VIETNAM PHARMACEUTICAL INDUSTRY REPORT Q2/2018

Transcription

1 VIETNAM PHARMACEUTICAL INDUSTRY REPORT Q2/2018 1

2 Contents Executive Summary Consumption Business environment Export - Import Macroeconomic situation Legal framework Pharmaceutical Industry Overview Global Pharmaceutical Industry Production - Consumption Vietnam Pharmaceutical Industry Overview History of Vietnam Pharmaceutical Industry Price movement Industry planning Driving forces of industry development development Enterprise analysis Profitability Ratios Cost structure Industry Position Asset Management Ratios Industry Scale and Feature Capital Structure Value Chain of Vietnam Pharmaceutical Industry Solvency Production Return on Investment 73 2

3 Abbreviations ETC Ethical drugs OTC Over The Counter (nonprescription-drugs) EU-GMP Europe Good Manufacturing Practice Patent Drug Drugs under intellectual property rights EVFTA EU Vietnam Free Trade Agreement Pharmerging Countries with emerging Pharmaceutical Industry GDP Good Distribution Practice PIC/S - GMP Pharmaceutical Inspection Co-operation Scheme on Good Manufacturing Practice (EU-GMP) Generic Drug Drug product that is comparable to a brand/reference listed drug product in dosage form, strength, quality and performance characteristics, and intended use." GDC General Department of Vietnam Custom GLP Good Laboratory Practice GSO General Statistic Office of Vietnam GMP Good Manufacturing Practice TPP Trans-Pacific Partnership GMP - WHO Good Manufacturing Practice recommended by the World Health Organization (WHO - GMP) WHO World Health Organization GPP Good Pharmacy Practice WTO World Trade Organization GSP Good Storage Practice MOH Ministry of Health DAV Drug Administration of Vietnam 3

4 Executive Summary There are about 153 western medicines producing enterprises, 80 traditional medicines producing enterprises, and over 300 establishments producing traditional medicines in Vietnam's pharmaceutical sector uses about 60,000 tons of pharmaceuticals, including 80-90% of imported pharmaceuticals. The growth of the prescription drug market will exceed the growth rate of Over-the-counter (OTC) market According to the Drug Administration of Vietnam - Ministry of Health, the number of drug items re-declared price as of 2/9/2018: the number of drug items with fluctuating price increase/decrease occupy very little (about 0.026%) of the total commercially available drugs 4

5 Executive Summary The biggest wholesale market systems in Vietnam pharmaceutical distribution in Ho Chi Minh City and Hanoi. For the WTO, the Vietnamese pharmaceutical market has gradually opened Pharmaceutical products are necessities, thus, economic growth virtually has hardly any impact on the industry growth rate, Most of the enterprises of pharmaceutical industry maintained positive operation with high levels of gross profit and net profit in the period M&A trend between domestic and foreign enterprises takes place strongly in the form of franchise drug production and the field of distribution. 5

6 Content 1. Business environment 1.1 Macroeconomic situation 1.2 Legal framework 6

7 1. Business environment 1.1 Macroeconomic situation GDP in the first three months of 2018 was estimated to increase by 7.38% over the same period last year, the highest increase in the first quarter of 10 years. GDP growth, M/2018 Source: VIRAC, GSO Consumer Price Index for Medicines and Health Services, M/2018 Unit: % Source: VIRAC, GSO 7

8 1. Business environment 1.1 Macroeconomic situation VND/USD exchange rate, 3/2016-3/2018 VND/CNY exchange rate, /2018 Source: VIRAC, SBV Source: VIRAC 8

9 1. Business environment 1.1 Macroeconomic situation The pharmaceutical market has a lot of potential when the demand for medicines is always increasing Million people Population and population growth, Population structure, Content is intentionally removed for demo purpose Source: VIRAC, GSO Source: VIRAC, GSO 9

10 Content 1. Business environment 1.1 Macroeconomic situation 1.2 Legal framework 10

11 1. Business environment 1.2 Legal framework Regulations on standards of Pharmaceutical Industry 11

12 1. Business environment 1.2 Legal framework Regulations on drug registration Regulations on control of drug prices 12

