Vietnam Pharmaceuticals & Healthcare Report - Q3 2022 - Shared by WorldLine Technology

Q3 2022
www.fitchsolutions.com
Vietnam
Pharmac
Pharmaceuticals
euticals & Healthcar
Healthcare
e
Report
Includes 10-year forecasts to 2031
Vietnam Pharmaceuticals & Healthcare Report | Q3 2022
Contents
Key View............................................................................................................................................................................................ 4
SWOT .................................................................................................................................................................................................. 6
Industry Forecast........................................................................................................................................................................... 7
Pharmaceutical Market Forecast ........................................................................................................................................................................................... 7
Healthcare Market Forecast ..................................................................................................................................................................................................... 9
Vietnam Prescription Drug Market Forecast ...................................................................................................................................................................14
Patented Drug Market Forecast............................................................................................................................................................................................16
Vietnam Generic Drug Market Forecast ............................................................................................................................................................................18
OTC Medicine Market Forecast .............................................................................................................................................................................................20
Pharmaceutical Trade Market Forecast .............................................................................................................................................................................22
Industry Risk/Reward Index ....................................................................................................................................................24

Vietnam Innovative Pharmaceuticals Risk/Reward Index .........................................................................................................................................24
Regulatory Review.......................................................................................................................................................................26
Market Overview..........................................................................................................................................................................29
Competitive Landscape.............................................................................................................................................................36
Company Profile...........................................................................................................................................................................40
DHG Pharmaceutical.................................................................................................................................................................................................................40
GlaxoSmithKline..........................................................................................................................................................................................................................42
Sanofi...............................................................................................................................................................................................................................................43
Traphaco.........................................................................................................................................................................................................................................45
Vietnam Pharmaceutical Corporation ...............................................................................................................................................................................47
Vietnam Demographic Outlook ..............................................................................................................................................49
Pharmaceuticals & Healthcare Glossary .............................................................................................................................52
Pharmaceuticals & Healthcare Methodology ....................................................................................................................54
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Key View
Key View: The ambition to provide universal healthcare across Vietnam remains intact and, coupled with plans to expand local
pharmaceutical production, pharmaceutical and healthcare spending will continue to increase. While cost-containment policies will
help manage government spending, which could limit opportunities for innovative multinational drugmakers, a commitment to
develop local drug production will support higher spending and also lead to greater export abilities.
Headline Expenditure Projections
• Pharmaceuticals: VND142.9trn (USD6.2bn) in 2021 to VND155.8trn (USD7.0bn) in 2022; 9.0% in local currency terms and
11.7% in US dollars. Forecast remains the same as last quarter.
• Healthcare: VND467.5trn (USD20.2bn) in 2021 to VND506.4trn (USD22.4bn) in 2022; 8.3% in local currency terms and 11.1%
in US dollars. Forecast revised upwards from last quarter.
HEADLINE PHARMACEUTICALS & HEALTHCARE FORECASTS (2020-2026)

Indicator 2020 2021 2022f 2023f 2024f 2025f 2026f
Pharmaceutical sales, VNDbn 118,995.069 142,918.000 155,825.908 169,362.550 183,877.137 199,567.848 216,392.286
Pharmaceutical sales, VND per

1,222,486.2 1,455,838.8 1,574,738.1 1,698,745.0 1,831,188.7 1,973,831.4 2,126,107.0
capita
Pharmaceutical sales, USDbn 5.127 6.171 6.895 7.364 7.916 8.506 9.132
Pharmaceutical sales, USD per

52.7 62.9 69.7 73.9 78.8 84.1 89.7
capita
Health spending, VNDbn 432,120.998 467,487.574 506,385.617 548,484.268 594,318.245 644,525.278 699,263.766
Health spending, USDbn 18.619 20.185 22.406 23.847 25.584 27.471 29.509
Pharmaceutical sales, % of GDP 1.89 1.70 1.68 1.65 1.63 1.60 1.58
Pharmaceutical sales, % of health

