Hau Giang Pharmacy (DHG), the largest listed pharma firm, has released its third quarter financial report which showed net profits dropped by 37 percent to VND166 billion, a 3-year low quarter-on-quarter profit.

Meanwhile, in 2022, the firm reported record high profit of VND1 trillion, up 27 percent over 2021.

The profit decrease so far this year is attributed to the economic impact and the company’s costly marketing campaign, as well as high costs for developing new products.

Pharmaceuticals is an industry making essential goods and therefore bears little impact from recessions. However, low demand has adversely affected business fields with high growth rates in Vietnam.

Many other pharmaceutical firms also reported decreases in the third quarter. Ha Tay Pharmacy (DHT) has seen net profit drop by 21 percent to VND18 billion, the lowest level over the last two years.

Imexpharm (IMP) made a profit of VND70 billion in the third quarter, the lowest level in the last four quarters, despite great efforts by the company to expand and restructure its product list.

As the business performance is not good, the prices of many pharmacy firms have decreased recently which is in line with a decline of the stock market in general, caused by selling pressure from foreign investors, escalation of dollar prices and money withdrawal from banks.

DHG share prices decreased at nine out of the 10 latest trading sessions. Over the last three months, the share price dropped from VND135,000 per share to VND110,000.

A decrease from VND68,000 per share to VND60,000 in the last month was reported for Imexpharm, while DHT shares price fell from VND27,000 to VND20,500 within two months.

However, compared with share prices for a long period, analysts said that prices have been at the highest peaks in history. The price of DHG shares at VND110,000, for example, is twofold higher than the price of five years ago, and three times higher than 10 years ago.

IMP share prices are also hovering around the VND60,000-70,000 per share threshold.

The pharma companies attracted huge capital from foreign corporations from Japan, South Korea and the US, as well as Vietnamese billionaires.

Still in high demand

Foreign investors, who can see the great potential of the industry, have been buying into Vietnam’s pharmaceutical firms. Experts pointed out that they hold large proportions of shares at most firms.

Taisho Pharmaceutical has a 51 percent of stake in Hau Giang Pharmacy, while the State Capital Investment Corporation (SCIC) is holding 43.3 percent. 

The company lifted the foreign ownership ratio ceiling to 100 percent, paving the way for the State to divest from the corporation and for foreign investors to increase their ownership ratio in the largest listed pharmacy firm. DHG is now a subsidiary of Taisho Pharmaceutical.

Meanwhile, at Imexpharm, South Korean SK Group holds 71 percent of shares.

In mid-October, Hataphar said that the company approved a plan to sell another 11 percent of shares to ASKA Pharmaceutical Co from Japan. After the deal, the Japanese shareholder will hold 33 percent of Hataphar shares.

Most of the Vietnamese leading pharmaceutical companies, including DHG, Domesco (DMC), Traphaco (TRA), Imexpharm, Pymepharco (PME) have foreign strategic shareholders. Foreign investors hold the controlling stake (over 51 percent) in some companies.

Foreign economic groups also have taken over domestic drug store chains.

In August 2023, South Korean Donwha Group signed a contract on buying 51 percent of shares of Trung Son Pharma at 391 billion won ($30 million, or VND720 billion), according to Business Korea.

Prior to that, South Korean SK Group acquired 14.5 percent of shares of Maroon Bells, the holding company running the Pharmacity chain.

According to EIU, the revenue from the pharmaceutical sector was $5.9 billion in 2021, and according to IBM, the sector may have a value of $16 billion by 2026 because of the aging population and increased spending on health care services.

Manh Ha