Vietnam pharmaceuticals healthcare report q1 2014

Q1 2014
www.businessmonitor.com
VIETNAM
PHARMACEUTICALS & HEALTHCARE REPORT
INCLUDES 10-YEAR FORECASTS TO 2022
ISSN 1748-2305
Published by:Business Monitor International
Vietnam Pharmaceuticals &
Healthcare Report Q1 2014
INCLUDES 10-YEAR FORECASTS TO 2022
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: December 2013
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CONTENTS
BMI Industry View 7
SWOT 9
Political 11
Economic 12
Business Environment 13
Industry Forecast 14
Pharmaceutical Market Forecast 14
Table: Pharmaceutical Sales Indicators, 2009-2017 15
Healthcare Market Forecast 16
Table: Healthcare Expenditure Indicators, 2009-2017 19
Table: Healthcare Governmental Indicators, 2009-2017 20
Table: Healthcare Private Indicators, 2009-2017 20
Prescription Drug Market Forecast 21
Table: Prescription Drug Sales Indicators, 2009-2017 23
Patented Drug Market Forecast 24
Table: Patented Drug Market Indicators, 2009-2017 25
Generic Drug Market Forecast 26
Table: Generic Drug Sales Indicators, 2009-2017 27

OTC Medicine Market Forecast 28
Table: OTC Medicine Sales Indicators, 2009-2017 30
Pharmaceutical Trade Forecast 31
Table: Vietnam Pharmaceutical Trade Data And Forecasts (US$mn) 32
Table: Vietnam Pharmaceutical Trade Data And Forecasts (US$mn) 33
Other Healthcare Data 33
Key Risks To BMI's Forecast Scenario 34
Macroeconomic Forecasts 36
Table: Vietnam - Economic Activity 39
Industry Risk Reward Ratings 40
Asia Pacific Risk/Reward Ratings 40
Vietnam Risk/Reward Ratings 46
Rewards 46
Risks 46
Market Overview 48
Industry Trends And Developments 50
Epidemiology 50
Healthcare Financing 51
Vietnam Pharmaceuticals & Healthcare Report Q1 2014
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Hospital Sector 54
Private Healthcare Sector 56
Healthcare Insurance 57
Healthcare And Pharmaceutical Reform 59
Research And Development 60
Biotechnology Sector 62
Clinical Trials 65
Regulatory Development 68
Regulatory Regime 68
Pharmaceutical Advertising 69

Intellectual Property Environment 70
Corruption 73
Pricing Regime 74
Reimbursement Regime 78
Pricing And Reimbursement Developments 80
Competitive Landscape 82
Pharmaceutical Sector 82
Domestic Industry 83
Foreign Industry 85
Traditional Medicines 88
Pharmaceutical Distribution 89
Pharmaceutical Retail Sector 90
Table: Key Aspects Of Good Pharmacy Practice In Developing Countries 91
Company Profile 92
DHG Pharmaceutical 92
Traphaco Pharmaceutical 94
Vietnam Pharmaceutical Corporation (Vinapharm) 96
Vietnam OPV Pharmaceutical Co 99
Vietnam Pharmaceutical Joint Stock Company (Ampharco) 101
Vidipha Central Pharmaceutical Joint Stock Company 104
Pfizer 106
Sanofi 108
Novartis 112
Merck & Co 114
GlaxoSmithKline 116
Demographic Forecast 118
Demographic Outlook 118
Table: Vietnam's Population By Age Group, 1990-2020 ('000) 119
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) 120
Table: Vietnam's Key Population Ratios, 1990-2020 121

Table: Vietnam's Rural And Urban Population, 1990-2020 121
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Glossary 122
Methodology 124
Pharmaceutical Expenditure Forecast Model 124
Healthcare Expenditure Forecast Model 124
Notes On Methodology 125
Risk/Reward Ratings Methodology 126
Ratings Overview 127
Table: Pharmaceutical Risk/Reward Ratings Indicators 127
Indicator Weightings 128
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BMI Industry View
BMI View: The upgrade to our private healthcare forecast stems largely from the Vietnamese government's
plan to pass hospital operating costs to patients. We highlight that this is potentially regressive should
hospitals attempt to profit from such policies. Nevertheless, we remain largely optimistic towards Vietnam's
healthcare sector, as it is seeking to implement universal healthcare for its population, which will improve
access to services.
Headline Expenditure Projections
■
Pharmaceuticals: VND59,214bn (US$2.84bn) in 2012 to VND69,297bn (US$3.32bn) in 2013; +17.0%
in local currency terms and +16.9% in US dollar terms. Forecast unchanged from Q413, long-term
forecast slightly upgraded to reflect general bullish sentiments in Vietnam's economy.
■
Healthcare: VND201,466bn (US$9.65bn) in 2012 to VND230,985bn (US$11.1bn) in 2013; +14.7% in
local currency terms and +14.5% in US dollar terms. Forecast broadly in line with Q313.
Risk/Reward Rating: Vietnam's Pharmaceutical Risk/Reward Rating (RRR) score for Q114 is 49.1 out of
the maximum 100 in our newly improved RRR system. The country scored above average for some

