A recent study of BMI Research found that in the next five years, Vietnam’s pharmacy industry will continue to be among 20 markets with the fastest and most stable growth rates.
Regarding market scale, it predicted that market value would reach $7.7 billion by 2021 and $16.1 billion by 2026, with CAGR of 11 percent if calculating in Vietnam dong.
In order to compete with Indian and Chinese low-cost products, some US pharmacy firms have licensed local pharmacy firms to make drugs, or buy into enterprises in local underdeveloped markets like Vietnam, so as to use the cheap labor force and cut production costs.
Vietnam is believed to be an attractive destination for multinationals to set up their production facilities which make products for export to third countries.
Many large-scale projects have kicked off including the $80 million medicine factory in the HCM City High-Tech Park Zone developed by Vietnamese Vinapharm and French Sanofi Group.
More recently, Vietnam has witnessed the establishment of AstraZeneca Vietnam, a subsidiary of the world’s big pharmacy manufacturer AstraZeneca. The group pledged to invest VND5 trillion, or $220 million in Vietnam in 2020-2024.
|Vietnam is believed to be an attractive destination for multinationals to set up their production facilities which make products for export to third countries.|
In the past, foreign businesses were subject to limitations in drug distribution, including storage and transportation services. But with EVFTA, Vietnamese enterprises will have to compete fairly with businesses from the EU like AstraZeneca.
Vietnamese businesses have every reason to worry about the competition as European pharmacy firms can join more deeply into the supply, production and distribution chains in the Vietnamese market.
The quality of many made-in-Vietnam products is nearly the same as the quality of foreign imports, while the price is just equal to 1/20, but Vietnamese patients still prefer foreign products.
To prepare for competition, many Vietnamese firms including Hau Giang Pharmacy, Bidiphar, Imexpharm and Pymepharco have planned big investments to upgrade their factories with modern technologies to improve the quality of products.
However, equipping factories with imported GMP-EU standard technology, which costs VND300 billion on average, is a big challenge for Vietnam’s enterprises.
Vietnam ranks 17th among 'pharmerging' markets, or markets expected to become a ‘pillar’ for the world’s pharmaceutical industry, according to IMS Health.
Having overcome the Covid-19 crisis, pharmacy firms are expected to have greater opportunities to thrive.