13 1. Business environment 1.2 Legal framework Regulations on import-export Regulations on drug advertising information 13

14 1. Business environment 1.2 Legal framework Regulations on drug promotion Distribution Bidding 14

15 1. Business environment 1.2 Legal framework Regulations on importing pharmaceutical materials 15

16 1. Business environment 1.2 Legal framework 16

17 1. Business environment 1.2 Legal framework 17

18 1. Business environment 1.2 Legal framework 18

19 Content 2. Pharmaceutical Industry Overview 2.1 Global Pharmaceutical Industry 2.2 Vietnam Pharmaceutical Industry Overview 2.3 Industry planning 2.4 Driving forces of industry development 19

20 2. Pharmaceutical Industry Overview 2.1 Global Pharmaceutical Industry Production Consumption In the period of , global drug spending increased at a CAGR of 4.6% per year from USD billion in 2010 to USD 1,163.6 billion in Global spending on medicines, e Source: VIRAC, IMS health 20

21 2. Pharmaceutical Industry Overview 2.1 Global Pharmaceutical Industry Production Consumption USD billion World sales of prescription drugs, Consumption structure by types of medicines, Source: VIRAC, EvaluatePharma Source: VIRAC, IMS health 21

22 2. Pharmaceutical Industry Overview 2.1 Global Pharmaceutical Industry Production Consumption Consumption market share by group, 2016 Source: VIRAC, IMS health World s top 10 consumed phamaceuticals, 2016 USD billion Source: VIRAC, IMS health 22

23 Content 2. Pharmaceutical Industry Overview 2.1 Global Pharmaceutical Industry 2.2 Vietnam Pharmaceutical Industry Overview 2.3 Industry planning 2.4 Driving forces of industry development 23

24 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview History of Vietnam Pharmaceutical Industry Northern domination before 1858, From 1858, during the French colonial period, resistance war against France, , After 1975,

25 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Industry Position 25

26 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Industry Scale and Feature Classification by ownership: Classification by product segment: 26

27 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Industry Scale and Feature Classification of medicine markets by distribution methods Classification of medicine markets by ownership Source: VIRAC, Hanoi University of Medicine and Pharmacy 27

28 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Industry Scale and Feature Bắc Ninh Hà Nội Hải Phòng Hưng Yên Nam Định Thanh Hóa Bình Định Hoàng Sa Phú Yên Bình Phước Khánh Hòa Đồng Tháp Đồng Nai An Giang Cần Thơ Hồ Chí Minh Tiền Giang Bến Tre Cà Mau Trường Sa Source: VIRAC 28

29 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Value chain of the industry Value chain of Vietnam pharmaceutical industry Source: VIRAC 29

30 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Production In fact, medicine companies in Vietnam are facing many difficulties in funding investment in research and development, technical staff and equipment of high quality which has not met the requirements yet. Outsourcing Franchising 30

31 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Production USD billion Domestic pharmaceutical production value, e Source: VIRAC, DAV It is estimated that in 2017, domestic pharmaceutical production value reached USD 2.4 billion, up 12.0% over the same period in Generally, domestic pharmaceutical production has been increasing steadily over the years with a CAGR of FY e of 15%. 31

32 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Production Medicine production by type, M/2018e Product name Unit e M/2018e Source: VIRAC, GSO 32

33 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption USD billion Pharmaceutical market value, e The pharmaceutical industry is growing at a compound annual growth rate (CAGR) of 17.4% for the period e. Causes are: Source: VIRAC, DAV 33

34 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption Value ratio of domestically produced medicines in Vietnam, e The pharmaceutical industry in Vietnam is still considered relatively young compared to the global industry. Source: VIRAC, DAV 34

35 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption VND trillion Domestically produced medicine consumption, e Source: VIRAC, GSO According to data from the General Statistics Office, the amount of pharmaceuticals consumed domestically focused on drugs containing penicillin or antibiotics, drugs containing hormones and vitamins. Drugs like serum and vaccines are domestically consumed at a very small number. Causes leading to this: 35

36 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption Spending on medicines in Vietnam, e Spending on medicines per capita in some countries, 2016e USD/person/year Source: VIRAC, DAV Source: VIRAC, DAV, Statista 36

