Entering 2022, when the epidemic gradually passes, along with the Government's push to complete vaccine coverage and add a new economic stimulus package, it is expected to gradually recover.

Facing the impact of the COVID-19 pandemic, Vietnam's pharmaceutical industry in the past 2 years has faced many difficulties when the supply chain broke, the price of raw materials and transportation increased, along with the government's strict disease prevention and control regulations, the pharmaceutical market was severely stagnated.

Entering 2022, when the epidemic is gradually over, along with the Government promoting completion of vaccine coverage, adding a new economic stimulus package, shifting the strategy from "Zero COVID" to "living safely with the epidemic". “The pharmaceutical industry is forecasted to gradually recover.

According to the results of KIS (Vietnam) Securities Joint Stock Company collected from 29 listed companies in the pharmaceutical industry,

In the first quarter of 2022, although industry revenue decreased by 10.7% compared to the same period last year and 12.4% compared to the previous quarter, net profit still increased positively by 25.4% compared to 2021.

“We believe that the pharmaceutical industry is starting to get back on track and will make a strong breakthrough in the coming quarters,” affirmed KIS (Vietnam).

In the longer term, Saigon Thuong Tin Bank Securities Joint Stock Company (SBS) assesses that the pharmaceutical industry has a lot of growth potential for both manufacturing enterprises as well as retail groups due to Vietnam's large and rapidly aging population.

Consistently rising household income will encourage increased spending, particularly in the health sector, and demand for health and social care also increases with age.

Vietnam is one of the countries with the fastest aging population in the world. People aged 60 and over make up more than 12% of the population by 2021 and by 2050 this number is forecast to increase to over 25%.

Currently, the average life expectancy of Vietnamese people stands at 73.5 years, but the number of years of healthy life is low compared to many countries. The average number of years women live with disease is about 11 years and men about 8 years.

Notably, in the double burden of disease, Vietnamese people often suffer from chronic diseases.

On average, each elderly person aged 65 years and over has 3 diseases, mainly non-communicable diseases, requiring long-term treatment and care.

The need for health care and social care increases with age.

The Vietnamese healthcare market is growing rapidly. Total health spending increased from $16.1 billion in 2017 to more than $20 billion in 2021.

Pharmaceutical spending will also increase to more than $6.6 billion in 2021.

The investment and upgrading of the factory to high standards for bidding on the ETC channel (the bidding channel at the department and the hospital) will be the solution to the growth problem in the coming time.

With legal support, especially Circular 15/2019/TT-BYT regulating the bidding of drugs at public health facilities issued by the Minister of Health, domestic products have begun to significantly penetrate therapeutic drugs into the ETC channel, especially in Group 2 (pharmaceutical drugs, traditional drugs are produced entirely on drug production lines in Vietnam), which was previously just a playground for imported products. This will be a potential opportunity for currently listed pharmaceutical companies.

The new generation free trade agreements (FTAs) that Vietnam has signed will be the growth engine of the pharmaceutical industry in the coming time when creating favorable conditions for pharmaceutical enterprises to expand export markets, develop distribution network, access more capital, technology and high quality human resources towards higher standard product lines such as EU-GMP, Japan-GMP.

It is forecast that the scale of Vietnam's pharmaceutical industry will reach approximately VND 141,400 billion, up 9.2% over the same period, due to the continued growth in demand for products to support resistance and disease prevention. the need for treatment of neurotropic, cardiovascular, respiratory, endocrine disorders... due to sequelae after contracting COVID-19.

The Ministry of Health has issued Circular 15/2019/TT-BYT regulating the bidding of drugs at public health facilities, in order to support domestic drug manufacturing companies with high production technology. Accordingly, the drug purchasing activities of public hospitals that will go through the bidding process must be divided according to quality standards; in which the two highest drug groups, accounting for about 60% of the generic drug package value, are limited to drugs that meet EU-GMP standards or equivalent, for example Japan-GMP and PIC/S-GMP issued by member countries. ICH.