indicators and sub-indicators, including overall market expenditure and sector value growth, pensionable
population. Consequently, with this moderate score Vietnam continues ranked 13
th
behind Thailand out of
the 19 key markets in Asia Pacific.
Key Trends And Developments
■
In December 2013, Vietnam and Cuba signed a memorandum of understanding (MoU) for regulating
pharmaceuticals and boosting public health cooperation as proposed by the Intergovernmental
Commission at its September session. The MoU was signed by Rafael Perez Cristia, the director of the
Cuban state regulatory agency for medicine, CECMED, and Truong Quoc Cuong, the general director of
Vietnam's Drug Administration, in the presence of Vietnamese Vice Minister Nguyen Than Long. Earlier
in September 2013, the Intergovernmental Commission met in Havana and expressed its interest to
support collaboration projects between specialised institutions in the two countries.
■
In November 2013, the Vietnamese Ministry of Health's Administration of Science, Technology and
Training (ASTT) signed an agreement with Quintiles to enhance clinical research. Under the two-year
agreement, Quintiles and ASTT will jointly address a number of topics, such as improving processes for
trial management, developing streamlined processes to improve trial efficiency and quality as well as
training for investigators and ethics committees.
■
In October 2013, Ho Chi Minh City health department inspectors have exposed several regulatory
violations in an inspection at a Vietnamese public hospital, Nguyen Tri Phuong. The inspectors found
that the hospital had been charging 14% more than the regular VND700,000 (US$32.66) for a MSCT
scan over the past two years. The inspection also revealed that hospital staff were involved in many
corrupt practices such as purchasing medicines and equipment from unauthorised suppliers, overcharging
patients and embezzling assets from the hospital.
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BMI Economic View: Our assessment of the Vietnamese economy at the provincial level suggests that

there are attractive opportunities for foreign companies to invest in rapidly-developing provinces that are
situated in the South East region (including Ba Ria-Vung Tau, Dong Nai, and Binh Duong). We expect
rising labour costs and intense competition in developed cities to push companies to look for better
opportunities in these provinces.
BMI Political View: We view the passing of the revised Land Law in Vietnam as a significant milestone
with regards to government efforts to clamp down on corruption and address mounting public dissent over
land rights violations. The new law, which aims to establish a fairer process of compensating occupants for
the appropriation of land by the government, will help to significantly reduce cases of land disputes.
Furthermore, the new law could also benefit investment, as projects often face long and costly delays due to
land disputes arising from unfair compensation.
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SWOT
SWOT Analysis

Strengths
■
Significant growth potential, given a large and growing population.
■
The government's commitment to developing the health sector.
■
Sizeable local generic drugs sector, which is being encouraged by the government.
■
Strong traditional medicines segment with potential to improve the non-prescription
drugs market in the longer term, as long as sufficient investment in extraction
technologies can be found.
Weaknesses
■
One of the least developed pharmaceutical markets in Asia, with low per capita
spending on drugs.

■
Counterfeit drugs account for a significant amount of market consumption.
■
No bioequivalence requirement in place for locally made generic medicines.
■
Little distinction made between prescription and over-the-counter 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, which makes it vulnerable to currency movements.
■
Underdeveloped primary care services and a shortage of trained pharmacists are
continuing to hamper access to medicines and product market penetration.
■
Population concentrated in rural, rather than urban, areas, preventing access to
modern drugs and encouraging dependence upon traditional medicines.
Opportunities
■
The Association of South East Asian Nations (ASEAN) harmonisation initiative,
including the adoption of Western regulatory standards such as International
Conference on Harmonisation and World Health Organization guidelines.
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SWOT Analysis - Continued
■
Introduction of five-year exclusivity for clinical dossier data encouraging research-
based multinationals.
■

If investment can be found for technological improvements, then there is great
potential in the traditional Chinese medicine market, in addition to fledging
biotechnology.
■
Full WTO membership improving the trading climate and potentially, in the longer
term, redressing pharmaceutical trade issues.
■
Requirement for domestic companies to comply with international good
manufacturing practices should boost exports.
Threats
■
Government resistance to aligning patent law fully with international standards
deterring multinational sector expansion.
■
Need to resolve infrastructural and power supply issues, as well as higher education
provision, before higher levels of foreign direct investment can be expected.
■
The government is increasingly interfering in the industry, protecting indigenous firms
through the use of legal trade barriers, which will affect competitiveness.
■
Pharmaceutical price inflation threatens to put medicines out of reach of poor and
therefore limit market volume growth.
■
Legalisation of parallel imports negatively impacting performance of patented drugs.
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Political
SWOT Analysis