37 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption Medicines consumption structure by channel, e Pharmaceuticals are distributed throughout the country through two distribution channels through the hospital (prescribed) or through the drug stores (not prescribed). Source: VIRAC, DAV Current status of Patented and Generic drugs, e Source: VIRAC, DAV 37

38 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption - ETC market Market data for prescription and non-prescription medicines is unclear because there is a lack of clear distinction between these two forms of sales. USD billion Market value of prescription drugs (ETC), e Source: VIRAC, DAV 38

39 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption - OTC market The OTC market has experienced relatively strong growth in value over the past few years. Market value of non-presciption drugs (OTC), e USD billion Source: VIRAC, DAV 39

40 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption - Patented drugs The market value of patented drugs in Vietnam is on the upward trend but still lower than that of the whole industry. USD billion Patened drugs (Patent), e Distribution cost also plays an important role in determining medicine prices. Source: VIRAC, DAV 40

41 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Consumption - Generic drugs USD billion Generic drug market, e Source: VIRAC, DAV 41

42 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Export Import Vietnam pharmaceutical industry mostly depends on imported sources with the total value of over USD 2 billion each year, moreover, in 2017, Vietnam imported more than USD 2.8 billion, an increase of 10% compared to the previous year. USD million Pharmaceutical imports, M/2018e Source: VIRAC, GDVC USD million Pharmaceutical imports, 3M/2017 3M/2018e Source: VIRAC, GDVC 42

43 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Export Import Vietnam s top import partners, 3M/2018 No. Partners Importing enterprises Top importing enterprises *, 3M/2018 * Only HS 3003 and 3004 Source: VIRAC, GDVC * Only HS 3003 and 3004 Source: VIRAC, GDVC 43

44 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Export Import Pharmaceutical exports, M/2018 However, Vietnam pharmaceutical industry is less competitive than others: Source: VIRAC, UN Comtrade, GDVC 44

45 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Export Import Export structure by country, 3M/2018 No. Top exporting enterprises, 3M/2018 Exporting enterprises Source: VIRAC, GDVC Source: VIRAC, GDVC 45

46 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Price movement Rate of drug re-price (increase), Source: VIRAC, DAV 46

47 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Price movement Price movement of some major drugs in the market, 12/2016 3/2018 No Drugs Unit Manufacturer 3/2017 6/2017 9/ /2017 3/2018 Unit: 1,000 VND Compared to the beginning of the same period Source: VIRAC, Agency for Price Management 47

48 2. Pharmaceutical Industry Overview 2.2 Vietnam Pharmaceutical Industry Overview Price movement There is a huge difference in drug prices listed at Ministry of Health and the ones distributed to customers. The difference in the price of some drugs at some drug stores, 2017 Unit: VND thousand Type of drug Long Chau drug store Yen Trang drug store Difference Source: VIRAC 48

49 Content 2. Pharmaceutical Industry Overview 2.1 Global Pharmaceutical Industry 2.2 Vietnam Pharmaceutical Industry Overview 2.3 Industry planning 2.4 Driving forces of industry development 49

50 2. Pharmaceutical Industry Overview 2.3 Industry planning 50

51 Content 2. Pharmaceutical Industry Overview 2.1 Global Pharmaceutical Industry 2.2 Vietnam Pharmaceutical Industry Overview 2.3 Industry planning 2.4 Driving forces of industry development 51

52 2. Pharmaceutical Industry Overview 2.4 Driving forces of industry development Subsidy policy of the State Policy to increase domestic drug spending Extension policy of the national health insurance system Impact from world economic agreements 52

53 2. Industry Overview 2.4. Driving forces of industry development USD million Total healthcare expenses, f Population tower, 2016 Population motivation and healthcare awareness: Source: VIRAC, WHO Source: VIRAC, GSO Over-60 population growth in the world, Million people Source: VIRAC, IMS health 53

54 Content 3. Enterprise analysis 3.1 Profitability 3.2 Cost structure 3.3 Asset Management Ratios 3.4 Capital Structure 3.5 Solvency 3.6 Return on Investment 54

