Business Korea has reported that Dongwha Pharm has spent 391 billion won, or $30 million (VND720 billion), to acquire 51 percent of Trung Son Pharma shares, a company running the largest drugstore chain in the western part of the southern region. The deal is forecast to wrap up in October.

Trung Son Pharma owns 140 drugstores which brought turnover of VND1.3 trillion in 2022. The medicine retailer has been growing very rapidly, by 46 percent per annum since 2019.

This is one of the fastest growing drugstore chains in Vietnam, with the same growth rate as FPT’s Long Chau, and much higher than The Gioi Di Dong’s (Mobile World) An Khang.

In 2022, the chain of 937 Long Chau drug stores owned by FPT Retail reported revenue of nearly VND9.6 trillion, or VND10.2 billion per store. Meanwhile, the chain of 500 An Khang stores owned by The Gioi Di Dong reported lower revenue of VND1.5 trillion, or VND3 billion per store.

By joining hands with Dongwha Pharm, Trung Son Pharma wants to enlarge the drugstore chain scale to 460 stores by 2026 and enter large cities, where Long Chau, An Khang and Pharmacity are gathering strength to expand their market share.

Prior to that, the South Korean SK Group poured money into two Vietnamese pharmacy firms. It now holds the controlling stake of 54 percent at Imexpharm (IMP) and 14.5 percent at Moroon Bells, the holding company that owns Pharmacity.

Meanwhile, pharmacy firms from the US and Japan have been buying into Vietnamese companies, from drug production to trading, over many years

Japanese ASKA Pharmaceutical Co spent hundreds of billions of dong to acquire 25 percent of shares of Hataphar (DHT).

Currently, most Vietnam’s leading pharmaceutical companies, such as Hau Giang Pharmacy (DHG), Domesco (DMC), Traphaco (TRA), Imexpharm (IMP), Pymepharco (PME), have foreign strategic shareholders. The foreign ownership ratios in some of the companies are over 51 percent.

At Domesco, for example, the US-based Abbott holds 51.7 percent, while the State Capital Investment Corporation (SCIC) holds 34.7 percent.

At Hau Giang Pharmacy, Japanese Taisho Pharmaceutical holds the controlling stake of 51 percent.

In 2020, when Covid-19 broke out, German Stada Arzneimittel AG took over Pymepharco and then delisted PME shares in 2021.

The predecessor of PME was Phu Yen Pharmacy and Medical Materials established 30 years ago. It is one of the leading pharmacy manufacturers in Vietnam and the region, with factories meeting EU-GMP standards. In the pharmacy industry, the enterprise has the second largest capitalization value in the stock market, after  Hau Giang Pharmacy.

In late 2017, when PME entered the bourse, Stada owned 49 percent of shares, while Truong Viet Vu had 13.2 percent with VND700 billion ($30 million), who is one of the super-rich people in Vietnam.

Similarly, 40 percent of Traphaco shares are held by foreign investors.

The drug market

Announcing its presence in the Vietnamese market, Dongwha plans to focus on distributing products in high demand in Vietnam, including vitamins, ginseng and beauty care products.

Kedglobal quoted its source from Dongwha as reporting that the acquisition of Trung Son is a big step in its strategy to penetrate the Southeast Asian drug and beauty care market.

Meanwhile, reports of securities companies all show that Vietnam has potential because of a large and aging population, plus increased income per capita and higher demand for healthcare products.

According to EIU, drug revenue in Vietnam reached $5.9 billion in 2021, up 9.6 percent over the previous year. Meanwhile, IBM predicted that the Vietnamese pharmacy sector may have value exceeding $16 billion by 2026 thanks to an aging population, higher spending on healthcare, larger health insurance coverage, and higher average life expectancy.

The drug retail market is expected to be hitter with the presence of big players, such as Digiworld, Bamboo Capital (Tipharco) and foreign investors buying into Vietnamese companies.

SSI Research estimates that Vietnam will have 7,300 retail drugstores by 2025.

Manh Ha