27.5 30.6 30.8 30.9 30.9 31.0 30.9
expenditure
f = Fitch Solutions forecast. Source: WHO, national sources, Fitch Solutions
Latest Updates
• From April 27 2022, it was reported Vietnam would no longer require international visitors to submit health declaration forms to
enter the country. It was also reported that, in March, Hanoi removed requirements for international visitors with a negative
Covid-19 test result to undergo quarantine and present Covid-19 vaccination certificates.
• On April 14 2022, Vietnam started its Covid-19 vaccination programme for children aged five to 11. The Moderna vaccine was
used in the first doses administered to this group.
• In April 2022, South Korean-based telecommunication firm KT announced its plans to launch a pilot telemedicine platform in
Vietnam by the end of the year. The service - aimed at monitoring those with chronic diseases - will let patients check their
medications, health conditions and workouts, and access counselling.
• Also in April 2022, 27 contract manufacturing organisations signed licensing deals to produce generic versions of Merck & Co's
molnupiravir, a Covid-19 antiviral pill. The CMOs together will produce molnupiravir for 105 markets in Africa, Asia and the Middle
East. In Vietnam, Stellapharm will complete dose manufacturing.
Risk/Reward Index
Vietnam will provide lucrative opportunities over the long term for pharmaceutical and healthcare firms. The expansion of universal
health coverage will continue to stimulate the development of the country's medicine and healthcare markets. However, issues
such as poor and inequitable access to healthcare services and low levels of intellectual property protection will continue to
undermine investment prospects for innovative firms, as reflected in the country's score of 55.3 out of 100 on our Risk/Reward
Index.
Key Economic View
We at Fitch Solutions have lowered our Vietnam’s 2022 real GDP growth forecast to 6.8% from 7.0% previously as economic
headwinds have risen following the outbreak of the Russia-Ukraine conflict. Notwithstanding the downward revision, we still expect
the Vietnamese economy to rebound strongly in 2022 from the growth print of 2.6% in 2021 and 2.9% in 2020. In Q122, Vietnam’s
real GDP expanded by 5.0% y-o-y, marking a second straight quarter of growth. We expect economic growth to pick up over the
coming quarters, underpinned by a continued lifting of Covid-19 restrictions and base effects.
Key Political View
Vietnam has a largely stable political system, kept in place by the ruling Communist Party of Vietnam's monopoly on power. The
potential for a cooling of relations with Beijing provides some external drags on the score, given Vietnam's deepening trade relations
with China. We view the one-party rule as inherently unsustainable in the longer term.
SWOT
SWOT Analysis
Strengths • Significant growth potential given a large increasingly urbanised and growing population.
• Healthcare sector a priority for the government.
• Sizeable local generic drugs sector, encouraged by the government.
• A local manufacturing sector that benefits from government support.
Weaknesses • Lack of universal health coverage owing to inequalities in the distribution and provision of healthcare in the
rural and urban areas.
• Lack of meaningful patent legislation or pricing and reimbursement system.
• Requirement for domestic companies to comply with international good manufacturing practices should
boost exports.
Opportunities
• Ageing population and increasing burden of chronic diseases to provide ample long-term opportunities for
prescription products.
Threats • Financial sustainability will continue to limit the success of Vietnam's National Health Insurance Scheme.
• Generic competition from more established manufacturing bases, such as India, will continue to pose
threats to domestic manufacturing.
Industry Forecast
Pharmaceutical Market Forecast
Key View: With favourable demographics and a desire to continue rolling out universal healthcare, the prospects for growth of
Vietnam's pharmaceutical market are positive. The main beneficiaries of the population increase will be generic manufacturers and
importers, as the country remains reliant on foreign-sourced medicines. One notable market deterrent that will remain is the low per
capita spending, while fiscal instability will also remain a concern.
Latest Updates
• On April 14 2022, Vietnam started its Covid-19 vaccination programme for children aged five to 11. The Moderna vaccine was
used in the first doses administered to this group.
• In April 2022, 27 contract manufacturing organisations signed licensing deals to produce generic versions of Merck & Co's
molnupiravir, a Covid-19 antiviral pill. The CMOs together will produce molnupiravir for 105 markets in Africa, Asia and the Middle
East. In Vietnam, Stellapharm will complete dose manufacturing.
Pharmaceutical Market Forecast

2017-2031
f = Fitch Solutions forecast. Source: United Nations Comtrade Database DESA/UNSD, ITC, Fitch Solutions
Structural Trends
We believe that pharmaceutical sales in Vietnam reached VND142.9trn (USD6.2bn) in 2021. We expect this to grow to VND155.8trn
(USD6.9bn) in 2022 and to VND216.4trn (USD9.1bn) by 2026. The figures will reach VND319.7trn (USD12.8bn) by 2031, growing at
a 10-year compound annual growth rate of 8.4% in local currency terms and 7.6% in US dollar terms.
Vietnam will continue to attract multinational drugmaker investment, underpinning its long-term growth potential. The outlook for
medicine sales in the country remains positive and will be boosted by a confluence of several important drivers, such as increasing
healthcare quality, a large and growing population and the expansion of the Social Health Insurance Scheme (SHI).
Since the implementation of a national SHI programme, Vietnam has made strong strides in extending universal healthcare
coverage (UHC) in the country. According to a report produced by the Vietnam Social Security agency, by the end of May 2019,
there were 84mn people participating in the public health insurance system nationwide, covering 89% of the population. A target
set by a resolution of the 6th Plenum of Communist Party of Vietnam states that by 2025, about 95% of the Vietnamese population
will be covered by the national health insurance scheme.
Covid-19 could derail universal healthcare coverage plan in Vietnam. Pre-Covid, there were already challenges that Vietnam's health
programme was facing such as financial stability of the healthcare scheme. Budget deficits are prominent in the country due to the
rising demand for health services. While the government is focused on improving the delivery of public healthcare services, we
believe that limited public financing, uneven distribution of health services, inadequate infrastructure and a similar shortage of
qualified workers will affect the goals of the UHC programme going forward. With these limitations already in place along with the
impact of Covid-19, we believe these challenges will be further aggravated. In Vietnam, funds were diverted from UHC to Covid-19
relief, stretching already constrained healthcare budget.
PHARMACEUTICAL SALES, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)

Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Pharmaceutical
97,917.005 109,020.931 118,995.069 142,918.000 155,825.908 169,362.550 183,877.137 199,567.848 216,392.286
sales, VNDbn
Pharmaceutical
sales, VNDbn, 0.37 11.34 9.15 20.10 9.03 8.69 8.57 8.53 8.43
% y-o-y
Pharmaceutical
sales, VND per 1,024,815.7 1,130,194.4 1,222,486.2 1,455,838.8 1,574,738.1 1,698,745.0 1,831,188.7 1,973,831.4 2,126,107.0
capita
Pharmaceutical
4.332 4.730 5.127 6.171 6.895 7.364 7.916 8.506 9.132
sales, USDbn
Pharmaceutical
sales, USDbn, -0.66 9.18 8.41 20.36 11.73 6.80 7.50 7.46 7.36
% y-o-y
Pharmaceutical
sales, USD per 45.3 49.0 52.7 62.9 69.7 73.9 78.8 84.1 89.7
capita
Pharmaceutical
1.77 1.81 1.89 1.70 1.68 1.65 1.63 1.60 1.58
sales, % of GDP
Pharmaceutical
sales, % of
27.8 27.1 27.5 30.6 30.8 30.9 30.9 31.0 30.9
health
expenditure
Healthcare Market Forecast

Key View: Boosted by a large population and universal healthcare rollout efforts, Vietnam's healthcare market will post robust
growth in the coming years. The Covid-19 outbreak will pose significant hurdles to universal healthcare achievement. High barriers
to accessing healthcare and low affordability could also further expose inefficiencies in the healthcare sector.
Latest Updates
• From April 27 2022, it was reported Vietnam would no longer require international visitors to submit health declaration forms to
enter the country. It was also reported that, in March, Hanoi removed requirements for international visitors with a negative
Covid-19 test result to undergo quarantine and present Covid-19 vaccination certificates.
• In April 2022, South Korean-based telecommunication firm KT announced its plans to launch a pilot telemedicine platform in
Vietnam by the end of the year. The service - aimed at monitoring those with chronic diseases - will let patients check their
medications, health conditions and workouts, and access counselling.
Healthcare Market Forecast

