Domesco Medical Import Export Joint Stock Corporation has become the first pharmaceutical firm allowed to raise the foreign ownership cap to 100% after it got approval from the State Securities Commission of Vietnam (SSC). The SSC has permitted Domesco to increase foreign ownership from 49% to 100%.

Under the prevailing regulations, foreign investors cannot distribute pharmaceutical products in Vietnam, so Domesco had to adjust and supplement its business operations to seek the SSC’s nod.

According to a document posted on the Hochiminh Stock Exchange, CFR International SPA has registered to buy an extra 5.76% stake in Domesco from September 8 to 30. 

If the transaction is conducted successfully, its ownership in Domesco will rise to 51.7% from 45.49%. 

Maybank Kim Eng Securities Company said besides Domesco, other pharmaceutical firms like Imexpharm Corporation and DHG Pharmaceutical JSC have seen their stock prices increasing sharply in recent times on expectations of foreign ownership limit (FOL) hikes at these companies.

According to a third-quarter report of BIDV Securities Company (BSC), investors can make long-term investments in the pharmaceutical sector. 

In the first and second quarters of this year, pharmaceutical stocks edged up, buoyed by information about FOL rises, capital divestment and transfer by foreign investors and the amendment of the Pharmaceutical Law.

However, BSC noted that the revised Pharmaceutical Law does not leave significant impact on Vietnamese pharmaceutical firms, which will continue facing tough competition from foreign rivals, especially after Vietnam’s signing a series of free trade agreements.  

Those enterprises have built or upgraded their factories to meet global standards, which is expected to help improve their revenue and operation efficiency.

SGT