Last update: 16:30 | 06/12/2018
Vietnam is one most of pharmerging markets
In 2017, the total revenue of the pharmaceutical industry reached $5.2 billion, or VND120 trillion, an increase of 11 percent compared with the $4.7 billion in 2016 (VND106 trillion) and 14 percent if calculating in Vietnam dong. The growth rate is expected to be no less than 10 percent in the next five years.
There are 1,910 Vietnamese owned pharmaceutical firms and 30 foreign invested enterprises. Vietnamese firms now only make generic medicine, while other kinds of medicine are imports. The situation has led to a series of problems, including business efficiency, product quality and vulnerability to exchange rate fluctuations as Vietnam relies on imports.
The M&A wave was strong in 2016-2017 after the government issued Decree 60, stipulating that public companies can have up to 100 percent of foreign ownership instead of 49 percent as previously applied.
A report of the Medicine Administration Agency under the Ministry of Health (MOH) said that domestically made medicine products account for 48 percent of the total.
Increasingly high demand and the weak production capability of Vietnamese enterprises have led to more foreign companies expressing interest.
Meanwhile, M&As (merger & acquisition) are the best solution for domestic firms to improve competitiveness and expand R&D activities.
Many M&A deals in the pharmaceutical industry have been completed in recent years. Analysts say that the M&A wave was strong in 2016-2017 after the government issued Decree 60, stipulating that public companies can have up to 100 percent of foreign ownership instead of 49 percent as previously applied.
Hau Giang Pharmacy (DHG) and Domesco (DMC), two Vietnamese firms, pioneered raising the foreign ownership ratios in their companies to 100 percent. This helped DHG and DMC shares soar in price.
At present, foreign investors hold 49 percent of DHG shares, of which Taisho, a Japanese company, is holding 34.3 percent. The figure may be even higher in the future.
At DMC, CFR International Spa, a subsidiary of Abbott, has raised its ownership ratio to 51 percent, becoming the strategic shareholder.
Prior to that, Abbot took over Glomed, a Vietnamese firm, in 2016.
Pymepharco has recently decided to lift the ceiling foreign ownership ratio to 100 percent, paving the way for Stada Service Holding B.V to raise its ownership ratio to 72 percent. The company holds 49 percent of shares.
Foreign investors now hold 30 percent and 35 percent in Imexpharm (IMP) and Traphaco companies, respectively.