2017-2031
f = Fitch Solutions forecast. Source: WHO, Fitch Solutions
Structural Trends
Health expenditure in Vietnam amounted to VND467.5trn (USD20.2bn) in 2021, with the government accounting for 46.8% of the
total. For 2022, we forecast healthcare spending to reach VND506.4trn (USD22.4bn). We expect this to grow to VND699.3trn
(USD29.5bn) by 2026 and VND939.7trn (USD37.7bn) by 2031, posting a 10-year compound annual growth rate (CAGR) of 8.7% in
local currency terms and 7.8% in US dollar terms. By this point, healthcare spending will account for a similar share of the country's
GDP at 5.6%, from 6.9% in 2020 which decreased to 5.6% in 2021. At the per capita level, we expect spending to increase,
from USD206 in 2021 to reach USD360 in 2031.
As of May 2 2022, the WHO stated there had been more than 10.6mn confirmed cases of Covid-19 and 43,042 deaths. The WHO
also reported that, as of April 21 2022, more than 211.2mn vaccine doses had been administered; Our World In Data stated 79.2% of
people had completed initial protocol with 2.2% partly vaccinated as of March 22.
Vietnam's healthcare market is set for a period of transformation as reforms within the sector gather momentum. As with many of
its Asian neighbours, Vietnam is attempting to achieve universal healthcare access through the implementation of a
comprehensive health insurance system. The commitment to roll out universal healthcare in the country will have the potential to
reshape the sector, with significant implications for both pharmaceutical and healthcare providers. A target set by a resolution of the
sixth Plenum of the Communist Party of Vietnam states that by 2025, about 95% of the Vietnamese population will be covered by
the national health insurance scheme. The government also aims that by 2025, the direct healthcare cost on each household will
be 35% lower than the current cost. By 2030, the country hopes to raise average longevity to 75 years old, with at least 68 years of
healthy life.
The proposed reforms aimed at expanding access to medical services for the population bode well for Vietnam's attractiveness to
international pharmaceutical companies. The Vietnamese government's target of covering majority of the population with health
insurance by 2025 will also result in significant investment in the healthcare sector. In September 2018, Prime Minister Nguyễn
Xuân Phúc approved the Vietnam Health Programme (2018-2030) to improve the well-being, stature, lifespan and quality of life
of citizens. The programme sets three goals:
• Promote a healthy diet and lifestyle with appropriate nutrition and increased physical activity to improve Vietnamese people’s
stature and well-being.
• Raise public awareness for behavioural change to protect health and prevent health-related risks.
• Provide constant and long-term primary healthcare services to reduce the burden of illness on the community and enhance
people’s quality of life.
To achieve these goals, the government will focus on reducing dependence on tobacco and alcohol, ensure environmental
sanitation and food safety, and foster the early detection and management of a number of non-communicable diseases.
While the government is focused on improving the delivery of public healthcare services, inefficiencies, such as limited public
financing options, means that the inequalities facing the country's healthcare market are likely to continue. In the medium-to-long
term, we believe that the uneven distribution of health services, inadequate infrastructure and a shortage of qualified workers will
continue to obstruct pharmaceutical and healthcare companies wishing to operate in the market.
The private healthcare sector is expanding rapidly. Given the dissatisfaction with the underperforming and underfunded public
healthcare sector, the private healthcare sector will see significant growth in coming years. French and US companies are the
dominant foreign players running hospitals, while companies based in Thailand (Bumrungrad Hospital), Indonesia (Lippo Group),
Malaysia (IHH Healthcare, KPJ Healthcare) and Singapore (Parkway Holdings) are currently setting up operations or have expressed
an interest in establishing facilities. These private healthcare players anticipate strong growth within the sector, and we view this as a
major driver behind total healthcare market growth - and as a result medicine sales - over the coming years.
A 10-year healthcare programme for the elderly started in Vietnam in 2021 as part of the government’s response to the country’s
fast-ageing population. Prime Minister Nguyen Xuan Phuc approved the healthcare programme, under which authorities at all levels
will be required to arrange funding for elderly healthcare by 2025. This funding will be maintained until at least 2030. Over the next
five years, at least 70% of elderly people aged over 60 and their caregivers will be informed about the programme and their right to
care. That percentage is expected to increase by 85% by 2030. Under the programme, at least 70% of elderly people across the
country will have medical check-ups once a year. By 2025, 95% of the elderly will have health records, with that figure rising to
100% over the following five years.
Intergenerational self-help clubs and other kinds of healthcare clubs will also be set up as part of the programme. The
Intergenerational Self-Help Club (ISHC) model - community-based organisations that promote healthy longevity through a variety
of inter-generational activities - was first launched in Vietnam in 2006. There are now nearly 3,000 ISHCs nationwide with a total
membership of around 160,000 people. ISHCs carry out social and cultural activities to promote psychosocial health such as games,
performances and home visits, and they promote life-long learning through monthly talks, study visits and intergenerational cross-
learning and sharing on a broad range of topics. They also focus on physical health by raising awareness of and promoting healthy
and active lifestyles, for example, exercise, sports, hobbies, meditation and volunteerism, and thorough access to regular health
screenings (monitoring weight and blood pressure), check-ups, treatment and insurance.
Changing demographics will drive increased demand for healthcare in Vietnam. Vietnam now has about 12mn elderly people
aged 60 and above. The country officially entered the ageing phase in 2011, and is among the most rapidly ageing markets in the
world. The proportion of older persons in the total population has increased to 11.9%, and one in nine persons was over the age of
60 in 2017. According to projections from the General Statistics Office, the population of over 60-year-olds is expected to reach
21mn, accounting for 20% of the total population, by 2038, and 27mn, accounting for 25% of the population, by 2050.
The country’s population is also utilising more healthcare than in the past, which is partly the result of making care more accessible
and affordable to all, and partly due to earlier diagnosis and closer monitoring and follow-ups for medical conditions. With the elderly
consuming a disproportionately large share of healthcare services, this rapid rise in the pensionable population will present
pharmaceutical and healthcare companies with significant business expansion and revenue-earning opportunities, especially as the
government tries to expand access to healthcare services. This in turn will bolster the attractiveness of the Vietnamese healthcare
market.
HEALTHCARE EXPENDITURE TRENDS, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)

Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Health
spending, 352,330.156 401,822.370 432,120.998 467,487.574 506,385.617 548,484.268 594,318.245 644,525.278 699,263.766
VNDbn
Health
spending,
11.24 14.05 7.54 8.18 8.32 8.31 8.36 8.45 8.49
VNDbn,
% y-o-y
Health
spending,
3,687,546.3 4,165,598.1 4,439,360.0 4,762,077.3 5,117,407.7 5,501,422.3 5,918,674.0 6,374,695.4 6,870,437.0
VND per
capita
Health
spending, 15.588 17.432 18.619 20.185 22.406 23.847 25.584 27.471 29.509
USDbn
Health
spending,
10.10 11.83 6.81 8.41 11.00 6.43 7.28 7.37 7.42
USDbn,
% y-o-y
Health
spending,
163.2 180.7 191.3 205.6 226.4 239.2 254.8 271.7 289.9
USD per
capita
Health
spending, 6.36 6.66 6.87 5.57 5.46 5.35 5.26 5.16 5.09
% of GDP
GOVERNMENT HEALTHCARE EXPENDITURE TRENDS, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)
Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Govt.
health
146,668.548 178,604.197 197,233.102 218,736.123 243,020.791 269,800.046 299,336.761 332,171.003 368,707.948
spend,
VNDbn
Govt.
health
spend, -7.31 21.77 10.43 10.90 11.10 11.02 10.95 10.97 11.00
VNDbn,
% y-o-y
Govt.
health
6.489 7.748 8.498 9.445 10.753 11.730 12.886 14.158 15.559
spend,
USDbn
Govt.
health
spend, -8.26 19.41 9.68 11.13 13.85 9.09 9.85 9.87 9.90
USDbn,
% y-o-y
Govt.
health
spend, %
41.63 44.45 45.64 46.79 47.99 49.19 50.37 51.54 52.73
total
health
spend
PRIVATE HEALTHCARE EXPENDITURE TRENDS, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)
Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Private
health
205,661.608 223,218.174 234,887.896 248,751.451 263,364.826 278,684.222 294,981.484 312,354.275 330,555.818
spend,
VNDbn
Private
health
spend, 29.76 8.54 5.23 5.90 5.87 5.82 5.85 5.89 5.83
VNDbn, %
y-o-y
Private
health
9.099 9.684 10.121 10.741 11.653 12.117 12.698 13.313 13.949
spend,
USDbn
Private
health
spend, 28.42 6.43 4.51 6.12 8.50 3.98 4.80 4.84 4.78
USDbn, %
y-o-y
Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Private
health
spend, % 58.37 55.55 54.36 53.21 52.01 50.81 49.63 48.46 47.27
total health
expenditure
Vietnam Prescription Drug Market Forecast

Key View: Vietnam's prescription drug market is set to grow at a healthy pace over our forecast period through to 2031 due to
its ageing population, increasing incidence of non-communicable diseases and healthcare expansion initiatives. The involvement of
foreign drugmakers in Vietnam's pharmaceutical industry and the growth of prescription medicines, which we forecast to outpace
sales of OTC medicines, add to the positive outlook.
Prescription Drug Market Forecast

2017-2031
Structural Trends
The sale of prescription drugs in Vietnam amounted to VND108.0trn (USD4.7bn) in 2021. We expect this to rise to
VND118.2trn (USD5.2bn) in 2022. The figures are expected to grow steadily to reach VND166.3trn (USD7.0bn) by 2026 and
VND249.9trn (USD10.0bn) by 2031, with a 10-year compound annual growth rate of 8.8% in local currency terms and 8.0% in US
dollar terms. We expect prescription drugs to account for a growing share of the overall market, rising gradually from 75.6% of total
medicine sales in 2021 to 78.2% by 2031, as access and regulatory environment improve.
Over the forecast period, there will be an increase in demand for prescription drugs as the combination of rising incomes, the roll-
out of national health insurance and better healthcare infrastructure spur demand for medicines. While drugmakers may view the
OTC market as attractive, the fundamental demand profile will continue to be on the rising chronic disease burden - stimulating
both patented and generic medicines. While the lowering of the prices of these drugs in government tenders will slow the growth of
prescription drug sales, we expect volumes to increase significantly to compensate.
PRESCRIPTION DRUG MARKET INDICATORS, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)
Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Prescription
drug sales, 73,253.768 81,837.366 89,628.140 108,008.448 118,171.070 128,873.363 140,392.143 152,886.797 166,333.834
VNDbn
Prescription
drug sales,
0.71 11.72 9.52 20.51 9.41 9.06 8.94 8.90 8.80
VNDbn, %
y-o-y
Prescription
drug sales, 3.241 3.550 3.862 4.664 5.229 5.603 6.044 6.516 7.019
USDbn
Prescription
drug sales,
-0.33 9.55 8.77 20.76 12.12 7.16 7.86 7.82 7.72
USDbn, %
y-o-y
Prescription
drug sales,
74.8 75.1 75.3 75.6 75.8 76.1 76.4 76.6 76.9
% of total
sales
Patented Drug Market Forecast

Key View: The share of patented medicines in the Vietnamese pharmaceutical market is set to decline over the coming years. The
market poses considerable risks for innovative drugmakers, ranging from weak patent enforcement to regulatory approval delays,
while government policies will lead to a growing preference for generic and biosimilar medicines.
Patented Drug Market Forecast