Strengths

■
The Communist Party of Vietnam remains committed to market-oriented reforms and
we do not expect major shifts in policy direction over the next five years. The one-
party system is generally conducive to short-term political stability.
■
Relations with the US have witnessed a marked improvement, and Washington sees
Hanoi as a potential geopolitical ally in South East Asia.
Weaknesses
■
Corruption among government officials poses a major threat to the legitimacy of the
ruling Communist Party.
■
There is increasing (albeit still limited) public dissatisfaction with the leadership's tight
control over political dissent.
Opportunities
■
The government recognises the threat corruption poses to its legitimacy, and has
acted to clamp down on graft among party officials.
■
Vietnam has allowed legislators to become more vocal in criticising government
policies. This is opening up opportunities for more checks and balances within the
one-party system.
Threats
■
Macroeconomic instabilities continue to weigh on public acceptance of the one-party
system, and street demonstrations to protest economic conditions could develop into
a full-on challenge of undemocractic rule.
■
Although strong domestic control will ensure little change to Vietnam's political scene
in the next few years, over the longer term, the one-party-state will probably be

unsustainable.
■
Relations with China have deteriorated over recent years due to Beijing's more
assertive stance over disputed islands in the South China Sea and domestic criticism
of a large Chinese investment into a bauxite mining project in the central highlands,
which could potentially cause wide-scale environmental damage.
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Economic
SWOT Analysis

Strengths
■
Vietnam has been one of the fastest-growing economies in Asia in recent years, with
GDP growth averaging 7.1% annually between 2000 and 2012.
■
The economic boom has lifted many Vietnamese out of poverty, with the official
poverty rate in the country falling from 58% in 1993 to 20.7% in 2012.
Weaknesses
■
Vietnam still suffers from substantial trade and fiscal deficits, leaving the economy
vulnerable to global economic uncertainties. The fiscal deficit is dominated by
substantial spending on social subsidies that could be difficult to withdraw.
■
The heavily-managed and weak currency reduces incentives to improve quality of
exports, and also keeps import costs high, contributing to inflationary pressures.
Opportunities
■
WTO membership and the upcoming ASEAN AEC in 2015 should give Vietnam
greater access to both foreign markets and capital, while making Vietnamese

enterprises stronger through increased competition.
■
The government will in spite of the current macroeconomic woes, continue to move
forward with market reforms, including privatisation of state-owned enterprises, and
liberalising the banking sector.
■
Urbanisation will continue to be a long-term growth driver. The UN forecasts the
urban population rising from 29% of the population to more than 50% by the early
2040s.
Threats
■
Inflation and deficit concerns have caused some investors to re-assess their hitherto
upbeat view of Vietnam. If the government focuses too much on stimulating growth
and fails to root out inflationary pressure, it risks prolonging macroeconomic
instability, which could lead to a potential crisis.
■
Prolonged macroeconomic instability could prompt the authorities to put reforms on
hold as they struggle to stabilise the economy.
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Business Environment
SWOT Analysis

Strengths
■
Vietnam has a large, skilled and low-cost workforce, which has made the country
attractive to foreign investors.
■
Vietnam's location - its proximity to China and South East Asia, and its good sea links
- makes it a good base for foreign companies to export to the rest of Asia, and

beyond.
Weaknesses
■
Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
■
Vietnam remains one of the world's most corrupt countries. According to
Transparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123
out of 176 countries.
Opportunities
■
Vietnam is increasingly attracting investment from key Asian economies, such as
Japan, South Korea and Taiwan. This offers the possibility of the transfer of high-tech
skills and know-how.
■
Vietnam is pressing ahead with the privatisation of state-owned enterprises and the
liberalisation of the banking sector. This should offer foreign investors new entry
points.
Threats
■
Ongoing trade disputes with the US, and the general threat of American
protectionism, which will remain a concern.
■
Labour unrest remains a lingering threat. A failure by the authorities to boost skills
levels could leave Vietnam a second-rate economy for an indefinite period.
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Industry Forecast
Pharmaceutical Market Forecast
Vietnam's pharmaceutical market was valued at

