Vietnam pharmaceuticals healthcare report q4 2013

Q4 2013
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 Q4 2013
INCLUDES 10-YEAR FORECASTS TO 2022
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: September 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 18
Table: Healthcare Governmental Indicators, 2009-2017 19
Table: Healthcare Private Indicators, 2009-2017 19
Prescription Drug Market Forecast 20
Table: Prescription Drug Sales Indicators, 2009-2017 22
Patented Drug Market Forecast 23
Table: Patented Drug Market Indicators, 2009-2017 24
Generic Drug Market Forecast 25
Table: Generic Drug Sales Indicators, 2009-2017 26

OTC Medicine Market Forecast 27
Table: OTC Medicine Sales Indicators, 2009-2017 29
Pharmaceutical Trade Forecast 30
Table: Exports And Imports Indicators, 2011-2017 31
Other Healthcare Data 32
Key Risks To BMI's Forecast Scenario 33
Macroeconomic Forecasts 35
Table: Vietnam - Economic Activity 38
Industry Risk Reward Ratings 39
Asia Pacific Risk/Reward Ratings 39
Vietnam Risk/Reward Ratings 44
Rewards 44
Risks 45
Market Overview 46
Industry Trends And Developments 48
Epidemiology 48
Healthcare Financing 49
Hospital Sector 51
Vietnam Pharmaceuticals & Healthcare Report Q4 2013
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Private Healthcare Sector 53
Healthcare Insurance 54
Healthcare And Pharmaceutical Reform 56
Research And Development 58
Biotechnology Sector 59
Clinical Trials 63
Regulatory Development 65
Regulatory Regime 65
Pharmaceutical Advertising 67
Intellectual Property Environment 68

Corruption 71
Pricing Regime 71
Reimbursement Regime 75
Pricing And Reimbursement Developments 77
Competitive Landscape 79
Pharmaceutical Sector 79
Domestic Industry 80
Foreign Industry 82
Recent Pharmaceutical Industry News 85
Traditional Medicines 85
Pharmaceutical Distribution 86
Pharmaceutical Retail Sector 87
Table: Key Aspects Of Good Pharmacy Practice In Developing Countries 88
Company Profile 89
DHG Pharmaceutical 89
Traphaco Pharmaceutical 91
Vietnam Pharmaceutical Corporation (Vinapharm) 93
Vietnam OPV Pharmaceutical Co 96
Vietnam Pharmaceutical Joint Stock Company (Ampharco) 98
Vidipha Central Pharmaceutical Joint Stock Company 101
Pfizer 103
Sanofi 105
Novartis 108
Merck & Co 110
GSK 112
Demographic Forecast 114
Table: Vietnam's Population By Age Group, 1990-2020 ('000) 115
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) 115
Table: Vietnam's Key Population Ratios, 1990-2020 116
Table: Vietnam's Rural And Urban Population, 1990-2020 117

Glossary 118
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Methodology 120
Pharmaceutical Expenditure Forecast Model 120
Healthcare Expenditure Forecast Model 120
Notes On Methodology 121
Risk/Reward Ratings Methodology 122
Ratings Overview 123
Table: Pharmaceutical Risk/Reward Ratings Indicators 123
Indicator Weightings 124
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BMI Industry View
BMI View: The government's promise to improve healthcare conditions through rising expenditure will
bring potential growth to pharmaceutical firms over the longer term. However, we highlight that there may
be a risk of not fulfilling such aims, given extensive bureaucracy and rampant corruption. In addition, the
macroeconomic condition was less -than optimistic between Q1 and Q2 this year. Should this continue, it
will be challenging for the country to invest in healthcare substantially.
Headline Expenditure Projections
■
Pharmaceuticals: VND59,214bn (US$2.84bn) in 2012 to VND69,455bn (US$3.32bn) in 2013; +17.3%
in local currency terms and +17.1% in US dollar terms. Forecast broadly unchanged from Q313.
■
Healthcare: VND201,466bn (US$9.66bn) in 2012 to VND232,015bn (US$11.1bn) in 2013; +15.2% in
local currency terms and +15.0% in US dollar terms. Forecast broadly in line with Q313.
Risk/Reward Rating: Vietnam's Pharmaceutical Risk/Reward Rating (RRR) score for Q413 is 50 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 12