2017-2031
Structural Trends
Patented drug sales in Vietnam are estimated to have amounted to VND27.1trn (USD1.2bn) in 2021 and are forecast to rise to
VND28.8trn (USD1.3bn) in 2022. We expect this to increase to VND36.0trn (USD1.5bn) by 2026 and to VND45.8trn (USD1.8bn) by
2031, posting a 10-year compound annual growth rate of 5.4% in local currency terms and 4.6% in US dollar terms. Patented
medicines will lose their share of the overall market, falling from 19.0% in 2021 to 14.3% in 2031. Similarly, their share of the overall
prescription market by value will drop from 25.1% in 2021 to 18.3% in 2031.
Growth in the patented drug market will be slower than growth in the generic drug segment, largely owing to the policy of generic
substitution. Nevertheless, prescription drug branding is important, resulting in continued sales even after patent expiry. Affluent
urban populations are more frequent users of patented medicines, although poor intellectual property law enforcement will make it
difficult for patented medicines to retain their market exclusivity and open them up to quicker generic competition.
PATENTED DRUG MARKET INDICATORS, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)
Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Patented drug
19,876.904 21,658.457 23,112.488 27,102.569 28,836.752 30,556.149 32,321.858 34,154.185 36,029.704
sales, VNDbn
Patented drug
sales, VNDbn, % -20.20 8.96 6.71 17.26 6.40 5.96 5.78 5.67 5.49
y-o-y
Patented drug
0.879 0.940 0.996 1.170 1.276 1.329 1.391 1.456 1.520
sales, USDbn
Patented drug
sales, USDbn, % -21.02 6.84 5.99 17.51 9.03 4.12 4.73 4.62 4.45
y-o-y
Patented drug
sales, % of total 20.3 19.9 19.4 19.0 18.5 18.0 17.6 17.1 16.7
sales
Vietnam Generic Drug Market Forecast

Key View: Vietnam's generic drug market will grow strongly in the long term, driven by a rapidly increasing population and
improvements to healthcare insurance coverage. Given cost-containment measures, the country's historically poor regulatory
environment and intellectual property regime, the generic sector will outpace the patented segment, driving sales growth in the
wider pharmaceutical market.
Generic Drug Market Forecast

2017-2031
Structural Trends
Generic drugs will continue to account for the majority of prescription drug sales with a value of VND64.7trn (USD2.8bn) in 2021
and a projected value of VND89.3trn (USD4.0bn) in 2022. We expect this to grow to VND130.3trn (USD5.5bn) by 2026 and to
VND204.1trn (USD8.2bn) by 2031. This is a 10-year compound annual growth rate (CAGR) of 12.2% in local currency terms and
11.4% in US dollar terms. By 2031, the value of the generic market will have risen to almost 63.8% of the total (up from 56.6% in
2021), with generic drugs also increasing their share of the prescription market (from 59.9% to 81.7%).
Vietnam's generic drug market will post robust growth rates over the coming years, driven by the government's encouragement of
the predominant generic-based local industry, as well as the expansion of healthcare services. Over the coming years, the
government will be re-assessing the public funds allocated to innovative health products. While public healthcare expenditure
increased in 2020 as a result of the Covid-19 pandemic, the accompanying economic slowdown will reverse this dynamic in
subsequent years. We believe public health and prevention services will be affected by budget cuts. Moreover, there will be new
budget restrictions, more reference pricing, greater emphasis on cost-effectiveness studies and additional mechanisms to increase
the uptake of cost-effective therapeutics such as generic drugs. Domestic medicine production remains firmly within the generic
drug sector given the lack of scientific expertise for innovative drug development, and also primarily due to the significantly higher
demand for generic drugs in the country as a whole. While the development of healthcare services in Vietnam will increase the
ability for patients to access higher quality medicines, affordability levels remain low and as such opportunities for patented
drugmakers will remain restricted.
GENERIC DRUG MARKET INDICATORS, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)
Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Generic drug
53,376.863 60,178.909 66,515.652 64,709.466 89,334.318 98,317.215 108,070.286 118,732.612 130,304.130
sales, VNDbn
Generic drug
sales,
-17.51 12.74 10.53 -2.72 38.05 10.06 9.92 9.87 9.75
VNDbn, % y-
o-y
Generic drug
2.362 2.611 2.866 2.794 3.953 4.275 4.652 5.061 5.499
sales, USDbn
Generic drug
sales,
-18.36 10.55 9.78 -2.51 41.47 8.14 8.83 8.78 8.66
USDbn, % y-
o-y
Generic drug
sales, % of 54.5 55.2 55.9 56.6 57.3 58.1 58.8 59.5 60.2
total sales
OTC Medicine Market Forecast

Key View: Sales of OTC medicines will diminish as a proportion of the wider pharmaceutical market due to the government's focus
on equalising access to healthcare across the country. While there is the potential for a liberalisation of the OTC market in the
coming years, the demand for prescription medicines will continue to grow at a faster rate than OTC drugs.
OTC Medicine Market Forecast