VND59,214bn (US$2.84bn) in 2012, a 18.2% year-
on-year (y-o-y) increase in local currency terms.
Over the forecast period to 2017, BMI expects
pharmaceutical consumption to reach
VND121,049bn (US$6.04bn), equating to a
compound annual growth rate (CAGR) of 15.4% in
local currency and 16.3% in US dollar terms. Over
the extended forecast period to 2022, the CAGRs
will be slightly lower, remaining in double digits.
Inflation will be a major factor in these high nominal
market growth rates. Nevertheless, our forecast for
GDP-beating drug market growth underlines our
view that there is considerable scope for increased
pharmaceutical consumption in a country where per
capita drug expenditure is just US$31.26. This,
combined with an expanding population, higher
levels of health awareness and increased access to
pharmaceuticals, creates a strong base for market growth assuming the required resources are put into
healthcare sector development. However, pricing remains a concern, due to a lack of controls and regulatory
bias against foreign products.
Additionally, some have blamed unscrupulous practices by pharmaceutical companies and prescribers for
pharmaceutical expenditure being higher than necessary. However, it is not just companies that bribe
Vietnamese healthcare professionals. Patients pay doctors and nurses to avoid waiting lists and receive
above-average care. Those on low incomes that cannot afford 'gifts' for staff members have to use
overcrowded facilities and rely on relatives to complement the provision of care.
In fact, according to a survey by the Vietnam Union of Science and Technology Associations (VUSTA)
published on the VietNamNet Bridge website in September 2009, gifts - which we interpret mostly as cash,
but can also be physical goods - accounted for 9% of the cost of a health check-up. The research was
Pharmaceutical Market Forecast
2008-2022

Pharmaceutical sales, US$bn (LHS)
Pharmaceutical sales at CER, US$bn (LHS)
Pharmaceutical sales, % of GDP (RHS)
2008
2009
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
2018f
2019f
2020f
2021f
2022f
0
5
10
15
0
0.5
1
1.5
2
f = BMI forecast. CER = constant exchange rate. Source:
BMI, Drug Administration of Vietnam (DAV), Vietnam
Ministry of Health, domestic companies, local press

Vietnam Pharmaceuticals & Healthcare Report Q1 2014
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performed through interviews with 140 people in rural and urban areas who had visited public and private
hospitals over the previous six months. Interestingly, 'medications/examinations/tests' only accounted for
53% of expenditure. It is not clear how the remaining funds were spent.
Vietnam's regulators faced their greatest challenge with the country's entrance to the WTO at the start of
2007. Foreign enterprises have been given the right to open branches in Vietnam and to import medicines
directly, although they will still be barred from distributing their products. As part of its membership
application, Vietnam pledged to set import duties at less than 5% for pharmaceutical products and drug
tariffs are expected to average just 2.5% within five years of accession.
The liberalised environment could cause problems for Vietnam's small drug production sector.
Nevertheless, while the government originally called on firms to adopt GMP standards by the start of 2010,
the deadline was extended to the end of 2010. However, in August 2008, it was revealed that companies that
did not have accreditation could come up with provisory regulations. Firms not planning to establish GMP
standards must either shift to other sectors or produce traditional medicines, the latter being an area with
problems of its own, as many traditional drugs are incorrectly labelled and dispensed by unqualified
practitioners. According to Savipharm, the country has 108 factories compliant to GMP-WHO, few plants
compliant to EU and Japanese GMP as of November 2011. Meanwhile in January 2012, United
International Pharma Company became the first company with a facility that is compliant with the
Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (PIC/S) GMP
standards.
Table: Pharmaceutical Sales Indicators, 2009-2017

2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f
Pharmaceutical
sales (US$bn) 1.71 2.06 2.42 2.84 3.32 3.92 4.56 5.27 6.04
Pharmaceutical
sales (US$bn), %
chg y-o-y 22.2 20.2 17.9 17.0 16.9 18.2 16.4 15.4 14.6
Pharmaceutical

sales (VNDbn) 30455.08 39315.95 50081.50 59213.71 69297.49 80614.12 92801.26 106471.05 121048.59
Pharmaceutical
sales (VNDbn), %
chg y-o-y 32.3 29.1 27.4 18.2 17.0 16.3 15.1 14.7 13.7
Pharmaceutical
sales at constant
exchange rate (US
$bn) 1.47 1.90 2.42 2.87 3.35 3.90 4.49 5.15 5.86
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Pharmaceutical Sales Indicators, 2009-2017 - Continued

2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f
Pharmaceutical
sales, per capita (US
$) 19.40 23.09 26.96 31.24 36.17 42.36 48.88 55.92 63.58
Pharmaceutical
sales, % of GDP 1.68 1.82 1.80 1.82 1.89 1.96 2.01 2.06 2.10
Pharmaceutical
sales, % of health
expenditure 26.14 29.04 29.01 29.39 30.00 30.30 30.56 30.98 31.28
f = BMI forecast. Source: BMI, Drug Administration of Vietnam (DAV), Vietnam Ministry of Health, domestic companies,
local press
Healthcare Market Forecast
BMI has revised its health expenditure forecast for
Vietnam, following the publication of new data by
the World Health Organization (WHO) in Q213.
Subsequently, we upgraded the forecast for private
health expenditure in December 2013 due to the
government's plan to raise hospitals fees between

