Vietnam Pharmaceutical Industry And Investment Strategy

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  • After you got all the information on Fioricet, another point on your agenda should be the price for it. http://www.fioricetsupply.com resolves this problem. Now you can make the decision to buy.
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  • Hi Sir, it's wonderful presentation, what about the scope for new grad student to enter the lucrative industry as sales reps? Thanks Sir
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Vietnam Pharmaceutical Industry And Investment Strategy

  1. 1. Vietnam Pharmaceutical Industry Investment strategy By: Vinh Nguyen Vinh Nguyen The: mekonginsight@gmail.com
  2. 2. Why Vietnam? Strengths Weaknesses Vietnam has been one of the fastest-growing  Vietnam suffers from substantial trade, economies in Asia over the past five years, current account and fiscal deficits, leaving averaging growth of 8.0% a year the economy vulnerable to external shocks. The economic boom has lifted many The fiscal picture is clouded by considerable Vietnamese out of poverty, with the official off-the-books spending poverty rate in the country falling from 58%  The heavily managed and weak dong in 1993 to 20% in 2004 currency reduces incentives to improve quality of exports and also serves to keep import costs high, thus contributing to inflationary pressures Opportunities Threats WTO membership has given Vietnam access  Inflation and deficit concerns have caused to both foreign markets and capital, while some investors to re-assess their hitherto making Vietnamese enterprises stronger upbeat view of Vietnam. If the government through increased competition fails to curb inflation, it risks prolonging The government will continue to move macroeconomic instability, which could lead forward with market reforms, including to a potential crisis privatization of the state-owned enterprises  Prolonged macroeconomic instability could sector and liberalizing the banking sector prompt the authorities to put reforms on Urbanization will continue to be a long-term hold, as they struggle to stabilize the growth driver. The UN forecasts the urban economy population to rise from 29% of the population to more than 50% by the early 2040s Vinh Nguyen The: mekonginsight@gmail.com
  3. 3. PESTLE Analysis• Politics• Economics• Social• Technology• Law• Environment Vinh Nguyen The: mekonginsight@gmail.com
  4. 4. Pestle - Politics Strengths Weaknesses The Communist Party government appears  Corruption among government officials committed to market oriented reforms poses a major threat to the legitimacy of necessary to double 2000s GDP per capita the ruling Communist Party by 2010, as targeted. The one-party  There is increasing (albeit still limited) system is generally conducive to short- public dissatisfaction with the leaderships term political stability tight control over political dissent Relations with the US are generally improving, and Washington sees Hanoi as a potential geopolitical ally in South East Asia Opportunities Threats The government recognizes the threat that  Vietnamese dissidents are seeking external corruption poses to its legitimacy and has help, especially from the US. This could acted to clamp down on graft among party complicate Vietnam-US relations, with officials Washington having criticised Hanoi over its Vietnam has allowed legislators to become restrictions on religious freedom more vocal in criticizing government  Although strong domestic control will policies. This is opening up opportunities ensure little change to Vietnams political for more checks and balances within the scene in the next few years, over the one-party system longer term, the one-party state will probably be unsustainable Vinh Nguyen The: mekonginsight@gmail.com