2017-2031
Structural Trends
Despite the blurred distinction between prescription and non-prescription products, OTC healthcare has been achieving relatively
robust value growth in the last few years. In 2021, OTC drug sales amounted to VND30.6trn (USD1.5bn) or USD15 per capita. We
expect this to rise to VND50.1trn (USD2.1bn) by 2026 and VND69.8trn (USD2.8bn) by 2031. This represents a 10-year compound
annual growth rate of 8.6% in local currency terms and 6.4% in US dollar terms.
OTC medicine growth in Vietnam will be hindered by the fast-growing demand for prescription medicines among the population
thanks to expanding health insurance coverage. In particular, strong growth forecasts within the patented and generic drug market
segments will gradually erode OTC medicines' share of the pharmaceuticals market. However, with the continued modernisation of
the healthcare sector - along with the rising need for cost containment in the public healthcare spending plan and increased health
awareness among the population at large - OTC growth should be evident despite its small existing base. The government's
continued encouragement of private sector involvement may boost the OTC market as higher prices force patients to look to self-
medication.
OVER-THE-COUNTER (OTC) MEDICINE MARKET INDICATORS, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)
Indicator 2018 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
OTC medicine
24,663.237 27,183.564 29,366.929 30,578.405 37,654.838 40,489.186 43,484.994 46,681.051 50,058.452
sales, VNDbn
OTC medicine
sales, VNDbn, % -19.34 10.22 8.03 4.13 23.14 7.53 7.40 7.35 7.24
y-o-y
OTC medicine
1.091 1.179 1.265 1.507 1.666 1.760 1.872 1.990 2.112
sales, USDbn
OTC medicine
sales, USDbn, % -1.65 8.08 7.30 19.12 10.54 5.66 6.34 6.29 6.17
y-o-y
Over-the-
counter (OTC)
25.2 24.9 24.7 24.4 24.2 23.9 23.6 23.4 23.1
medicine sales,
% of total sales
Pharmaceutical Trade Market Forecast

Key View: The Vietnamese pharmaceutical export value is expected to rise over the next five years, spurred on by the country's
high manufacturing standards and the development of the domestic pharmaceutical industry. However, the country will continue
to rely on pharmaceutical imports - particularly high-value medicines - to meet its growing medical demands, and we forecast
its pharmaceutical trade deficit will widen over the coming years.
Pharmaceutical Trade Forecast

2017-2026
Structural Trends
Pharmaceutical exports from Vietnam were valued at VND4.8trn (USD205.5mn) in 2021. We expect this to rise to VND9.8trn
(USD412.3mn) by 2026 at a compound annual growth rate (CAGR) of 15.5% in local currency terms and 14.9% in US dollar terms.
Imports into the country are projected to remain significantly more substantial. Rising from VND95.7trn (USD4.1bn) in 2021 to
VND144.9trn (USD6.1bn) by 2026, imports are expected to post a CAGR of 8.7% in local currency terms and 8.2% in US dollar terms.
The Vietnamese government's support for the local pharmaceutical industry will remain steadfast. This is in part driven by the
authorities' push to meet domestic healthcare needs. In addition, the economic potential of the pharmaceutical sector will
incentivise continued government support for the domestic industry. Vaccine shortages, for example, remain a persistent challenge
and were cited by the Ministry of Health as a contributing factor to the spread of several infectious diseases in August 2016. To
address this, rulings such as Decision No.68/QD-TTg have been issued, setting out the objective to gradually reduce the country's
reliance on pharmaceutical imports and ensure the adequate supply of drugs. Although the government aims to increase the share
of locally produced pharmaceuticals to 80%, an average of 55% of medicines in Vietnam are imported every year. One of the
reasons for Vietnam's reliance on imports is that most domestic companies lack R&D capabilities, and do not meet the EU Good
Manufacturing Practice (EU-GMP) or Pharmaceutical Inspection Co-operation Scheme Good Manufacturing Practice (PIC/S-GMP)
standards required to manufacture high-quality generic drugs. Furthermore, Vietnam imports more than 90% of drug inputs, half of
which are from China.
PHARMACEUTICAL TRADE DATA AND FORECASTS (VIETNAM 2020-2026)

Indicator 2020 2021 2022f 2023f 2024f 2025f 2026f
Pharmaceutical exports, USDmn 180.86 205.47 235.85 265.26 305.69 354.58 412.25
Pharmaceutical exports, USDmn, % y-o-y 14.12 13.61 14.78 12.47 15.24 15.99 16.26
Pharmaceutical imports, USDmn 3,418.17 4,131.06 4,615.73 4,929.45 5,298.92 5,694.15 6,113.07
Pharmaceutical imports, USDmn, % y-o-y 8.41 20.86 11.73 6.80 7.50 7.46 7.36
Pharmaceutical trade balance, USDmn -3,237.31 -3,925.59 -4,379.88 -4,664.19 -4,993.23 -5,339.57 -5,700.82
PHARMACEUTICAL TRADE DATA AND FORECASTS LOCAL CURRENCY (VIETNAM 2020-2026)
Indicator 2020 2021 2022f 2023f 2024f 2025f 2026f
Pharmaceutical
exports, 4,197,429.22 4,758,676.00 5,330,165.95 6,101,045.90 7,101,282.68 8,319,277.29 9,769,005.99
VNDmn
Pharmaceutical
exports,
14.90 13.37 12.01 14.46 16.39 17.15 17.43
VNDmn, % y-o-
y
Pharmaceutical
imports, 79,330,046.04 95,674,486.53 104,315,507.45 113,377,425.98 123,094,016.62 133,597,947.28 144,860,835.03
VNDmn
Pharmaceutical
imports,
9.15 20.60 9.03 8.69 8.57 8.53 8.43
VNDmn, % y-o-
y
Pharmaceutical
trade balance, -75,132,616.81 -90,915,810.53 -98,985,341.49 -107,276,380.08 -115,992,733.94 -125,278,669.99 -135,091,829.04
VNDmn
Industry Risk/Reward Index