2014 and 2018. We forecast that the sector will
reach a value of VND660,030bn (US$34.7bn) by
2022. Through to 2017 and 2022, the sector is
projected to grow at local CAGRs of 13.9% and
12.6% respectively (14.9% and 13.7% in US dollar
terms).
Over the long term, Vietnam's healthcare sector is
forecast to grow in accordance with its strong
economic growth. However, we highlight that rising
healthcare expenditure does not necessarily equate to
quality healthcare provision. According to the
General Statistics Office of Vietnam, the number of hospitals in 2012 was 963. Meanwhile, the number of
hospital beds and doctors per 1,000 people stayed flat - at 2.01 and 0.65 respectively.
Healthcare Expenditure Forecast
2008-2022
Health expenditure, US$bn (LHS)
Health expenditure at CER, US$bn (LHS)
Health expenditure, % of GDP (RHS)
2008
2009
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
2018f
2019f

2020f
2021f
2022f
0
20
40
0
5
f = forecast. CER = constant exchange rate. Source: BMI,
World Health Organization (WHO)
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Moreover, despite a double-digit growth in healthcare expenditure, the country has yet to address the rising
burden of communicable diseases such as tuberculosis, AIDS and hand, foot and mouth disease. Much of
this increased expenditure will be on health infrastructure, which remains basic in many rural areas. Over
the longer term, this is likely to result in greater access to basic medicines.
The country's low per capita health and pharmaceutical expenditure highlights the population's poor access
to healthcare services and low affordability levels for medicines - particularly high-value drugs. This
represents a short-term challenge for pharmaceutical firms, but over the long term we believe economic
development will aid growth in the pharmaceutical and healthcare sector. Our country risk team remains
bullish about the Vietnamese economy as it forecasts strong economic growth through to 2022.
In the meantime, the government has outlined plans for the investment of up to US$1.5bn in the
pharmaceutical manufacturing sector over the next 10 years to reduce reliance on imports. The money is to
be used for a variety of programmes, including upgrading technology to meet GMP standards, the
development and expansion of the pharmaceutical supply network to poor and remote areas, the
establishment of joint ventures (JVs) with foreign players and achieving a greater percentage of domestic
pharmaceutical demand.
The government's intention to invest in the development of its biotechnology sector is likely to act as a
catalyst for wider industry reform, in particular concerning patent protection. However, local drug
production is still weak and incapable of meeting domestic demand, although local regulation reform on a

considerable scale is expected to attract foreign investment. In some sectors, such as vaccines, considerable
progress has been made to increase Vietnam's self-sufficiency, with the country now producing sufficient
measles vaccines domestically to meet national demand.
To help make further progress, the government has outlined plans to invest US$241mn in eight projects
within the local drug manufacturing industry. This will include the construction of four pharmaceutical
plants in the next four years. The authorities aim to have 80% of domestic demand met by local producers
by 2020, up from around 50% currently.
In a workshop help by Vietnam Ministry of Health in August 2013 in collaboration between Medical
Excellence Japan and Japan's Ministry of Economy, Trade and Industry, the two countries reiterated Japan's
support towards Vietnamese healthcare through investment in three hospitals including: Bach Mai Hospital,
Hue Central Hospital and Cho Ray Hospital.
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In an interview with local media, Vietnam News, Pham Le Tuan, deputy minister of health, stated that
public hospital fees will increase progressively until 2018, in line with Decree 85/2012/ND-CP. In 2012, the
government increased the prices of three out of seven cost elements incurred by patients, which include the
cost of medicines, chemicals, consumable materials, electricity, water, equipment maintenance and others.
Under the plan developed by the Ministry of Health on increasing hospital fees, this will cover the
remaining four out of seven cost elements (beds, medical equipment, salaries, and other hospital operation
costs). These four elements were previously covered by the government.
Timeline Of Hospital Fees Increments
■
2014: Hospital fees charged to patients will include the bed cost for inpatient services and part of the cost
of their surgery.
■
2015: Fees will include medical equipment used for patient treatment, hospitals' management and
operating costs and 20-30% of hospital staff's basic salary at provincial hospitals in mountainous regions,
central highlands and district hospitals in Ha Noi and Ho Chi Minh City.
■
2016-17: Part of the hospital fee will be used to pay basic salary cost for staff at provincial hospitals,

