VietNamNet Bridge – Expensive imported medicine has been dominating the Vietnamese market, a poor country with the average income per capita at $1,000 a year.

A report of the Vietnam Pharmacy Association showed that there are 39,000 medicine retail points nationwide, while there are 2,357 enterprises registered their operation as medicine trade companies. Meanwhile, there are only 276 medicine manufacturers. As such, the number of medicine distributor is triple the number of manufacturers.

Regarding the market structure, Tran Phuong Lan from the Competition Administration Department (CAD), an arm of the Ministry of Industry and Trade, noted that the majority of the enterprises in the top 10 manufacturers are the state owned ones, headed by Hau Giang Pharmacy, with the modest market share of 10.79 percent. The enterprises which are not listed in the top manufacturers have the market shares of less than 10 percent.

Domestic products can only satisfy 50 percent of the domestic demand, while the other 50 percent has been fed by the imports. Vietnam has to import most of specifics, while it also has to import the materials to make many kinds of medicine. That is why imports are the main source of medicine supply in the Vietnamese market.

The medicine distribution network in Vietnam is rather complicated with the existence of many different intermediaries, thus making it difficult for the state management agencies to control.

According to CAD, the 10 leading import companies hold big market shares. They include the Central Medicine Company No. 2 with 12.09 percent, Zuellig Pharma Vietnam 10.9 percent.

Despite the stiff competition, the medicine prices in Vietnam remain very high while the upward tendency is stable. Under the current regulations, foreign enterprises are now allowed to distribute medicine products in Vietnam. However, in fact, they still can dodge and laws through the M&A (merger and acquisition deals).

The multi-national logistics companies do not have the right to distribute drugs, but in fact, they have got involved in all the phases of the product distribution of foreign manufacturers. This has allowed them to control the drug prices in Vietnam.

Lan from CAD has noted that the abnormal drug price increases have not occurred with domestically made products, but happen regularly with the import products, including the specifics. The “cooperation” between the manufacturers and the distributors allows them to control the drug prices in the market.

State management agencies have admitted that it’s very difficult to manage the drug prices, because medicine is a kind of special product, while every medicine product targets its specific market which cannot be replaced with another. Meanwhile, consumers have always been put on the passive voice, who have been relying on the physicians’ prescriptions, and they don’t have enough information about the products.

The noteworthy thing is that while Vietnamese are still poor, they don’t use domestic products which have reasonable prices, but have to use import medicine at high prices.

According to the Vietnam Enterprises’ Association, the percentage of the money spent on domestically made medicine products is very low. The figures are 11.9 percent and 33.9 percent, respectively, for central and provincial hospitals.

Osamu Igarashi, a Japanese expert, has also suggested that Vietnam needs to be sure that foreign invested enterprises do not have the right to distribute medicine in Vietnam. It’s necessary to clarify that foreign invested enterprises can only provide logistics services (customs, storage, transportation), and none of the companies should be allowed to possess high numbers of retailers.

TBKT