th
behind Thailand but in
front of Indonesia out of the 19 key markets in Asia Pacific.
Key Trends And Developments
■
In August 2013, in an online meeting held by the Vietnamese government electronic portal, chinhphu.vn,
the implementation of the health insurance law in 2010-2011 compensated the deficit in 2009 and had a
surplus. However, due to the increase in health services fee, Vietnam Social Insurance calculated that if
such adjustments are applied in 2013, the fund may run a VND10trn deficit.
■
In July 2013, Terumo BCT (a Terumo company) has started constructing its second manufacturing
facility in Vietnam. The manufacturing facility, when open in 2015, will support growth and demand for
blood and cellular therapy products globally. Terumo BCT serves three primary customer segments:
blood centres, therapeutic apheresis & cell collections and cell processing. The Vietnam facility is part of
Terumo's broader strategy that includes investments in its existing US manufacturing operations at its
global headquarters in Colorado, and its manufacturing facilities in Northern Ireland and India.
• In the same month, Vietnam's Pharmaceutical Management Department ordered a recall of Relab 20%, a
drug solution for intravenous infusion manufactured by India's Reliance Life Science. The department
has also suspended the distribution of the drug in the country. The recall has been ordered due to the
drug's harmful side effects. The importers and the distributor of Relab 20% were asked by the department
to immediately withdraw the drug from the domestic market.
BMI Economic View: Vietnam's economic recovery is beginning to lose its momentum, with the country
recording a relatively weak real GDP growth figure of 5.0% year-on-year (y-o-y) in Q213, up only slightly
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from 4.9% in Q113. The latest GDP print also suggests to us that further efforts by the Vietnamese
government to speed up the restructuring of debt-laden banks and restart lending to small and medium-sized
enterprises (SMEs) may be necessary to support economic growth over the coming quarters. Moreover,
given that we have recently begun to see signs of a slowdown in economic activity across the region, 2013
looks increasingly precarious for the Vietnamese economy.

BMI Political View: The Communist Party of Vietnam (CPV)'s decision to implement an annual no-
confidence vote for senior officials is a sign of progress for the country's evolving political system towards
a more accountable and democratic government. We believe that the move will also have a significant
influence on the CPV's economic agenda by putting pressure on senior government officials to speed up
economic reforms.
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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 in 2012 are likely 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 14.0% in 2010.
Weaknesses
■
Vietnam still suffers from substantial trade, current account and fiscal deficits, leaving
the economy vulnerable to global economic uncertainties in 2012. 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 has given Vietnam 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
VND124,772bn (US$6.24bn), equating to a
compound annual growth rate (CAGR) of 16.1% in
local currency and 17.1% 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
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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 2013f 2014f 2015f 2016f 2017f
Pharmaceutical
sales (US$bn) 1.71 2.05 2.42 2.84 3.32 3.93 4.64 5.41 6.24
Pharmaceutical
sales (US$bn),
% chg y-o-y 22.2 20.1 18.0 17.1 17.1 18.3 17.9 16.7 15.3
Pharmaceutical
sales (VNDbn) 30,455.08 39,315.95 50,081.50 59,213.71 69,454.95 80,872.67 94,233.67 108,720.58 124,772.28
Pharmaceutical
sales (VNDbn),

% chg y-o-y 32.3 29.1 27.4 18.2 17.3 16.4 16.5 15.4 14.8
Pharmaceutical
sales at
constant
exchange rate
(US$bn) 1.47 1.90 2.42 2.87 3.36 3.92 4.56 5.26 6.04
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Pharmaceutical Sales Indicators, 2009-2017 - Continued