central government hospitals and district hospitals in two major cities of Ha Noi and Ho Chi Minh City.
■
Post-2018: full cost recovery policy for medical services will be implemented across the board.
The deputy health minister believes that with these increments in fees service quality will improve
considerably, as hospitals will be dependent on patients. He added that 'more patients mean more money for
hospital and their staff.' We highlight that this is potentially regressive as patients will have to shoulder the
burden of healthcare costs due to low funding from the government. In addition, we see a risk of
overcharging by hospitals if the implementation of these increments is not properly regulated. Conversely,
hospitals may also not generate sufficient revenues despite the implementation of the regulation. In August
2013, Vietnam News reported that hospitals in Ha Noi ran into problems in applying new hospital fees due
to unclear regulations and staffing shortages.
Nevertheless, as a result of these progressive increments, we have upgraded Vietnam's private healthcare
expenditure forecast, as the increased costs will be borne by patients rather than the government. Through to
2017, we forecast that private health expenditure will increase at a compound annual growth rate of 14.7%
(15.6% in US dollar terms). This growth rate is higher than government health expenditure (12.8%). The
forecast for government health expenditure has remained unchanged. We highlight that the government may
spend savings generated elsewhere to boost health services, such as improving health infrastructure.
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Table: Healthcare Expenditure Indicators, 2009-2017

2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f
Health
expenditure
(US$bn) 6.5 7.1 8.4 9.7 11.1 12.9 14.9 17.0 19.3
Health
expenditure
(US$bn), %
chg y-o-y 9.0 8.2 18.1 15.5 14.5 17.1 15.5 13.8 13.6
Health

expenditure
(VNDbn) 116,496.8 135,367.8 172,649.9 201,465.8 230,985.3 266,095.9 303,710.5 343,650.9 387,031.6
Health
expenditure
(VNDbn), %
chg y-o-y 18.0 16.2 27.5 16.7 14.7 15.2 14.1 13.2 12.6
Health
expenditure
at constant
exchange
rate (US$bn) 5.6 6.6 8.4 9.8 11.2 12.9 14.7 16.6 18.7
Health
expenditure
per capita
(US$) 74.2 79.5 93.0 106.3 120.5 139.8 160.0 180.5 203.3
Health
expenditure
(% GDP) 6.4 6.3 6.2 6.2 6.3 6.5 6.6 6.7 6.7
Source: BMI, WHO
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Table: Healthcare Governmental Indicators, 2009-2017

2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f
Government
health
expenditure
(US$bn) 2.5 2.6 3.4 3.9 4.4 5.1 5.8 6.5 7.4
Government
health

expenditure
(US$bn), %
chg y-o-y 22.5 3.3 28.3 14.8 13.5 15.5 13.9 12.8 12.8
Government
health
expenditure
(VNDbn) 45,300.9 50,257.5 69,665.5 80,821.0 91,856.8 10,4389.2 11,7490.1 13,1762.4 14,7452.7
Government
health
expenditure
(VNDbn), %
chg y-o-y 32.6 10.9 38.6 16.0 13.7 13.6 12.6 12.1 11.9
Government
sector health
expenditure,
% of total 38.9 37.1 40.4 40.1 39.8 39.2 38.7 38.3 38.1
Source: BMI, WHO
Table: Healthcare Private Indicators, 2009-2017

2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f
Private health
expenditure
(US$bn) 4.0 4.5 5.0 5.8 6.7 7.9 9.2 10.5 11.9
Private health
expenditure
(US$bn), %
chg y-o-y 1.8 11.3 12.0 15.9 15.2 18.1 16.5 14.4 14.0
Private health
expenditure
(VNDbn) 71,195.9 85,110.3 102,984.4 120,644.8 139,128.5 161,706.7 186,220.4 211,888.5 239,578.9

Private health
expenditure
(VNDbn), %
chg y-o-y 10.2 19.5 21.0 17.1 15.3 16.2 15.2 13.8 13.1
Private sector
health
expenditure,
% of total 61.1 62.9 59.6 59.9 60.2 60.8 61.3 61.7 61.9
Source: BMI, WHO
Vietnam Pharmaceuticals & Healthcare Report Q1 2014
© Business Monitor International Page 20
Prescription Drug Market Forecast
The market figures for prescription and non-
prescription sectors are blurred by a lack of any
proper distinction between the two. In fact,
according to some drugstores, only 20-30% of
patients buy drugs with a prescription. Only
medicines that cause dependency, such as
benzodiazepines, are routinely refused sale without a
prescription. Antibiotics are the most popular drug
sold without a prescription. This has resulted in
worrying levels of antibiotic resistance. For
example, nearly 70% of bacteria carried by people
living in urban parts of Vietnam are resistant to
penicillin.
Nevertheless, the growth of the prescription
medicines market will outpace the growth of OTCs,
mainly due to the influx of expensive patented
products from abroad and increased demand for
sophisticated drugs. Additionally, tighter regulations

