- Generic drug formula of drugs available abroad has proven effective and expirationof copyright - Patent drug has copyright Currently, the domestic pharmaceutical industry is largely ge
Trang 1BUILD A STRATEGIC PLAN FOR THE PHARMACY
BUSINESS IN VIETNAM
Pharmacy is type a goods, it has special properties, affect health and human life, it
is goods essential for any country The scope and demand of drugs is extremely large.Vietnam is a country with a population is quite crowded with nearly 90 million people,tropical monsoon climate, to lead many diseases - a large market and promise manypotential, Vietnam's pharmaceutical market is a hot spot for investors in countries andregions So, now Vietnam's pharmaceutical sector is considered as an attractive marketfor investors, including foreign investment by health care needs as well as the averagecost of medical bills / capita / year increasing
I Overview of the pharmaceutical industry in Vietnam
1 Vietnam's economic situation
In 2011-2012 the world economy is reeling in the wake of the global financial
Step into 2013, Step into 2013 although the situation has improved, but basically theeconomy is facing a four challenge of short-term as follows :
The first, recurrence risk of high inflation accompanied by the stagnation of the market
will make the situation more difficult Although, CPI first eight months in 2013 onlyincreased 3,53% comparison to the month 12/2012, but inflation risks remain "stalking"
as the underlying cause of the economy unsolved
The second bad debt situation has not improved, the credit line is clogged, the economy
is not absorbing capital
The third, ability to pull off interest rates not much; difficult to meet the expectations of
the company, due to inefficient operation of businesses and commercial banking system
Trang 2The fourth, efforts to "warm" the real estate market may not yield results, the liquidity of
this market is difficult to improve
Plus it's, in 2013 world economic situation was unpredictable fluctuations, have adverseeffects on the economy of a large open economy like Vietnam
In 2014 economy still not out of the stagnation phase The difficulties posed in
2013 will continue in 2014 The economy continues to grow, but slow speed However,the overall picture of the economy in 2014 still brighter than two years 2012-2013.Therefore, in the foreseeable in 2014 GDP growth rate of about 5,5% and CPI increasedabout 7% The main task in 2014-2015 remained stable macroeconomic, accelerate theprocess of restructuring the economy and most importantly restore market confidence
2 Vietnam's pharmaceutical industry currently.
The survey results of private investors at home and abroad of Grant Thornton Vietnam insecond quarter /2013 and 2 times previously showed that the Health and Pharmaceuticalsector is the most attractive investment
The overloading of hospitals in Vietnam, most of the state hospital with 2-3 patients
a hospital bed and lies, is a problem to be solved Potential development along withincreasing demand for high professional and favorable population has created attractiveinvestment opportunities for investors
Trang 3Vietnam's pharmaceutical market is still on increasing growth and deeperintegration with the world, but the contribution to GDP is still modest Vietnam'spharmaceutical market subject to separation of particular elements of human factors andeconomic factors such as exchange rates, interest rates, inflation this market segment isdivided into two diverse arraies of traditional medicine and western pharmacy.Particularly asparagus is also divided:
By way of using drugs
- OTC Drugs (Non-prescription goods, sold primarily in retail pharmacies)
- Drug treatment (no prescription, it use in hospitals and medical centers)
At Vietnam:
- Drug distribution into the hospital system
- Drug distribution to market
According to drug patents
Trang 4- Generic drug (formula of drugs available abroad has proven effective and expiration
of copyright)
- Patent drug (has copyright)
Currently, the domestic pharmaceutical industry is largely generic producers have highvalue and accounted for 69% of the total drug market with many categories related toantibiotics, conventional medicine (vitamins, decrease pain, fever) According to WHOand UNCTAD United Nations Conference on Trade and Development, pharmaceuticalindustry is divided into 4 levels:
Level 1: Fully imported
Level 2: Production numbers are 1 and most import generic
Level 3: Domestic pharmaceutical industry produced some export generic pharmaceuticalproducts
Level 4: Raw materials pharmaceutical production and new drug discover
Accordingly, the pharmaceutical industry is developing Vietnam level 2,5-3 Thislevel of evaluation is the economy of the pharmaceutical industry, has produced genericsbut still mostly imported This is the major challenge facing today's pharmaceuticalindustry Vietnam, while not itself being proactive resource materials for domesticproduction, with an average of more than 90% of raw materials are still imported,accounted for 50% of the production cost The imported pharmaceutical raw materialsmainly antibiotics, vitamins and accounts for over 80% of the value of imports
II General Environment of pharmaceutical industry - Analysis PEST model
Trang 51 Political - Law
Political stability: Vietnam is considered the country with the political
