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Vietnam Pharmaceuticals and Healthcare Report Q4 2011
Business Monitor International, Oct 2011, Pages: 101
Business Monitor International's Vietnam Pharmaceuticals and Healthcare Report provides industry professionals and strategists, corporate analysts, pharmaceutical associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's pharmaceuticals and healthcare industry.
BMI View:
The overall attractiveness of Vietnam's pharmaceutical market will continue to be limited by financial and wider regulatory inefficiencies. While the potential of the local industry has been boosted by the introduction of stricter standards, the country will remain import-dependent, especially in relation to higher-tech products. Nevertheless, the growing population numbers (expected to top 96mn in 2020) will remain an attractive proposition for foreign companies.
Headline Expenditure Projections:
Pharmaceuticals: VND32,842bn (US$1.71bn) in 2010 to VND38,902bn (US$1.89bn) in 2011; +18.5% in local currency terms and +10.3% in US dollar terms. Forecast up slightly from Q311 due to elevated inflation.
Healthcare: VND152,076bn (US$7.93bn) in 2010 to VND180,218bn (US$8.75bn) in 2011; +18.5% in local currency terms and +10.3% in US dollar terms. Forecast up slightly from Q311 due to elevated inflation.
Medical devices: VND13,422bn (US$700mn) in 2010 to VND14,967bn (US$727mn) in 2011; +11.5% in local currency terms and +3.8% in US dollar terms. Forecast down marginally from Q311 due to changes in historical data, but absolute numbers increasing considerably. Business Environment Rating: The addition of New Zealand pushed Vietnam down one place in BMI's latest version of the Asia regional Business Environment Rating (BER) matrix. The country is now ranked 14th, out of the 18 key markets surveyed. The country's score remained unchanged quarter-onquarter (q-o-q), at 44.7 out of 100, with its Risks and Rewards profiles relatively evenly balanced.
Key Trends & Developments:
In August 2011, the Vietnam Institute of Vaccines and Medical Biologicals (IVAC) produced a vaccine against rotavirus, the most common cause of diarrhoea among infants and toddlers. The institute has previously successfully produced several vaccines such as those for diphtheria, pertussis, tetanus and tuberculosis. According to IVAC, the price of a Vietnamese-made vaccine is one-third (US$11) the cost of an imported vaccine that cost approximately US$34.
In August 2011, India-based Fortis Healthcare entered the Vietnamese healthcare sector through the acquisition of a 65% stake in Hoan My Medical for US$64mn, as part of its wider expansion plans in Asia Pacific. Since the start of the year, Fortis Malar Hospitals, a subsidiary of Fortis Healthcare, took over the Cardiac Centre at Sri Lanka-based Oasis Hospitals.
BMI Economic View:
Inflationary pressures in Vietnam have proven to be more stubborn than BMI has previously anticipated, although monetary normalisation is expected to begin in H112. Nonetheless, with inflationary pressures taking longer to cool, BMI sees upside risks to its consumer price index (CPI) forecasts for 2011 and 2012.
Still, given that the increase in the healthcare-related component of the CPI has trailed the overall inflation by a large margin in the past, BMI envisages a modest impact on the current forecasts. In the meantime, from the start of October 2011, the Vietnamese government will be implementing an increase in minimum wages to help workers in coping with high inflation rates.
BMI Political View:
Recent territorial disputes in the South China Sea have sparked anti-China demonstrations in Vietnam, and BMI sees increasing risks that Hanoi may be pressured to take a tougher stance against Beijing in an attempt to ease public unrest.
Meanwhile, the lack of a credible third party to facilitate a compromise between both parties in order to agree on a resolution means that bilateral relations should remain heated in the medium term, which is nevertheless expected to have at best a moderate bearing on the development of the country's healthcare market
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