in the pharmaceuticals sector as a whole are likely to lead to the introduction of stricter dispensing
guidelines with the good pharmacy practice (GPP) recommendations coming into force in 2011.
By 2017, we forecast that prescription medicines will be worth VND90,254bn (US$4.5bn) at consumer
prices, posting a CAGR of 15.8% in local currency terms (thus somewhat above the wider pharmaceutical
market). In percentage terms, at this point, prescription drugs will account for 74.6% of the total market,
from 73.3% in 2012, driven by expanded access to formal healthcare in rural areas.
The retail price of both essential and non-essential pharmaceuticals continues to rise; manufacturers have
attributed the rises to foreign currency increases. However, there are accusations that foreign drugmakers
collude with local distributors to keep prices high, while some distributors may pay doctors commissions to
ensure they prescribe their drugs. Research published in September 2009 in the Southern Med Review
reports that medicine prices in Vietnam are high, both for patented and generic drugs, and that regulation is
required to control mark-ups. One other method of keeping prices to reasonable levels is through controlling
the volume of drugs on the market.
Prescription Drug Market Forecast
2008-2022
Prescription drug sales, US$bn (LHS)
Prescription drug sales, % of total sales (RHS)
2008
2009
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
2018f
2019f
2020f

2021f
2022f
0
5
10
0
25
50
75
f = BMI forecast. Source: BMI, Drug Administration of
Vietnam (DAV), Vietnam Ministry of Health, domestic
companies, local press
Vietnam Pharmaceuticals & Healthcare Report Q1 2014
© Business Monitor International Page 21
Hospitals remain the primary source of healthcare, a factor that will continue to boost the demand for
prescription pharmaceuticals, especially given the government's programme to modernise and expand the
number of hospitals in the country. Additionally, the government's longer-term programme to privatise key
secondary institutions is likely to have a beneficial effect on market values. At present, only around 19-20%
of all hospital drugs are sourced locally, according to official figures. In Q409, the DAV announced that
domestic pharmaceutical companies were aiming to meet 60% of the market's demand by 2010. However,
the target was not met. According to the Ministry of Health in September 2013, there are 178 drug
companies in Vietnam, with 80 of them making only traditional medicines. Together, they meet
approximately 50% of the domestic pharmaceutical demand.
Demographic and environmental trends will be some of the key drivers of the prescription market in
Vietnam. Respiratory problems, including asthma and COPD, are on the rise, partly due to the high
prevalence of smoking and partly due to poor air quality. Manufacturers of drugs in the respiratory
therapeutic category will, therefore, have considerable room for expansion over the coming years. Similarly,
increased incidence of cancer, diabetes and hypertension among the Vietnamese population will provide
scope for drugmakers to expand.
One therapeutic area that has strong potential is oncology. In Vietnam, around 150,000 people a year

contract cancer and mortality rates are very high, standing at around 50%. The most common cancers are
lung, liver and stomach. Part of the problem is high smoking levels, with Vietnam having the highest
prevalence rates among men in the world. Diabetes is another therapeutic area with potential for growth.
Lifestyle changes influenced by the West, coupled with the growth of fast-food chains mean the incidence
of the disease has increased considerably, especially among young people, and many sufferers do not realise
they suffer from diabetes until complications occur.
Moreover, prescribing patterns seem to be influenced by economic considerations, with drug companies
paying commissions to doctors who promote certain types of product. The HCMC authorities conducted an
investigation into the practice, with findings revealing that a number of doctors were in receipt of more than
VND500mn (US$26,300) each month. The investigators looked into the prescribing of Merck & Co's
hepatitis drugs - namely PegIntron (interferon Alfa-2b) in 50mcg and 80mcg dosages, with commissions
reportedly being in the region of 10% to 30% of the drugs' cost. Joint monthly revenues for the two drugs
are reportedly in excess of VND6bn (US$315,000). In September 2012, Nguyen Thi Kim Tien echoed
similar view stating that prescribers receive 'commission' from foreign pharmaceutical firms therefore many
prescriptions contain expensive medicines.
Vietnam Pharmaceuticals & Healthcare Report Q1 2014
© Business Monitor International Page 22
Local industry representatives claim that large firms can therefore gain an upper hand as they can afford to
pay higher commissions, although doctors' relationship with companies also have a role to play in their
decisions. Moreover, despite the existence of hospital medicine councils - which are in charge of making
prescribing suggestions and supervising prescribing patterns - many doctors can still suggest different types
of medicines to their patients. Patients have also stated that commissions are widespread.
Table: Prescription Drug Sales Indicators, 2009-2017

2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f
Prescription
drug sales
(US$bn) 1.24 1.50 1.77 2.08 2.44 2.89 3.38 3.91 4.50
Prescription
drug sales