environment, social security and stability The Government has made efforts in theinstitutionalization of the legal system, administrative reform to create better conditionsfor business activities of domestic and foreign enterprises in general, firms in thepharmaceutical industry in particular
Policy: The pharmaceutical industry is strongly affected sectors by the
management policies of the state
First, price management: Under the provisions of the Drug Enforcement Administration,
businesses must register with the Department drug price management DrugAdministration based on the cost of production for each year If there are fluctuations inraw material prices, the company may be the local Health Department to apply foradjustment of drug prices this adjustment is done only if approved by the Department ofHealth
Trang 6Price pharmaceuticals accounted 5,4% in the CPI formula But the price index ofdrugs and pharmaceuticals (MPI) tends to increase and decrease quite like the consumerprice (CPI), but there is no pharmaceutical pricing by large fluctuations In 2010, the rate
of drug prices (5%) lower than the growth rate of the CPI by the Ministry of Healthtightened regulations on the management of drug prices
The second, business management: Follow WHO pharmaceutical industry to meet the
criteria specified in the pharmaceutical industry:
- Good Manufacturing Practice (GMP)
- Practice good control drugs Industry (GLP)
- Good Storage Practice (GSP)
- Practice good drug delivery (GDP)
- Good Pharmacy Practice (GPP)
To 2013, all pharmacies must apply the principle of GPP 1/7/2007 private pharmacies all
4 districts of major cities: Hanoi, Ho Chi Minh City, Da Nang, Can Tho to apply thisstandard
These regulations led to the purification of pharmaceutical industry Last year of
2008, had 52% pharmaceutical companies (including modern and traditional medicine)standard GMP-WHO The remaining businesses at the deadline if not achieved GMP-WHO will have to narrow the scope of production and turn to outsourcing to corporatestandards Number of enterprises and GLP GSP 51% and 63%
The relevant legislation: Enterprise Law, Investment Law, Competition Law,
Commercial Law and Intellectual Property Law is passed by the National Assembly, isexpected to generate investment environment - business - open competition andtransparency , equity and healthy for the business In the process of completing the legal
Trang 7framework, the change of the law and the bylaws can create legal risks for businesses inthe pharmaceutical industry.
Position leading agencies: The agency directly managing the pharmaceutical
industry Drug Administration was established in 1996 by decision of 547/TTg This is aspecialized agency of the Ministry of Health pharmacist assist the Minister of Health toperform the function of State management and law enforcement, operating activities andprofessional services for the pharmaceutical and cosmetic sector products on a nationalscale
2 The economic factors
The first, growth: During in the period from 2003 to 2007 in Vietnam's economic
growth rate is high and stable, averaging 7.5-8.5% / year From 2008 to now, due to theimpact of the world economic recession, GDP growth fell to Vietnam 2013 is the 6thyear in Vietnam economy fell into stagnation but there are signs of recovery as GDPgrowth of 5.42% but lower than the 5.5% growth target set out but 5.25% higher of 2012.Growth of pharmaceutical in industry from 2012to 2013 about 20% VND
The pharmaceutical industry is a sector also depends on economic development.When economic growth and improve people's living standards, the demand forpharmaceuticals, especially tonic, specific drugs has also increased Increasing revenueand profits of the pharmaceutical industry
Conversely, While economic recession, life and reduce people's income, thedemand will decline as do pharmaceutical sales and reduced profit pharmaceuticalindustry However, due to the group's pharmaceutical products essential to the decreasewill lower the economy's decline
+ Increased drug consumption:
Trang 8Vietnam's pharmaceutical industry grew by an average of 18-20%/ year in theperiod from 2011to 2013, higher than the world (4-7%) and Asia (12.6%) Thedevelopment of the pharmaceutical sector in the past year thanks to demand for drugs andthe increasing proportion of domestic production to improve competitiveness over
of domestic medicine Production is recovering compared with 2011
The econd, inflation
Higher inflation leads to input costs of business increase, affecting business performanceand growth of the business, thereby affecting revenue and profitability of the company.While key sectors are affected, the pharmaceutical industry is less affected becausethis sector is essential and subject to the strict supervision of the State on the sale price.Therefore, in the 2012-2013 inflation was kept below 6.6% two numbers, credit interestrates fell sharply in 2013 at 7-9% compared to 12-15% in 2012
Although prices are controlled by the State, but also pharmaceutical price will beadjusted according to the rise of the CPI increase, but slower growth According to theofficial announcement of the General Statistics Office, the prices of pharmaceuticalproducts and medical tháng 5/2013 up from 4/2013 was one of the group have no highgrowth rate in the index general consumption increased by 2.21% Compared to the same
Trang 9period last year, the prices of pharmaceutical and health by 6.2%, much lower than thegeneral rate near 19,8%.
