VietNamNet Bridge - With limited manufacturing capability, Vietnam has to import 55 percent of drugs it needs every year.

VIRAC, a consultancy firm, said that Vietnam’s drug imports have been increasing sharply in recent years. In 2016, the import turnover reached $2.5 billion, an increase of 10 percent compared with the year before.

With higher income per capita, Vietnamese are spending more money on healthcare services and medicine. The spending level by Vietnamese is $30-40 per head per annum, lower than the average level of $96 in developing countries and $186 globally.

IMS Health has given optimistic forecasts about revenue growth of pharmacy firms in Vietnam. The organization ranks Vietnam second among emerging countries, after Argentina, and above China and other ASEAN countries in terms of revenue growth rate.

A recently released report by BMI showed that the average growth rate of Vietnam’s pharmaceutical  industry in 2015-2018 is expected to be16 percent and sales will hit the $10 billion threshold.

The average growth rate of Vietnam’s pharmaceutical  industry in 2015-2018 is expected to be16 percent and sales will hit the $10 billion threshold.

However, with current conditions, Vietnam is listed in the third group on the world’s drug map, among 17 “emerging pharma” countries.  Vietnam is not seen as an inventor of new drugs, and only a few enterprises use technologies satisfying high standards such as EU - GMP or PIC/S.

About 55 percent of domestic drugs needs must be imported, especially patented drugs. In 2016, Vietnam imported $2.5 billion worth of drugs, of which imports from France, Germany and the US were worth $200 million.

While Europe and the US are the sources of specialty drugs, India and China are the sources of low-cost products.

According to FPT Securities, drugs reach patients through three ways – ETC, attending the bids to become the drug suppliers of hospitals; through clinics and drugstores; and wholesale markets. Of these, ETC is the key channel that manufacturers, importers and distributors target.

There are 13,000 hospitals, clinics and healthcare centers in Vietnam. A report from Maybank Kim Eng Securities also shows that 70 percent of total expenses on drugs, or $3 billion, comes from the channel.

However, the competition in ETC market has become very stiff. Under a MOH Circular 01, privileges will be given to manufacturers and suppliers which can offer low prices.

The circular has been criticized by many manufacturers, which point out that under the circular, drugs chosen by hospitals are very cheap, but have low quality.

In making generic drugs, many manufacturers import cheap low-quality materials from India and China so as to cut production costs, though the treatment efficiency is not high.

The General Department of Customs says by August 15, Vietnam had imported $1.7 billion worth of drugs.

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