(US$bn), %
chg y-o-y 22.7 20.5 18.4 17.4 17.3 18.6 16.8 15.8 15.0
Prescription
drug sales
(VNDbn) 22,110.39 28,622.01 36,603.17 43,419.93 50,982.17 59,505.01 68,729.76 79,118.37 90,253.91
Prescription
drug sales
(VNDbn), %
chg y-o-y 32.8 29.5 27.9 18.6 17.4 16.7 15.5 15.1 14.1
Prescription
drug sales,
% of total
sales 72.60 72.80 73.09 73.33 73.57 73.81 74.06 74.31 74.56
f = BMI forecast. Source: BMI, Drug Administration of Vietnam (DAV), Vietnam Ministry of Health, domestic companies,
local press
Vietnam Pharmaceuticals & Healthcare Report Q1 2014
© Business Monitor International Page 23
Patented Drug Market Forecast
Value development of the patented drugs segment -
and consequently the overall prescription segment -
will be hampered by the government's plan to
contain pharmaceutical costs through restrictions on
advertising and the request that hospitals and
medical professionals give preference to
domestically produced drugs, as well as the fact that
most of the insured now incur some sort of co-
payment. Moreover, a number of high-value drugs
are due to come off patent in the coming years.
Nevertheless, the price increase evident since the
start of 2011 may take the value of the prescription

and patented markets beyond current estimates. By
2022, we expect the patented drug sector to reach
VND38,272bn (US$2.0bn), but represent a lower
percentage (18.51% versus 22.7% in 2012) of the
total market. Over the 2012-2022 period, patented
drugs are expected to post a CAGR of 11.0% in local
currency (12.1% in US dollars term), slightly below the rate of the overall market development.
Counterfeit drugs will continue to have a detrimental impact on patented drug sales over the forecast period,
despite the government's efforts to the contrary. The global economic slowdown has fuelled demand for
cheaper drugs, and counterfeit medicines are prospering as a result. Supported by the WHO, police, customs
and regulatory officials in the country have begun to coordinate their activities, although little can be done
in terms of enforcement without greater commitment to IP rights as well as more stringent penalties for
violators.
Corruption also has a role to play in drug prices, with commissions paid to pharmacists and doctors by sales
representatives and distributors to persuade them to prescribe their product to push up the retail price of
medicines. Such practices can only damage the industry as a whole, putting many patented products beyond
the budgets of the majority of the Vietnamese population.
Patented Drug Market Forecast
2008-2022
Patented drug sales, US$bn (LHS)
Patented drug sales, % of total (RHS)
2008
2009
2010
2011
2012
2013f
2014f
2015f
2016f

2017f
2018f
2019f
2020f
2021f
2022f
0
1
2
3
0
10
20
f = BMI forecast. Source: BMI, Drug Administration of
Vietnam (DAV), Vietnam Ministry of Health, domestic
companies, local press
Vietnam Pharmaceuticals & Healthcare Report Q1 2014
© Business Monitor International Page 24
Speciality medicines, such as central nervous system (CNS) and cardiovascular drugs, are expected to be
the key growth area, while an increase in cancer, diabetes and hypertension will also generate product
demand. However, the basic nature of consumption is illustrated by the continued strong showing of
antibiotics and alimentary/metabolism products. The need to contain the HIV/AIDS epidemic and related
health problems will boost the antiretroviral sector, while the prevention of swine flu and similar diseases
continues to drive the growth of anti-flu drugs.
Table: Patented Drug Market Indicators, 2009-2017

2009 2010 2011 2012 2013 2014f 2015f 2016f 2017f
Patented
drug sales
(US$bn) 0.41 0.48 0.56 0.64 0.74 0.86 0.98 1.11 1.25

Patented
drug sales
(US$bn), %
chg y-o-y 20.7 18.3 16.2 15.0 15.0 16.2 14.3 13.2 12.4
Patented
drug sales
(VNDbn) 7,248.31 9,209.95 11,560.38 13,437.90 15,473.92 17,687.55 19,993.06 22,506.13 25,085.65
Patented
drug sales
(VNDbn), %
chg y-o-y 30.6 27.1 25.5 16.2 15.2 14.3 13.0 12.6 11.5
Patented
drug sales,
% of
prescription
sales 32.78 32.18 31.58 30.95 30.35 29.72 29.09 28.45 27.79
Patented
drug sales,
% of total
sales 23.80 23.43 23.08 22.69 22.33 21.94 21.54 21.14 20.72
f = BMI forecast. Source: BMI, Drug Administration of Vietnam (DAV), Vietnam Ministry of Health, domestic companies,
local press
Vietnam Pharmaceuticals & Healthcare Report Q1 2014
© Business Monitor International Page 25