VietNamNet Bridge – Domestic pharmacy firms, which understand the power of
foreign groups, do not intend to confront the big guys, but try to attach niche
markets to earn small changes.
The unequal struggle
International pharmacy groups, one after another, have announced their big
investment projects in Vietnam.
Sanofi has announced the additional investment of $75 million in its third
factory in Vietnam. Rohto-Mentholatum has also increased investment capital from
$18 million to $33 million and revealed the plan to build its second factory in
Vietnam.
Prior to that, United Pharma committed to make heavier investments in the two
operational factories in HCM City and Binh Duong province. Actavis is seeking
suitable partners to develop its production and business activities. With the
big projects, foreign pharmacy groups seem to follow a plan to turn Vietnam into
a big production and consumption center.
According to Actavis, in 2012, the group’s revenue in Vietnam reached $7.2
million, the figure that put the group into the list of top 10 foreign
enterprises which provide generic medicine in Vietnam.
Thomas Runkel, Vice President of Actavis Pharmacy Group in charge of North Asia
and in Indonesia, estimated that the sales in Vietnam may climb to $5.2 billion
by 2015 from the $2.2 billion level in 2012.
Therefore, foreign groups, having realized the great potentials of the market,
have been gearing up with their plans to conquer the domestic market.
A senior executive of Imexpharm, a Vietnamese company, admitted that foreigners
have advantages over Vietnamese ones. Especially, Vietnamese consumers still
prefer foreign brand products to domestic.
Pham Thi Viet Nga, President of Hau Giang Pharmacy JSC, said making specific
medicine is one of their biggest advantages. Meanwhile, Vietnamese enterprises
can only make popular products.
However, Nga thinks that the biggest challenge for domestic enterprises is the
weak distribution network, which makes it impossible to bring medicine products
to the remote areas.
It always takes time to register new medicine products in Vietnam. Vietnamese
enterprises still have been relying by 90 percent on the material imports, while
the material import tariffs are much higher than that in other countries.
Vietnamese going their own ways
According to Chris Freund, Managing Director of Mekong Capital, the company
which manages the fund that injected capital in Vietnamese Traphaco, said
Traphaco plans to expand its production and distribute its products itself.
Traphaco has joined forces with a Japanese partner to implement a plan to
increase the productivity and enlarge the distribution network.
The big domestic pharmacy manufacturer also plans to buy other companies in 2013
to become stronger. Prior to that, it bought 51 percent of Dak Lak Pharmacy’s
stakes and 43 percent of Quang Tri Pharmacy’s stakes.
Vietnamese DHG has sold Eugika brand to Wecare, a Thai company. According to
MayBank Kim Eng Securities Company (MBKE), DHG’s profit still grew by 18 percent
over 2011, though it was nearly impossible for DHG to increase the turnover
because its factories have always been running at full capacity.
MBKE has affirmed that DHG has obtained the high growth rate thanks to the sale
of Eugika brand.
Domesco, at the shareholders’ meeting stated that it would focus on making
herbal medicine, believing that this is a potential market with the increasingly
high demand for the medicine products from herbs.
DNSG