The third, material prices, foreign exchange and interest rates
+ Fluctuations in raw material prices: business for pharmaceutical Vietnam today, the
source inputs of the most production units in the country depends heavily on foreignimports (over 90%) While raw material prices fluctuate Fluctuations raw material priceshave an impact on drug prices and to affect consumer sentiment These are risk factorsthat affect the cost of production and profitability of the pharmaceutical companies
In 2008, the main raw material imports as antibiotics average increase of 2%, anincrease of 34% and vitamin ingredients of analgesic, antipyretic increased 80% led tohigher production costs
+ Exchange and interest rates
These factors directly affect the profitability of the business Currently,pharmaceutical chemist still greater proportion than many herbal products (more 90% inthe pharmaceutical market), and over 90% imported raw materials and finished products,
so just a small change in exchange rates also affect the cost of pharmaceutical companies.Estimated at 3.36% rates increase the cost of business is increased 3,024%
Interest rates for loans to enterprises manufacture and trading at from 7-9%, downloan in 2012
In 2009 exchange rate USD/VND continue to be revised up to 9.3% and 2012remained at this level In 2013 adjusted up 1%, and maintain the amplitude at commercialbanks +/-1%
3 Society Factors
The first, Population
Trang 10Vietnam, with early 90 million people its large population, with over 90% of thepopulation in the working age, birth rate should maintain a high level of demand formedicines is very large In addition, annual GDP growth of Vietnam is about 8% / year,people's living standards increasingly raising the demand for the use of nutritionalsupplements, vitamins, health promotion is needed.
Vietnam is an agricultural country, over 70% of the population living in rural areas,have lower living standards in urban areas, the demand for cheaper drugs high This is ahuge market for business local pharmaceutical production, so except for a brand-namedrug, specialists need to be imported, and most of the domestic production of genericmedicines will meet the treatment needs of while cheaper
Second, the routine use of consumer goods
Most Vietnam medication without a doctor's prescription for common diseases, theysaid that if in the hospital to get prescriptions for common illnesses is both expensive justtime consuming Thus they declare to pharmacy patients
When a high living standard, tonic abuses in drug use habits of consumers isincreasingly popular, life is increasingly busy with a lot of pressure, needs additionalvitamins and minerals to maintain your body's health is increasingly concerned.Therefore, market supplements provide vitamins and minerals that are being developedvery fast, “piece of cake "relatively large for pharmaceutical companies to keep an eye
on Currently, the list of products in the market supply of pharmaceutical productionenterprises are mostly the tonic form such as effervescent tablets, tablet, siro…
4 The technical, technology factors
In any other country, science and technology are considered an important areadecided competitiveness and efficient growth of the national economy
Trang 11In Vietnam, technologically backward and Vietnam pharmaceutical industry is notout of the group developing country scientific backwardness The level of engineering,technology and medicine production is low is not the right investment, ongoinginvestment status lines overlap.
In developing countries, severe active research and development (R & D) in thepharmaceutical industry is focused But in Vietnam is a developing country with lowlabor costs but foreign investment in R & D activities not commensurate with thepotential of the industry Vietnam businesses lack the expertise and financial resources tosupport the work of R & D Instead, Vietnam is home to multinational companiesconducting clinical trials
The investment for a new research extremely expensive, on average it takes 10years at a cost of U.S $ 12-15 million Furthermore, the business runs immediate needs
of the market and limited manpower and technology should only enter productiontechnology to conventional medicine Therefore, R & D costs that Vietnam nowpublished tend to focus on the procurement of machinery and new equipment Expensesfor R & D only less than 3% of sales, this is a low rate compared with other Asiancountries population (about 5%) and compared with the world (12-16%) To survive anddevelop Vietnam businesses need to promote the development of scientific research andprocessing technology, biotechnology new drug production, finished products
5 Globalization
Advantage:
Investment Environment: Vietnam joined the WTO will bring economic sectors ingeneral and pharmaceuticals in particular the investment climate, business open,transparent and more favorable access to markets large and diverse business conditions,fair competition