The great potential of the Vietnamese market
Vietnam has a growing population of approximately 90 million, which makes it the world’s thirteenth-most populous country and the eighth-most populous country in Asia. A million babies are born each year in Vietnam, and the growing population demands high-grade medical services. The sector is therefore seen as a premium investment area for foreign companies involved in healthcare.
Drug consumption per capita in Vietnam is increasing as well—it is expected to double by 2015. The increase is fuelled by a richer and older society, as well as by an expansion of the country’s national insurance system: Today, 65% of Vietnamese people are covered by the national system. By 2020, that number will reach 90%.
One of the main reasons for the country’s increased drug consumption is a busy and stressful lifestyle. People in Vietnam exercise less and use more take-away food deliveries. Consequently, about 22% of the population is affected by gastrointestinal (GI) problems. Alcoholism is another serious cause of gastrointestinal problems in the country; according to the Vietnam Beverage Association, about 5% of Vietnamese citizens are alcoholics.
Vietnam’s pharmaceutical market has tremendous growth potential. Still, most of the drugs used in the country are imported. According to the General Statistics Office, Vietnam spent US $1.25 billion on pharmaceutical imports in 2013, up 7.1% from the previous year.
Those market indices have attracted some pioneering drug-makers. For example, Sanofi plans to invest US $75 million in a new plant in Vietnam, which will begin operations by 2015. Some other foreign drug-makers are partnering with their Vietnamese counterparts for manufacturing and distribution. GlaxoSmithKline has maintained a deal with Savipharm, a leading Vietnamese pharmaceutical company, since 2010. STADA has taken another approach, having bought almost half of Vietnamese drug-maker Pymepharco.
Foreign investors have traditionally paid less attention to the Vietnamese healthcare industry in comparison to many other fields like finance, real estate or tourism. Today, the situation is changing. Many international pharmaceutical players have realized the great potential of the Vietnamese market lies in its low cost of labour and manufacturing.