VietNamNet Bridge – The prices of foreign made medicine products in Vietnam are exorbitant, but Vietnamese still spend money on foreign products instead of domestic ones. Why?

Part 2: Pale Vietnamese pharmacy firms have to take bitter medicine

Part 1: Vietnamese market really lucrative for foreign pharmacists

Medicine is considered a special type of products which needs to be stabilized in prices, especially in the context of the hospital fee increases and the current economic difficulties.

However, despite the great efforts to stabilize the market, the medicine prices have always been staying firmly high. Medicine was one of the two groups of goods which saw the highest prices over the last two months. Some foreign medicine products have witnessed the sharp rise of 40 percent in prices.

Meanwhile, domestic products still have been refused in treating many diseases, even though they have the same quality as foreign made products. According to the Ministry of Health, the quality of domestically made medicine has been increasing, now meeting the 29 groups pharmacological effects as recommended by the World Health Organization (WHO).

However, a report of the ministry has also shown the obvious decrease in using domestically made products. At the 1000 surveyed hospitals across the country, the amount of Vietnamese medicine products used in medical treatment just amounted to 40 percent on average. Especially, at central hospitals, the proportion is much lower, just 10 percent.

Nguyen Nam Hai, Deputy Director of Industry and Trade, said that foreign pharmacy firms have by far bigger advantages than domestic ones in terms of brand names, technologies, distribution networks, management skills, financial capability and marketing policies.

Especially the firms have been taking full advantage of Vietnamese physicians to do the marketing. Despite the low income per capita of Vietnamese and sky high prices of foreign medicine products, Vietnamese physicians still prioritize prescribing foreign medicine for patients.

They do that simply because they can enjoy high levels of commissions from foreign pharmacy firms or pharmacy stores.

Minister of Health Nguyen Thi Kim Tien has said that some foreign pharmacy firms even accept to fund physicians’ tours abroad worth thousands of dollars. And it is understandable why physicians always like prescribing foreign medicine.

Meanwhile, domestic pharmacy firms can only pay 10 percent in commission at maximum to physicians.

Meanwhile, Ong Van Dung, General Director of Stada Vietnam, a pharmacy firm, said the current policies encourage the import of foreign medicine products. Vietnam even imports the products which can be made domestically.

Dung went on to say that foreign products have been entering Vietnam very easily. Importers just have to show the certificates about the products’ quality granted by the competent agencies of the exporters’ countries, declare the CIF prices (cost price, insurance and freight), and pay fee to be able to import products.

In many cases, importers declare the cost prices of medicine products higher than the real prices, in order to set up high sale prices, but the frauds have not been discovered by competent agencies.

While the state management agencies keep loosening control over imports, they have been imposing a very strict control over the prices of domestic products. Especially, domestic pharmacy firms must not pay more than 10 percent of their turnover on advertisement and marketing, or just 1/3 of that of foreign firms.

Also according to Dung, the biggest rivals of Vietnamese pharmacy firms now are the companies from Asia such as India, Pakistan, Bangladesh, and South Korea, which use the same technologies and make the products with the same quality.

At present, the expenditure on medicine accounts for 60 percent of the healthcare insurance fund. Therefore, Dung said, using foreign expensive medicine instead of domestic cheap ones would be a heavy burden on patients and the healthcare fund.

DDDN