55 3. Enterprise analysis 10 typical pharmaceutical enterprises in typical pharmaceutical enterprises in 2017 No. Company Business sector Revenue (VND billion) Main features 1 DHG Pharmaceuti cal Joint Stock Company 2 3 TRAPHACO Joint Stock Company Domesco Medical Import Export JSC 4 Imexpharm Pharmaceut ical JSC 5 OPC Pharmaceut ical JSC Source: VIRAC 55

56 3. Enterprise analysis 10 typical pharmaceutical enterprises in 2017 No. Company Busine ss sector Revenue (VND billion) Main features 6 S.P.M JSC 7 8 Vimedimex Medi Pharma JSC Ha Tay Pharmaceutical JSC 9 Ben Tre Pharmaceutical JSC 10 Lam Dong Pharmaceutical JSC Source: VIRAC 56

57 Content 3. Enterprise analysis 3.1 Profitability 3.2 Cost structure 3.3 Asset Management Ratios 3.4 Capital Structure 3.5 Solvency 3.6 Return on Investment 57

58 3. Enterprise analysis 3.1 Profitability VND billion Profitability, Source: VIRAC 58

59 3. Enterprise analysis 3.1 Profitability 59

60 3. Enterprise analysis 3.1 Profitability COGS/NR, Source: VIRAC 60

61 Content 3. Enterprise analysis 3.1 Profitability 3.2 Cost structure 3.3 Asset Management Ratios 3.4 Capital Structure 3.5 Solvency 3.6 Return on Investment 61

62 3. Enterprise analysis 3.2 Cost structure Selling expenses, Source: VIRAC 62

63 3. Enterprise analysis 3.2 Cost structure Administrative expenses, Source: VIRAC 63

64 Content 3. Enterprise analysis 3.1 Profitability 3.2 Cost structure 3.3 Asset Management Ratios 3.4 Capital Structure 3.5 Solvency 3.6 Return on Investment 64

65 3. Enterprise analysis 3.3 Asset Management Ratios Day Days in inventory, Source: VIRAC 65

66 3. Enterprise analysis 3.3 Asset Management Ratios Days of sales outstanding, Day Source: VIRAC 66

67 3. Enterprise analysis 3.3 Asset Management Ratios Asset turnover Source: VIRAC 67

68 Content 3. Enterprise analysis 3.1 Profitability 3.2 Cost structure 3.3 Asset Management Ratios 3.4 Capital Structure 3.5 Solvency 3.6 Return on Investment 68

69 3. Enterprise analysis 3.4 Capital Structure Self-financing ratio, Source: VIRAC 69

70 Content 3. Enterprise analysis 3.1 Profitability 3.2 Cost structure 3.3 Asset Management Ratios 3.4 Capital Structure 3.5 Solvency 3.6 Return on Investment 70

71 3. Enterprise analysis 3.5 Solvency Solvency, Source: VIRAC 71

72 Content 3. Enterprise analysis 3.1 Profitability 3.2 Cost structure 3.3 Asset Management Ratios 3.4 Capital Structure 3.5 Solvency 3.6 Return on Investment 72

73 3. Enterprise analysis 3.6 Return on Investment Profit ratio, Source: VIRAC 73

74 REPORT DISCLAIMER REPORT DISCLAIMER This document has been prepared in good faith on the basis of information available at the date of publication without any independent verification. VIRAC has produced this report for private circulation to professional clients only. All information and statistical data herein have been obtained from sources we believe to be reliable and made to ensure the accuracy of the contents of the pages of the report at the time of preparation. Such information has not been independently verified and VIRAC makes no representation or warranty, whether express or implied, of any kind with respect to the document and its contents, information and materials. The content found in this report is proprietary to VIRAC and is provided solely for your personal and non-commercial use. You agree that you will not use this report for any purpose that is unlawful and that you will not reproduce the report or redistribute it outside your organisation, or place it on a website for public access without the express written permission of VIRAC. SHOULD YOU NEED ANY ASSISTANCE, PLEASE CONTACT US: VIETNAM INDUSTRY RESEARCH AND CONSULTANCY (VIRAC JSC.,) 6 th Floor, Anh Minh Building, 36 Hoang Cau, O Cho Dua, Dong Da, Hanoi, Vietnam Website: viracresearch@virac.com.vn Tel:

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