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Vietnam Pharmaceuticals and Healthcare Report Q4 2008
Business Monitor International, Dec 2008, Pages: 82
Vietnam Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Vietnam's pharmaceuticals and healthcare industry.
Despite still being ranked 12th out of 14 key regional countries in our Business Environment Rankings for Q408, the Vietnamese pharmaceutical market is expected to overtake its neighbours in the coming years. Key reasons for this include the expected double-digit growth over the next five years, healthcare system reform and the improvement in intellectual property rights (IPR) protection. On the other hand, low per capita expenditure, a strict pricing regime and the prevalence of counterfeit medicines continue to represent major drawbacks to investing in the market. Nevertheless, the authorities appear firmly committed to clamping down on counterfeit trade, with the Ho Chi Minh (HCM)’s Market Management Department seizing a considerable haul of illegally imported Chinese traditional medicines in September 2008.
The country is also presently contending with hospital overcrowding. In fact, local reports from September 2008 suggested that central hospitals in Vietnam are facing a shortage of beds to the extent that in some hospitals a single bed is being shared by two or more patients. Additionally, results of a study on healthcare facilities released in July 2008 indicated most of the hospitals had not applied the new rules concerning emergency aid and treating poison victims. On the other hand, there are a growing number of private facilities offering advanced services, which are increasingly attracting foreign patients.
In the meantime, reports from a September 2008 issue of Vietnam News suggest that the Ministry of Health is addressing the countrywide shortage of hospital drugs and medical devices, as well as holding discussions with drug companies over ways to alleviate the problem. Immediate measures to restore drug supplies include forcing large companies to comply with their contracts, allowing hospital directors to purchase batches of drugs with a value less than VND100mn (US$6,066) and fining smaller drugmakers that have not fulfilled their contracts. The situation had been caused by a September 2007 freeze on drug prices, which was introduced in order to improve access to medicines, but ended up backfiring.
In terms of a wider operating climate in Vietnam, GDP expansion is expected to slow down to 5.5% in 2008, before picking up again in 2009 and 2010. Inflation will also improve after the end of the current year, while foreign investment will improve as economic conditions stabilise, which will give impetus to growth in 2010 and 2011. Government efforts to improve infrastructure – including the construction of new power plants and ports – will also boost investor confidence, which will be positively reflected in the operating conditions for pharmaceutical companies. On the legislative front, the likely adoption of a bill lowering the top corporate tax level from 28% to 25% as of January 2009 will also improve business conditions and bolster investment.
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