The 2016 Vietnam Pharmaceutical Law and Circular 03/2019/TTBYT on the list of domestically produced drugs that meet the requirements for treatment, drug prices and supply capabilities also give priority to domestically produced drugs, if possible. completely replace imported drugs.

The lengthy drug approval process has resulted in a tight supply of drugs in the industry, which is affected by the current speed of drug licensing. Although this affects each company differently and depends on the number of existing drug registrations or product revenue structure, the price level of many drugs has a relatively stable increase, enough to compensate. input costs increased, helping to maintain stable industry profits during the period.

Investors can also take advantage of tariff preferences under agreements such as the EU-Vietnam free trade agreement (EVFTA). EU investors are now allowed to set up companies to import pharmaceutical products and sell them to local distributors or wholesalers. EU investors are also allowed to build warehouses and conduct research and clinical trials.

Under the EVFTA, Vietnam will also comply with international standards for pharmaceuticals, which means that products already certified in the EU will not have to undergo additional testing and certification in Vietnam, thus reducing time and costs in the Vietnamese market.

In fact, realizing the great potential of the pharmaceutical industry, many leading retail companies have been investing heavily in this field in search of growth opportunities. Retail leaders are entering a new race in the pharmaceutical sector. In November 2021, Mobile World Investment Joint Stock Company (stock code: MWG) bought 1,294 million shares of An Khang Retail Joint Stock Company (An Khang Pharmacy), with a value of 52 ,2 billion dong, increasing ownership from 49% to 100% of An Khang pharmacy chain. Currently, the monthly sales of each pharmacy is more than 500 million VND, starting to reach the breakeven threshold.

Mobile World Investment Joint Stock Company builds a number of new An Khang models to increase revenue and optimize costs per store, and the business will rapidly increase the number of stores in 2022.

A retail business that is investing heavily in drugstores needs to mention that FPT Digital Retail Joint Stock Company (FPT Retail) - a member of FPT Corporation. In 2017, FPT Retail invested in the Long Chau pharmacy chain with the ambition to lead the pharmaceutical retail industry. Currently, sales of many Long Chau pharmacies have reached approximately 10 billion VND. FPT Retail will accelerate the opening of 200-300 new stores in 2022.

Currently, retail businesses are not only competing with each other, but this is also a fierce "battle" for market share with the giants of the pharmaceutical industry with brands. The pharmaceutical supply market is also quite rich; in which, enterprises import a lot from Germany, the US, China, France, Belgium, India... Notably, Vietnam's pharmaceutical imports in 2021 from some markets increased sharply compared to the previous year, such as China, Belgium, Thailand, Russia.

Import turnover of pharmaceutical materials and accessories will reach USD 419 million in 2021, an increase of 1.7% compared to 2020. The Chinese market increased by 6.7%, reaching over USD 299 million, accounting for 71.4%. The Indian market decreased by 16.2%, reaching over 57 million USD, accounting for 13.5%.

As for the price fluctuations of input materials, imported pharmaceutical materials currently account for about 80-90% of the demand in Vietnam. The COVID-19 epidemic has affected the supply chain of pharmaceutical raw materials, with prices increasing over the same period, especially at the time of a strong outbreak in the country that supplies the main source of pharmaceutical materials, China.

According to FE Healthcare, the price of the active pharmaceutical ingredient (API) for the production of Paracetamol, Azithromycin, Doxycycline, etc. have all increased as the price of an API for the production of Paracetamol has increased over 140% in the past year. This has put great pressure on operating profit margins as well as product prices of pharmaceutical companies.

However, according to KIS Securities Joint Stock Company (Vietnam), the demand for treatment of the "post-COVID-19" disease is becoming "hottest" than ever. Most major hospitals in Ho Chi Minh City have added their list of medical examination and treatment after COVID-19, so this securities company believes that there is still a lot of growth potential for the pharmaceutical industry in the next quarters.

Source: https://www.vietnamplus.vn/doanh-nghiep-nganh-duoc-tro-lai-duong-dua-tang-truong/797467.vnp