Vietnam’s producers to take full advantage of the Vietnamese partners’ low production costs and distribution networks,” according to a report from ACB Securities about the pharmacy industry.

In the stock market, the prices of pharmacy shares have been fluctuating as they are influenced by takeover deals.

Hau Giang Pharmacy share price, which decreased by 25 percent in the last three months of 2018, has bounced back and increased by 60 percent over the last two months. The share market price has nearly hit the VND120,000 per share threshold, which is nearly the same as the price Taisho spent to take over the company.

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