Vietnam is a development success story. Political and economic reforms (Doi Moi) launched in 1986 have transformed Vietnam from one of the poorest countries in the world, with per capita income below $100, to a lower middle income country within a quarter of a century with per capita income of $1,130 by the end of 2010.The ratio of population in poverty has fallen from 58 percent in 1993 to 14.5 percent in 2008, and most indicators of welfare have improved.Vietnam has already attained five of its ten original Millennium Development Goal targets and is well on the way to attaining two more by 2015.5 Vietnam is one of the fastest growing economies in Southeast Asia. Growing economy, liberalized trade, and technological advancements are providing opportunities to every sector in the country. Due to these factors, the pharmaceutical market is also emerging as a fast growing sector. Besides, the expenditure made by the country on the medicines surged up by a double digit growth rate in 2011, which has fuelled the growth of the market. Hence, the pharmaceutical market of Vietnam is forecasted to grow at a CAGR of 19 % during 2011 – 2013, which is one fastest in the Asia Pacific region.1
With a population of more than 87 million4, total expenditure on medicines increased from US$1.707 billion in 2010 to US$ 1.89 billion in 2011 and is forecasted to reach US$2.15 million by the end of 2012, with average annual per capita consumption forecast to rise from US$19.5 in 2009 to US$23 in 2010 and US$60.30 in 2019.2,3 However Vietnam still shows a shortage of hospital beds. According to the Worldbank the number of hospital beds per 1,000 people reached 3.1 in 2009. In July 2012 the municipal People's Committee has approved a plan to increase the number of hospital beds in Hanoi with a total investment of VND 43,360 billion for the 2011-2020 period.6
Vietnam’s pharmaceutical industry is still at a medium level of development. Although a domestic pharmaceutical industry exists, almost all materials are imported. Local manufactured pharmaceuticals contribute only 50 percent of the market in unit sales while it imports around 90 percent of the active pharmaceutical ingredients (APIs) used in drug production. Vietnam operates a restrictive distribution system. All imported products must be shipped into the country through a governmental approved, import company. Multinational companies are not permitted to sell drugs directly through their representative offices. The distribution system is difficult for non-Vietnamese companies. The major market in Vietnam is Ho Chi Minh City, which accounts for an estimated 60% of the national market. This is followed by Hanoi, with around 25%.
Data Sources:
1. Asia Pacific Pharma Sector Analysis, RNCOs Business Solutions, January 2011.
2. Vietnam Pharmaceuticals and Healthcare Report Q2, 2012, Market Publishers.
3. Financial review Vietnam: www.vfr.vn
4. General office for Population and family planning: www.e.gopfp.gov.vn
