Vietnamese spending on drugs has been increasing rapidly

According to the Ministry of Industry and Trade (MOIT), there are 178 manufacturers, but there are only seven pharmaceutical chemistry material production establishments, and only two meet GMP standards.

Vietnam still cannot produce brand-name drugs, and most of the drugs are generic which have low value and competitiveness. 

Domestic pharmaceutical firms only spend 5 percent of revenue on research and development of new drugs, far below the 15 percent of foreign companies.

Regarding materials, the pharmaceutical industry every year uses 60,000 tons of materials of different kinds, 80-90 percent of which are imports.

According to Nguyen Quy Son, chair of Vinapharm, to develop the pharmaceutical chemistry in Vietnam, pharmaceutical firms need to make investments in laboratories, and research & industrial production lines, and build up their marketing staff.

Meanwhile, CEO of Besins Healthcare Finance in Vietnam, Nguyen Thanh Danh, said that Vietnamese companies tend to earn money quickly by making low-cost products. There are many reasons behind this.

First, it is very costly to invest in R&D. In general, R&D is a risky game, because firms may lose billions of dollars if they fail to develop a new kind of drug.

Second, a market segment now belongs to big names including Hau Giang Pharmacy, Glomed, Traphaco and Domexco, backed by foreign companies and investment funds which came to Vietnam to make products with high technology and bring products to hospitals through bidding.

According to Danh, market segment analysts believe Vietnamese companies should pay attention to oriental medicine. However, oriental medicine is still known only in the domestic market. The complicated procedures for registering products also discourage investors.

It is possible that manufacturers will focus on OTC drugs and functional food, a market segment which has always been hot.

Pharmacist Nguyen Van Liem, former director of a pharmaceutical company under Sapharco, said that the top 10 Vietnamese pharmaceutical companies have launched many similar products.

Even in the oriental medicine market, where analysts believe Vietnamese companies should focus, foreign companies are also dominating thanks to their good brands.  

The functional food market has been growing well, but consumers do not highly appreciate Vietnam’s products. 

Analysts believe that Vietnamese firms in the drug market can expect the biggest profits from distribution activities. Under current laws, only Vietnamese firms have the right to distribute drugs. There are 800 distribution companies.

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Chi Nam