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Vietnam Pharmaceuticals and Healthcare Report Q3 2007
Business Monitor International, Oct 2007, Pages: 63
The Vietnam Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Vietnams pharmaceuticals and healthcare industry.
Vietnam’s entry into the World Trade Organisation (WTO) at the start of 2007 is helping the development of the national pharmaceutical market, which has traditionally been regarded as high risk and disorganised, mainly due to considerable counterfeit activity and a substandard intellectual property (IP) regime. Some improvements in the IP regulations have already been made, although the country remains on the 2007 ‘Watch List’ of the United States Trade Representative (USTR) Special 301 report. At the same time, foreign companies are taking advantages of the delayed enforcement of price regulations, which have resulted in an illegal increase in pharmaceutical prices in Vietnam since the start of the year. Some medicines experienced a 20% hike, with the government since unsuccessfully attempting to control the situation by importing key medicine to help reduce and stabilise prices. In the longer term, however, the authorities are aiming to promote domestic self-sufficiency in the pharmaceutical sector, originally setting a target of 70:30 for the foreign to locally manufactured drugs ratio by 2015. In the meantime, the rising drug prices have caused a drop in demand, as stockpiles are replacing new purchases.
The adjusted Business Environment Rankings for Asia reveal that Vietnam is in joint 13th (but last) place in Q307, on a par with Pakistan. Although foreign-invested enterprises account for more than 60% of all prescription drugs available in Vietnam, the market for pharmaceuticals presents significant challenges to operating firms. Key issues are IP deficiencies and therefore sizeable counterfeit industry, low income of the majority of the population, and the country’s poor regulatory system.
Nevertheless, by 2011, the market value is expected to top US$1.15bn, up from an estimated US$882mn in 2006. Prescription medicines will remain the dominant force in the market, given the undeveloped nature of the primary care network, secondary sector modernisation, potential privatisation of facilities, and the improved IP regulations. In the meantime, rising pressure on healthcare resources will necessitate an increased focus on the use of generics, although the government will be pushed to reduce the use of non-authorised versions of such products. On a positive note, the recent investment in the country’s nascent biotechnology industry represents an opportunity for both domestic and foreign players looking for a cheap production and research base.
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