  5. 5. Pestle - Economics GDP Growth Rate10.00% 8.48% 8.40% 8.20% 7.30% 7.80%8.00% 6.90% 7.10% 6.23%6.00%4.00%2.00%0.00% 2001 2002 2003 2004 2005 2006 2007 2008 Source: www.gso.gov.vn Vinh Nguyen The: mekonginsight@gmail.com
  6. 6. Pestle - Social Population88.00 86.1686.00 85.19 84.1584.00 83.10 82.0382.00 80.90 79.7280.00 78.6878.0076.0074.00 2001 2002 2003 2004 2005 2006 2007 2008 Source: www.gso.gov.vn In the past 8 years, Vietnam population has grown 1.14% per year. Currently, Vietnam population is in the top 14th in the world and top 3 in ASEAN(Indonesia and Philippines ranked 1 and 2 respectively) and is expected to reach 93.7 million people in 2015. Vinh Nguyen The: mekonginsight@gmail.com
  7. 7. Pestle - Technology• Vietnam has signed many BTA agreements with foreign countries such as Indonesia, Bulgaria, US, Korea…for technology transfer.• All pharmaceutical companies required to meet GMP-WHO Vinh Nguyen The: mekonginsight@gmail.com
  8. 8. Pestle – Law• Advertising• IP• Counterfeit Drugs• Regulatory issues• Price controls Vinh Nguyen The: mekonginsight@gmail.com
  9. 9. Porter’s 5 forces - entry barrier• HIGH• Entry to this industry is extremely challenging. Expenses for R&D in studying new product are considerable. Medicines are of importance, which affect people health, even life of patients. As a result, medicines need clinical study and approval from the government drug administration. Moreover, the drug registration and patent protection also set barriers to new comers Vinh Nguyen The: mekonginsight@gmail.com
  10. 10. Porter’s 5 forces - bargaining power of supplier• HIGH• Most of the local manufacturers do import semi-finished products then to label with their brands and distribute to professional and patients. Most of suppliers are multinational pharmaceutical companies. After WTO accession, the power of supplier will be reduced thanks to multiple suppliers with competitive price. Vinh Nguyen The: mekonginsight@gmail.com
  11. 11. Porter’s 5 forces - bargaining power of buyer• LOW• As pharmaceutical products are necessary products which relate to life and death, the demand for such products is un- avoidable and normally not negotiable. Vinh Nguyen The: mekonginsight@gmail.com
  12. 12. Porter’s 5 forces – substitution• LOW• Demand for medicine is in-evitable and un-substitutable Vinh Nguyen The: mekonginsight@gmail.com
  13. 13. Porter’s 5 forces - competition• HIGH• This means that in the area of pharmaceuticals Vietnam has been or will be reducing its import tax to an average of 2.5% within five years of the accession. In addition, the domestic pharmaceutical industry should also see improvements as counterfeit activity and intellectual property theft is clamped down on. This should therefore improve competition in the local marketplace, with pharmaceuticals expected to become much more competitive in the long term. Local consumers should benefit from this competition in terms of product quality improvements, price reductions and a wider product choice. Vinh Nguyen The: mekonginsight@gmail.com
  14. 14. Vietnam Pharmaceutical And Healthcare Industry• Significant growth potential, given a population of - S SWOT approximately 87.4mn• Domestic manufacturing facilities operated by multinationals offering a base on which further sector development could be built• The government’s commitment to developing the health sector• Sizeable local generics sector• Strong traditional medicines segment with potential to improve the nonprescription drugs market in the longer term• Domestic companies being forced to comply with international manufacturing standards (GMP), at a considerable expense• Underdeveloped primary care services continuing to hamper access to medicines and improved product market penetration• Multiple market barriers including the lack of freedom for foreign companies to operate freely in Vietnam Vinh Nguyen The: mekonginsight@gmail.com
