Vietnam’s pharmaceutical market
Vietnam is among 17 countries with the most rapidly growing pharmaceutical industry in the world, according to IQVIA Institute. In the group of Pharmerging Markets, divided into 3 subgroups, Vietnam is ranked in the third group of 12 countries. With a growth rate of 14%, Vietnam is only behind Argentina and Pakistan.
The growth potential of the pharmaceutical industry is being appreciated by a number of factors.
First of all is the aging population factor. Vietnam’s golden population is currently at its peak and is entering a period of rapid population aging. Since 2011, Vietnam has entered the aging phase when the number of people over 60 years old accounted for 9.9%. By 2018, this figure had increased to 11.95%. According to the General Department of Population, Vietnam will become a country with an aging population by 2038 with the proportion of people aged 60 and over reaching over 20%. By 2049, the proportion of elderly people will account for about 25% of the population.
In addition, Vietnam’s average drug spending is currently only about 75 USD (2019), much lower than the world average. With a large population and an economy with great potential for growth, the Vietnamese pharmaceutical market is considered to have a lot of room for development in the future.
Vietnam’s current population is nearly 100 million people while per capita income is 2,750 USD (2020 data). The country is one of the fastest growing economy in the world. Along with that, the population is aging while income is increasing and health issues are being paid more attention. Therefore, spending on health products also increases. In 2005, per capita drug spending was $9.85, in 2010 it was $22.25 and in 2019 it was $75. The average growth rate in the period 2010-2019 is 14.8%..
Vietnam’s pharmaceutical market is divided into ETC and OTC channel:
ETC channel (tendering for drugs sold to hospitals): accounted for about 70% of the drug market. ETC distribution channels are mainly concentrated in big cities such as Hanoi and Ho Chi Minh City where there are many hospitals with high demand for medicines. Market share in this channel still mainly comes from imported drugs.
OTC channel (over-the-counter drugs – distributed through pharmacies): accounts for 30% of the drug market. The total number of drugstores is 62,000 (data in 2019). The density of pharmacies in Vietnam is really high compared to other countries in the world.
In 2021, pharmaceutical sales declined due to prolonged social distancing during the 3rd and 4th Covid-19 outbreaks in Vietnam. It is estimated that the total revenue of Vietnam’s pharmaceutical industry for the whole year decreased by 6% over the same period, of which revenue from retail drug stores increased by 2% and from hospital channels decreased by 14%.
SSI Research’s pharmaceutical analysis report said that the application of strict social distancing in provinces, especially the southern region, has caused disruptions in the supply and distribution activities of pharmaceutical companies.
Hospitals were forced to convert into Covid-19 treatment centers, causing a sharp drop in drug procurement revenue while the hospital channel currently accounts for about 70% of pharmaceutical demand.
In addition, intensive care units (ICUs) were often overcrowded, and Covid-19 patients are mostly being treated for free or charged relatively low fees.
It is also difficult for pharmaceutical companies to benefit from vaccines or drugs to treat Covid-19 when currently only a few companies outside the Ministry of Health carry out vaccine import activities for the reason that import procedures are relatively complicated. However, the Government is also starting to allow many other pharmaceutical companies to register to produce therapeutic drugs based on the drug patents recently ceded from Pfizer and MSD.
It is estimated that the revenue in 2021 of listed healthcare companies in Vietnam reached 14,800 billion VND, down 1.8% over the same period. Total net profit reached 2,030 billion VND, up 10.5%.
Although revenue was flat due to a drop in healthcare demand, net profit grew relatively well as companies cut costs and reduced sales discounts.
In 2022, healthcare demand is expected to recover and grow 13% compared to 2021. At the same time, it is predicted that the impact from the Covid-19 epidemic will be less severe or even bring some benefits.
Specifically, the proportion of people who will visit hospital will be back to normal, and pharmaceutical industry will have a significant additional revenue from fever-reducing drugs and vitamins. In particular, many Vietnamese pharmaceutical companies have received the formula for the production of Covid-19 treatment drugs transferred by Pfizer and MSD and may soon commercialize this year.
Profits of healthcare companies are estimated to increase 15% year-on-year, thanks to 12% growth in revenue and 4-6% increase in prices of medical services and medicines.
The increase in price is considered inevitable because pharmaceutical companies have had to deal with high prices of raw materials (APIs) and hospitals have faced many expensive operating costs in the past two years.
For pharmaceutical companies, it is suggested that business results may be positive in the first half of 2022 when people stockpile drugs for the new Omicron variant, while hospitals have to wait for the recovery in the second half of the year.