2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f
Pharmaceutical
sales, per
capita (US$) 19.40 23.08 26.97 31.26 36.25 42.49 49.63 57.43 65.70
Pharmaceutical
sales, % of
GDP 1.68 1.82 1.80 1.82 1.90 1.96 2.03 2.09 2.13
Pharmaceutical
sales, % of
health
expenditure 26.14 29.04 29.01 29.39 29.94 30.56 31.58 32.52 33.46
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. We
forecast that the sector will reach a value of
VND597,081bn (US$29.9bn) by 2022. Through to
2017 and 2022, the sector is projected to grow at

local CAGRs of 13.1% and 11.5% respectively
(14.1% and 11.9% 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 increased by approximately 3% from 1,030
in 2010 to 1,059 in 2011. Despite the increase, the
number of hospital beds and doctors per 1,000
people stayed flat - at 2.01 and 0.71 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
2.5
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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Table: Healthcare Expenditure Indicators, 2009-2017

2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f
Health
expenditure
(US$bn) 6.5 7.1 8.4 9.7 11.1 12.9 14.7 16.6 18.6
Health
expenditure
(US$bn), %
chg y-o-y 9.0 8.1 18.2 15.5 15.0 15.9 14.1 13.3 12.1
Health
expenditure
(VNDbn) 116,496.8 135,367.8 172,649.9 201,465.8 232,014.8 264,601.4 298,365.2 334,332.4 372,937.3
Health
expenditure
(VNDbn), %
chg y-o-y 18.0 16.2 27.5 16.7 15.2 14.0 12.8 12.1 11.5

Health
expenditure
at constant
exchange
rate (US$bn) 5.6 6.6 8.4 9.8 11.2 12.8 14.4 16.2 18.1
Health
expenditure
per capita
(US$) 74.2 79.4 93.0 106.4 121.1 139.0 157.2 176.6 196.4
Health
expenditure
(% GDP) 6.4 6.3 6.2 6.2 6.3 6.4 6.4 6.4 6.4
Source: BMI, WHO
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Table: Healthcare Governmental Indicators, 2009-2017

2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f
Government
health
expenditure
(US$bn) 2.5 2.6 3.4 3.9 4.4 5.1 5.7 6.5 7.2
Government
health
expenditure
(US$bn), %
chg y-o-y 22.5 3.2 28.4 14.9 13.9 15.0 13.0 12.5 11.6
Government
health
expenditure

(VNDbn) 45,300.9 50,257.5 69,665.5 80,821.0 92,232.7 104,390.4 116,662.4 129,785.2 144,073.5
Government
health
expenditure
(VNDbn), %
chg y-o-y 32.6 10.9 38.6 16.0 14.1 13.2 11.8 11.2 11.0
Government
sector health
expenditure,
% of total 38.9 37.1 40.4 40.1 39.8 39.5 39.1 38.8 38.6
Source: BMI, WHO
Table: Healthcare Private Indicators, 2009-2017

2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f
Private health
expenditure
(US$bn) 4.0 4.4 5.0 5.8 6.7 7.8 8.9 10.2 11.4
Private health
expenditure
(US$bn), %
chg y-o-y 1.8 11.2 12.1 16.0 15.7 16.5 14.7 13.9 12.4
Private health
expenditure
(VNDbn) 71,195.9 85,110.3 102,984.4 120,644.8 139,782.1 160,211.0 181,702.7 204,547.2 228,863.8
Private health
expenditure
(VNDbn), %
chg y-o-y 10.2 19.5 21.0 17.1 15.9 14.6 13.4 12.6 11.9
Private sector
health

