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Vietnam: Pharmaceutical retail market heats up with big players
The Hanoitimes – According to Business Monitor International (BMI) data, revenue of the Vietnamese pharmaceutical market was US$5.2 billion last year and which is forecast to reach US$7.7 billion in 2021.
That large retailers with strong financial strength and good governance joining the Vietnamese drugs distribution market is expected to drive the domestic pharmaceutical retail market forward in the coming time.
Conglomerate Vingroup last weekend officially entered the pharmaceutical retail segment, with a launch of its VinFa Pharmacy chain in Hanoi. VinFa’s first eleven stores have been opened at Vingroup’s VinMart + convenience stores in urban areas or apartment buildings.
With a series of locations in trade centers and large-scale urban areas, VinFa promises to become a heavy-weight competitor of other big retailers, such as Mobile World Group, FPT Retail, Nguyen Kim Group and Digiworld JSC (DGW), which have entered in the pharmaceutical retail market over the past year.
Mobile World Group late last year showed ambitions to break into the pharmaceuticals segment, acquiring Ho Chi Minh City-based Phuc An Khang pharmacy at a cost of VND1.2 trillion (US$110 million).
Meanwhile, FPT Retail also announced a resolution to establish FPT Long Chau Pharmaceutical JSC after buying the biggest drugstore chain in Ho Chi Minh City. This company has concentrated on pharmaceutical retail, medical equipment, cosmetics, and toiletry in specialized stores.
Besides domestic companies, the market also witnessed many mergers and acquisitions (M&A) deals of foreign investors in the pharmaceutical market. Adamed Group – a pharmaceutical and biotechnology company from Poland – spent US$50 million to acquire a 70 percent stake of Dat Vi Phu Pharmaceutical Co., Ltd., Taisho pharmaceutical from Japan spent US$97 million buying 24.4 percent of the shares in DHG Pharma, whereas Domesco Medical Import-Export JSC sold 51.69 percent of its shares to Abbott Laboratories (America).
Major changes ahead
The demand for pharmaceutical products in Vietnam has rapidly expanded, given by high economic growth, rising per capita income, and rising population.
Per capita spending on drugs in the market increased from US$9.85 in 2005 to US$22.25 in 2010 and nearly doubled to US$37.97 in 2015. The average annual growth of drug expenses was 14.6 percent in the 2010-2015 period and maintained an annual growth of at least 14 percent until 2025. Drug expense per capita is forecast to double to US$85 in 2020 and US$163 in 2025.
According to Business Monitor International (BMI) data, revenue of the Vietnamese pharmaceutical market was US$5.2 billion last year and which is forecast to reach US$7.7 billion in 2021.
The local pharmaceutical retail market is large but has yet to saw the emergence of a dominant player. The sector’s distribution is still in the hands of private pharmacies with no one seizing a market share of up to 20 percent. According to experts, this therefore inspired the retail giants to break in the market.
However, experts said that actual changes in the local drug distribution market are expected to take place over the next 5-10 years as this year is still a period of exploration and evaluating market approach for new players.
According to Phan Van Hieu, chairman of CVI Pharmaceutical and Cosmetics JSC, the pharmaceutical retail market is not an easy sector for even big distributors, explaining that the drug market has a lot of barriers and is different from other markets.
Sharing the same view, Mai Hai Ninh from thuocvasuckhoe.com drugstore chain, said the biggest risk for drug retailers is the lack of medical expertise as drug sales depend on prescriptions or just a patients’ declaration on their health status.
The pharmaceutical industry is a specific industry, so from managers and salespeople need to have strong medical knowledge, Ninh said, adding that training of medical staff requires 2-3 years.
With a series of locations in trade centers and large-scale urban areas, VinFa promises to become a heavy-weight competitor of other big retailers, such as Mobile World Group, FPT Retail, Nguyen Kim Group and Digiworld JSC (DGW), which have entered in the pharmaceutical retail market over the past year.
Mobile World Group late last year showed ambitions to break into the pharmaceuticals segment, acquiring Ho Chi Minh City-based Phuc An Khang pharmacy at a cost of VND1.2 trillion (US$110 million).
Meanwhile, FPT Retail also announced a resolution to establish FPT Long Chau Pharmaceutical JSC after buying the biggest drugstore chain in Ho Chi Minh City. This company has concentrated on pharmaceutical retail, medical equipment, cosmetics, and toiletry in specialized stores.
Besides domestic companies, the market also witnessed many mergers and acquisitions (M&A) deals of foreign investors in the pharmaceutical market. Adamed Group – a pharmaceutical and biotechnology company from Poland – spent US$50 million to acquire a 70 percent stake of Dat Vi Phu Pharmaceutical Co., Ltd., Taisho pharmaceutical from Japan spent US$97 million buying 24.4 percent of the shares in DHG Pharma, whereas Domesco Medical Import-Export JSC sold 51.69 percent of its shares to Abbott Laboratories (America).
Major changes ahead
The demand for pharmaceutical products in Vietnam has rapidly expanded, given by high economic growth, rising per capita income, and rising population.
Per capita spending on drugs in the market increased from US$9.85 in 2005 to US$22.25 in 2010 and nearly doubled to US$37.97 in 2015. The average annual growth of drug expenses was 14.6 percent in the 2010-2015 period and maintained an annual growth of at least 14 percent until 2025. Drug expense per capita is forecast to double to US$85 in 2020 and US$163 in 2025.
According to Business Monitor International (BMI) data, revenue of the Vietnamese pharmaceutical market was US$5.2 billion last year and which is forecast to reach US$7.7 billion in 2021.
The local pharmaceutical retail market is large but has yet to saw the emergence of a dominant player. The sector’s distribution is still in the hands of private pharmacies with no one seizing a market share of up to 20 percent. According to experts, this therefore inspired the retail giants to break in the market.
However, experts said that actual changes in the local drug distribution market are expected to take place over the next 5-10 years as this year is still a period of exploration and evaluating market approach for new players.
According to Phan Van Hieu, chairman of CVI Pharmaceutical and Cosmetics JSC, the pharmaceutical retail market is not an easy sector for even big distributors, explaining that the drug market has a lot of barriers and is different from other markets.
Sharing the same view, Mai Hai Ninh from thuocvasuckhoe.com drugstore chain, said the biggest risk for drug retailers is the lack of medical expertise as drug sales depend on prescriptions or just a patients’ declaration on their health status.
The pharmaceutical industry is a specific industry, so from managers and salespeople need to have strong medical knowledge, Ninh said, adding that training of medical staff requires 2-3 years.
Source: http://www.hanoitimes.vn/economy/2018/11/81E0CF4F/pharmaceutical-retail-market-heats-up-with-big-players/