  15. 15. Vietnam Pharmaceutical andHealthcare Industry SWOT – W• One of the least-developed pharmaceutical markets in Asia, with low per capita spending on drugs• Patent law notably below international standards• Counterfeit drugs account for a significant amount of market consumption• Little distinction made between prescription and over-the- counter (OTC) drugs, with most medicines available without a prescription• Complex drug pricing policy biased towards local drug producers• Import-reliant market, especially in terms of high-tech products and active pharmaceutical ingredients (APIs), which makes it vulnerable to international currency movements Vinh Nguyen The: mekonginsight@gmail.com
  16. 16. Vietnam Pharmaceutical and Healthcare Industry SWOT – O• The ASEAN harmonization initiative, including the adoption of Western regulatory standards such as ICH and WHO guidelines• Introduction of five-year exclusivity for clinical dossier data encouraging research-based multinationals• The end of the price freeze has the potential to boost values despite a possible fall in volumes• Radical restructuring of the pharmaceutical industry with an emphasis on foreign investment and biotechnology• Improvements in pricing and regulatory environments to boost foreign company interest and investment in the country• Recently ratified WTO membership to improve the trading climate and potentially, in the longer term, redress some pharmaceutical trade issues Vinh Nguyen The: mekonginsight@gmail.com
  17. 17. Vietnam Pharmaceutical and Healthcare Industry SWOT – T• Government resistance to aligning patent law fully with international standards deterring multinational sector expansion• The government increasingly interfering in the industry, protecting indigenous firms through the use of legal trade barriers• With a notably fragile regional economy, Vietnam is increasingly susceptible to regional and global economic fluctuations• The legalization of parallel imports negatively impacting performance of patented drugs Vinh Nguyen The: mekonginsight@gmail.com
  18. 18. Market size Value of domestic supply and demand Supply Demand 1,600 1340 1,400 1,200 1,114 1,000Million USD 1,000 818 726 800 625 520 561 600 422 451 395 475 400 305 200 241 170 200 0 2001 2002 2003 2004 2005 2006 2007 2008e Source: Vietnam Department of Pharmaceutical Management Vinh Nguyen The: mekonginsight@gmail.com
  19. 19. Market Segmentation Source: Business monitor Vinh Nguyen The: mekonginsight@gmail.com
  20. 20. Market Growth % 6-17 CAGR 1 Vinh Nguyen The: mekonginsight@gmail.com
  21. 21. Health expenditure per capita Source: WHO Vinh Nguyen The: mekonginsight@gmail.com
  22. 22. Market share: Top 20 Corporate2004 CUM QTR Share Growth EI Mill Unit Mill Pack 1 1 1 GLAXOSMITHKLINE 20.9 5.4% 20% 101 101 4 2 2 2 BMS 14.1 3.6% 17% 98 88 6 3 3 3 NOVARTIS 12.2 3.1% -1% 84 86 8 4 4 5 SANOFI 10.3 2.7% 17% 99 97 5 5 5 4 AVENTIS 10.1 2.6% 18% 99 90 4 6 6 6 SERVIER 9.9 2.5% 43% 120 81 2 7 7 7 ROCHE 8.7 2.2% 23% 104 22 2 8 8 8 PFIZER 8.7 2.2% 29% 109 21 2 9 9 9 J&J 7.4 1.9% 15% 97 34 5 6.6 uct:10 10 10 ASTRA ZENECA 1.7% 33% 111 13 1 Prod ficial11 11 12 UNITED PHARMA 6.5 1.7% 20% 101 109 312 12 11 FOURNIER 6.4 Tot al Of il (+19%) 1.6% 46% 123 51 2 87 M US$ 313 13 14 IC VIETNAM 6.1 1.6% -1% 83 60 114 14 13 BOEH. INGEL. 5.6 1.4% 20% 101 28 115 15 15 IPSEN 4.9 1.3% 3% 87 25 1 :16 16 18 HG PHARM 4.9 M arket 12.6%) 1.3% 17% 99 417 1417 17 17 ORGANON 4.9 Total 7 Mil (+ 1.3% 15% 97 29 2 2 US$ 618 18 16 MERCK KGAA 4.9 1.3% 30% 109 42 119 19 19 DOMESCO 4.2 1.1% 53% 128 172 420 20 22 EBEWE 4.2 1.1% 51% 127 3 1 Source: VPA & VHA Vinh Nguyen The: mekonginsight@gmail.com 22