expenditure,
% of total 61.1 62.9 59.6 59.9 60.2 60.5 60.9 61.2 61.4
Source: BMI, WHO
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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 VND93.030bn (US$4.7bn) at consumer
prices, posting a CAGR of 16.5% 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; a situation that could
be partially explained by Vietnam's high headline rate of inflation, which is pushing up the cost of raw
materials. 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
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 Q4 2013
© Business Monitor International Page 20
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.
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.
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 Q4 2013
© Business Monitor International Page 21
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 2013f 2014f 2015f 2016f 2017f
Prescription
drug sales
(US$bn) 1.24 1.50 1.77 2.08 2.44 2.90 3.43 4.02 4.65
Prescription
drug sales
(US$bn), %
chg y-o-y 22.7 20.4 18.5 17.4 17.5 18.7 18.3 17.1 15.7
Prescription
drug sales
(VNDbn) 22,110.39 28,622.01 36,603.17 43,419.93 51,098.01 59,695.85 69,790.61 80,789.99 93,030.30
Prescription
drug sales
(VNDbn), %

chg y-o-y 32.8 29.5 27.9 18.6 17.7 16.8 16.9 15.8 15.2
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 Q4 2013
© Business Monitor International Page 22
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
VND35,931bn (US$1.8bn), 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 10.3% in local
currency (10.8% 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
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 Q4 2013
© Business Monitor International Page 23
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 2013f 2014f 2015f 2016f 2017f
Patented
drug sales
(US$bn) 0.41 0.48 0.56 0.64 0.74 0.86 1.00 1.14 1.29
Patented
drug sales
(US$bn), %
chg y-o-y 20.7 18.2 16.3 15.1 15.2 16.3 15.7 14.5 13.1
Patented
drug sales
(VNDbn) 7,248.31 9,209.95 11,560.38 13,437.90 15,509.08 17,744.28 20,301.66 22,981.64 25,857.34
Patented
drug sales

(VNDbn), %
chg y-o-y 30.6 27.1 25.5 16.2 15.4 14.4 14.4 13.2 12.5
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 Q4 2013
© Business Monitor International Page 24
Generic Drug Market Forecast
Although the overall generic drug market is sizeable,
standing at around VND29,982bn (US$1.44bn) - or
approximately 51% of the overall market's value - in
2012, most products were actually low-quality
copies of unproven bioequivalence. The Ministry of
Health is stepping up its efforts to address the
problem by enlisting the help of medical
professionals in the country, in a bid to improve
generic usage and the utilisation of domestically
made products in hospitals and clinics.
Additionally, entrance into the WTO should result in
dubious copy products gradually being purged from
the market, as the country brings its IP regime in line
with TRIPS. However, given the notoriously poor

standard of IP enforcement in the country, these
illicit products will continue to have a sizeable
influence in the near future.
Overall, generic products are likely to continue dominating the market in volume terms and we forecast the
value of the sector should reach VND111,313bn (US$5.57bn) in 2022, accounting for over 57.3% of the
total market (up from the calculated 50.6% in 2012). Vietnam offers strong prospects for generic market
growth due to low consumer purchasing power. However, a number of obstacles still remain, such as a
widespread belief that generic drugs are inferior to patented products and that in many cases, they are not
that much cheaper than patented counterparts. They are also not as widely available as they could be.
In the meantime, the legalisation on parallel imports, which must be cheaper than locally produced drugs,
will increase the pressure on companies to compete on price and should also have the impact of breaking up
distributor-led monopolies. Similarly, the policy of publishing drug prices on the DAV's website should also
instil further competition into the market and will allow hospitals to make more informed purchasing
decisions.
Generic Drug Market Forecast
2008-2022
Generic drug sales, US$bn (LHS)
Generic drug sales, % of total sales (RHS)
2008
2009
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
2018f
2019f

2020f
2021f
2022f
0
2.5
5
7.5
0
25
50
f = BMI forecast. Source: BMI, Drug Administration of
Vietnam (DAV), Vietnam Ministry of Health, domestic
companies, local press
Vietnam Pharmaceuticals & Healthcare Report Q4 2013
© Business Monitor International Page 25