VietNamNet Bridge - Pharmacy firms are making good profits, with the market expecting a stable growth rate of 10-15 percent.

A report shows that about 30 pharmacy firms had listed their shares on the Hanoi and HCMC bourses and on UpCom by April 2016 with total capitalization value of VND14.8 trillion. 

Thirteen firms list on two main bourses, of which 11 have relatively high state ownership ratios, between 35 percent and 51 percent of charter capital, such as Hau Giang Pharmacy, Traphaco, Imexpharm and Domesco. 

Most of the businesses have reported satisfactory business results, which explains why many investors want to bank on the pharmacy industry.

The average spending on medicine is around $35-37 per head per annum in Vietnam, which is much lower than that in Thailand ($60) and China ($100).

Pharmacy firms are making good profits, with the market expecting a stable growth rate of 10-15 percent.

The Q3 report on pharmacy released by Virac Research showed that there are 178 medicine manufacturers in Vietnam, but they only make generic medicine with low value.

Vietnam’s pharmacy industry uses 60,000 tons of medicinal materials of different kinds, of which 80-90 percent are imports. China and India are the biggest exporters of medicines to Vietnam.

Vietnamese companies spend 5 percent of their revenue to R&D (research and development), while foreign companies spend 15 percent.


Vietnamese pharmacy firms mostly make food supplement and generics, while foreign enterprises make more specialized products. 

In order to improve competitiveness, analysts say that Vietnamese companies need to invest more in R&D or cooperate with foreign pharmacy firms.

With a high economic growth rate and increasingly high demand for healthcare services, the market value is expected to expand in upcoming years. 

In 2013, the total medicine consumption was worth $3.3 billion. The figure, as estimated by VIRAC, reached $4.2 billion in 2015 and is expected to rise to $8-10 billion by 2020.

VIRAC has also predicted that the prescription medicine market’s growth rate would surpass the OTC (over the counter) market because of higher demand for specific medicine.

Commenting about the potential of the pharmacy industry, Chris Freund, CEO of Mekong Capital, which invests in Traphaco, said the market would see profit of 10-15 percent per annum.

Foreign investors, both manufacturers and financial investors, have shown serious interest in Vietnamese pharmacy firms. 

Andy Ho, CEO of VOF, a fund managed by VinaCapital, praised the fund’s investment in Hau Giang Pharmacy, saying that he hopes he can find other good investment opportunities in the future.

Drug distribution is also attractive to foreign investors. SAM (Saigon Asset Management) earlier this year announced the purchase of 15 percent of My Chau JSC stake, a company which owns the My Chau drug store chain.

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