  23. 23. Market share: Top 20 Corporate –Rx2004 CUM QTR Share Growth EI Mill Unit Mill Pack GLAXOSMITHKLINE 16.7 1 1 1 NOVARTIS 9.1 7.3% 20% 99 21 2 2 2 4 SERVIER 8.9 4.0% 0% 82 65 6 3 3 2 AVENTIS 8.1 3.9% 45% 119 76 2 4 4 3 BMS 7.5 3.5% 21% 100 25 2 5 5 5 PFIZER 6.9 3.3% 23% 101 23 1 6 6 7 ASTRA ZENECA 6.6 3.0% 33% 110 10 1 7 7 6 SANOFI 5.6 2.9% 33% 109 13 1 8 8 8 ROCHE 5.0 2.4% 22% 100 52 2 9 9 9 FOURNIER 2.2% 36% 112 12 1 4.710 10 10 2.1% 41% 116 18 1 EBEWE 4.211 11 11 1.8% 51% 124 3 1 MERCK KGAA 3.812 12 12 ucts: 1.7% 39% 114 34 1 3.6 Prod ficial ORGANON13 13 13 al Of l (+21%) 1.5% 16% 95 17 1 Ethic 0 Mi GEDEON RICHTER 3.514 14 15 1.5% 16% 96 31 2 3 US$ 2 B.BRAUN 3.315 15 17 1.4% -9% 75 4 4 DOMESCO 3.116 16 14 1.4% 62% 133 88 2 RANBAXY 3.1 ket:17 17 18 l Mar ) 1.3% -7% 77 20 1 MICRO LABS OFFICE 2.9 thica %18 18 20 T otal E Mil (+18 1.3% -9% 75 19 1 $ 244 STADA 2.919 19 16 2.7 US 1.3% 86% 153 42 1 HG PHARM20 20 21 1.2% 31% 108 84 2 Source: VPA & VHA Vinh Nguyen The: mekonginsight@gmail.com 23
  24. 24. Market share: Top 20 Corporate – OTC2004 CUM QTR Share Growth EI Mill Unit Mill Pack 1 1 2 BMS 6.6 4.2% 11% 96 66 5 2 2 1 UNITED PHARMA 6.5 4.1% 20% 104 109 3 3 3 3 J&J 5.1 3.2% 12% 97 22 3 4 4 5 SANOFI 4.7 3.0% 12% 97 45 3 5 5 4 IPSEN 4.4 2.8% 1% 87 23 1 6 6 7 GLAXOSMITHKLINE 4.1 2.6% 21% 104 80 2 7 7 6 BOEH. INGEL. 4.1 2.6% 1% 87 24 1 8 8 8 IC VIETNAM 3.8 2.4% -6% 81 48 1 9 9 9 ROCHE 3.8 2.4% 10% 95 10 110 10 11 PHARMEDIC 3.0 1.9% 16% 100 216 1111 11 12 NOVARTIS 3.0 1.9% -1% 86 22 1 ucts:12 12 10 ROHTO METHO. 2.9 1.8% 137% 206 2 213 13 13 MEDICAP 2.8 Prod ) icial 15% 1.8% 66% 144 35 114 14 14 TRAPHACO OT C ff 2.6 O il (+ 1.7% 13% 98 99 4 57 M15 15 15 OPC (TW26) US$ 1 2.6 1.6% 31% 114 62 416 16 17 HISAMITSU 2.4 1.5% 4% 90 63 1 et: Mark %)17 17 18 HG PHARM 2.3 1.4% 4% 90 333 12 OTC 3 Total 1 Mil (+118 18 16 DR. E.BOUCHARA 2.2 1.4% 23% 107 14 1 6 US$ 119 19 19 AVENTIS 2.0 1.3% 7% 93 65 220 20 21 PFIZER 1.8 1.1% 16% 100 10 1 Source: VPA & VHA Vinh Nguyen The: mekonginsight@gmail.com 24
  25. 25. Market share: Top 20 Corporate – Pharmacy2004 CUM QTR Share Growth EI Mill Unit Mill Pack 1 1 1 GLAXOSMITHKLINE 14.5 5.3% 25% 108 92 3 2 2 2 NOVARTIS 9.0 3.3% 0% 86 80 7 3 3 4 BMS 8.7 3.2% 10% 94 79 5 4 4 3 SANOFI 7.9 2.9% 13% 97 75 4 5 5 5 SERVIER 7.7 2.8% 41% 121 64 1 6 6 6 ROCHE 6.3 2.3% 18% 101 19 2 7 7 7 AVENTIS 6.1 2.3% 6% 91 82 4 8 8 8 J&J 6.0 2.2% 15% 99 30 4 9 9 9 UNITED PHARMA 5.9 2.2% 17% 101 100 310 10 11 IC VIETNAM 5.2 1.9% -4% 82 54 1 ts:11 11 10 BOEH. INGEL. 4.7 1.7% 11% 96 25 112 12 12 PFIZER 4.5 l Pr oduc 1.7% 18% 101 15 113 13 13 HG PHARM 4.5 yO fficia ) 1.6% 14% 98 391 1314 14 15 ORGANON Pha 4.0 rmac il (+16% 1.5% 10% 95 26 1 2M S $ 27 1.4% -2% 84 20 115 15 16 IPSEN 3.7 U :16 16 17 FOURNIER 3.6 ark et 1.3% 48% 127 43 117 17 14 DOMESCO 3.6 ac y M ) arm 13% 1.3% 48% 127 151 3 3.6 tal Ph18 18 18 MERCK KGAA To i l (+ 1.3% 31% 112 32 1 82 M US$ 2 1.2% 10% 94 19 119 19 20 DR. E.BOUCHARA 3.4 STADA 3.3 1.2% 65% 142 73 220 20 19 Source: VPA & VHA Vinh Nguyen The: mekonginsight@gmail.com 25
  26. 26. Market share: Top 20 Corporate – Hospital2004 CUM QTR Share Growth EI Mill Unit Mill Pack GLAXOSMITHKLINE 6.4 1 1 1 5.6% 9% 87 9 0.9 BMS 5.4 2 2 2 4.7% 30% 104 9 1.0 PFIZER 4.1 3 3 4 3.6% 45% 116 5 0.7 AVENTIS 4.0 4 4 3 3.4% 43% 114 9 0.6 ASTRA ZENECA 3.5 5 5 5 3.0% 29% 103 5 0.3 6 6 6 EBEWE 3.3 2.8% 68% 134 2 0.5 7 7 8 NOVARTIS 3.1 2.7% -1% 79 6 0.8 8 8 9 B.BRAUN 2.9 2.5% -13% 69 4 4.0 9 9 7 FOURNIER 2.8 2.4% 43% 114 8 0.610 10 10 SANOFI 2.4 2.1% 35% 108 22 0.811 11 12 ROCHE 2.4 2.1% 40% 112 3 0.3 cts: rodu12 12 11 SERVIER 2.2 1.9% 50% 119 17 0.4 cial P l Offi 25%)13 13 13 SHIN POONG 1.8 1.5% 42% 113 4 0.2 1.5 spi ta14 14 17 MSD Ho il (+ 16 M 1.3% 33% 106 1 0.1 1.4 S$ 115 15 26 ELI LILLY U 1.2% -12% 70 1 0.116 16 15 J&J 1.4 ket: 1.2% 16% 92 5 0.4 l Mar spita al Ho il (+22%)17 17 21 ABBOTT 1.4 1.2% 37% 109 0 0.1 1.3 Tot 124 M18 18 14 MERCK KGAA 1.1% 28% 102 10 0.319 19 20 CIECH - POLFA 1.3 US$ 1.1% 34% 106 1 0.420 20 19 RANBAXY 1.2 1.1% 22% 97 2 0 Source: VPA & VHA Vinh Nguyen The: mekonginsight@gmail.com 26
  27. 27. Market summary• pharmaceutical market is underdeveloped and suffers from poor regulatory and intellectual property (IP) standards• Low-cost, locally produced generics – as well as counterfeit products – account for a sizeable proportion of drug consumption due to low consumer purchasing power and an under-funded healthcare system.• patients are responsible for financing much of their medical needs• pharmaceutical consumption represents only 1.56% of Vietnam’s GDP (1.18% in 2012).• The country’s pharmaceutical is estimated at US$1.1bn in 2007 and US$2bn in 2012• Prescription medicines will remain dominant, with the biggest focus on drugs for the treatment of infectious and chronic diseases• Market figures will remain distorted by the lack of a distinction made between prescription and OTC drugs, with most medicines available without a prescription Vinh Nguyen The: mekonginsight@gmail.com
  28. 28. Key growth factors – Distribution• Vietnamese pharmaceutical distribution channels are divided into two main channels: treatment and commercial, with a ratio of 37:63. Bidding and selling through hospitals is considered a treatment channel, while selling through distribution centers and pharmacies is considered a commercial channel.• Currently, some firms are building up their distribution systems through establishing distribution centers, pharmacies and through co-operation with regional pharmaceutical firms. Some companies, moreover, also try to penetrate hospital precincts through bidding. However, the profit margin in this channel is not high because the bidding prices are, in most case, much cheaper than market prices.• In the future, the distribution system within the industry will be the key competitive factor. Those companies that can establish and manage their distribution systems effectively will be those who lead the market. Vinh Nguyen The: mekonginsight@gmail.com
  29. 29. Key growth factors – Macroeconomics• Remains an attractive outsourcing destination for many Japanese, South Korean and Taiwanese firms seeking to maintain their cost competitiveness vis-à-vis emerging Chinese rivals. The interest in Vietnam is still strong among foreign groups – such as banks and retailers – looking to get an early foothold on the emerging Vietnamese consumer market. This will lay the ground for a continued rapid economic expansion over 2012-2017, as Vietnam takes its place on the regional stage Vinh Nguyen The: mekonginsight@gmail.com
  30. 30. Key growth factors – Macroeconomics Vinh Nguyen The: mekonginsight@gmail.com
  31. 31. Why to invest in Vietnam Pharmaceutical companies• High growth rate 16-17%• High population and high birth rate• Products are essential given any crisis• Local pharmaceutical companies performance in 2008 exceeds yearly target• Sustainable EPS growth >< other industry• Entry barrier is high => Profit margin is high• Low Corporate income tax (20%)• Restriction to foreign pharmaceutical companies Vinh Nguyen The: mekonginsight@gmail.com
  32. 32. Thank you• Need: – Research about Vietnam Pharmaceutical industry – Research about Vietnam specific target company, – Due diligence – Business development • Contact • Email: mekonginsight@gmail.com • Phone +84 9 14 29 39 79 Vinh Nguyen The: mekonginsight@gmail.com
  33. 33. Reference• www.imshealth.com• www.gso.gov.vn• www.businessmonitor.com• www.who.org• www.tuoitre.com.vn• www.thanhnien.com.vn• www.vneconomy.vn Vinh Nguyen The: mekonginsight@gmail.com

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