Vietnam Innovative Pharmaceuticals Risk/Reward Index
Key View: Vietnam will provide lucrative opportunities over the long term for pharmaceutical and healthcare firms. The expansion
of universal health coverage and economic growth will continue to stimulate the development of the country's medicine and
healthcare markets. However, issues such as poor and inequitable access to healthcare services and low levels of intellectual
property protection will continue to undermine investment prospects for innovative firms, as reflected in the country's score of 55.3
out of 100 on our Risk/Reward Index.
Vietnam: Innovative Pharmaceuticals RRI - Global And Regional Rank
• Regional rank (out of 20): 11th

• Global rank (out of 109): 47th
Vietnam: Innovative Pharmaceuticals Risk/Reward Index

Q322
Note: Scores out of 100, higher scores = lower risk. Source: Fitch Solutions' Innovative Pharmaceuticals Risk/Reward Index
Industry Rewards: Reflecting the high growth outlook for Vietnam's pharmaceutical market, the country scores 64.8 out of 100,
far above the regional average of 52.5. The country's market expenditure is high compared with regional peers, thus offering long-
term benefits to innovative pharmaceutical companies. The growing demand for medicines and medical treatment will be
supported by the expansion of the Social Health Insurance Scheme, rising income growth and improvements to healthcare delivery.
Country Rewards: Vietnam scores 38.2 out of 100, far below the regional average of 48.4. Urbanisation is minimal; the vast
majority of the population lives in rural areas, which are characterised by a lack of healthcare infrastructure, thereby
restricting access to healthcare services. Key drivers of growth include a large and expanding population, which will continue to
stimulate the development of Vietnam's medicine market.
Industry Risks: Vietnam scores 43.6 out of 100, below the regional average of 52.1. Patented medicine sales will continue to face
a challenging business environment in the country as concerns over counterfeit drugs, intellectual property protection and pricing
pressures remain unaddressed. In addition to the challenges posed by the challenging regulatory environment, the focus on
increased cost efficiency will further reduce the appetite for high-value medicines.
Country Risks: Highlighting the short-term economic and political risks, Vietnam scores 59.6 out of 100, above the regional
average of 57.6. We at Fitch Solutions have lowered our Vietnam’s 2022 real GDP growth forecast to 6.8% from 7.0% previously as
economic headwinds have risen following the outbreak of the Russia-Ukraine conflict. Notwithstanding the downward revision, we
still expect the Vietnamese economy to rebound strongly in 2022 from the growth print of 2.6% in 2021 and 2.9% in 2020.
Regulatory Review
In Vietnam, the Ministry of Health is the main regulatory authority. Under the Ministry of Health, the Drug Administration
Department of Vietnam, established in 1996, is responsible for the regulation of pharmaceuticals. It evaluates pharmaceutical
applications for their compliance with the 2005 Pharmaceutical Law. It has specific responsibilities, which mainly include:
• Develop and issue legal documents on pharmaceuticals;

• Manage the registration and circulation of pharmaceuticals;
• Permit, suspend or revoke certificates of pharmaceutical trading, manufacturing, import, export and circulation of drugs;
• Coordinate with the science and training department, under the Ministry of Health, regarding clinical trials in Vietnam;
• Manage drug advertising;
• Manage and coordinate with competent authorities for drug prices, carry out measures to stabilise the drug market and manage
tenders in hospitals; and
• Inspect the implementation of provisions relating to drugs and punish violations
Vietnam has a legal framework for pharmaceuticals and continues to improve it. The Pharmacy Law, issued in June 2005,
implements regulations that govern the management of drugs and biologicals in Vietnam. The regulations provide guidelines on:
• Pharmaceutical business
• Registration and distribution of drugs
• Traditional herbal medicines and drugs from pharmaceutical materials
• Prescriptions and use of drugs
• Advertisement of drugs
• Provision of drugs in health facilities
• Clinical trials of drugs
• Management of addictive drugs, mental health medications, radioactive materials, etc
• Standards for quality of drugs and drug quality assurance
The Law, however, does not cover issues such as financial and economic mechanisms, monitoring and evaluation methods, or the
role of health professionals. The Vietnamese regulations on market authorisation are in line with the Association of Southeast Asian
Nations (ASEAN) Common Technical Dossier and ASEAN Common Technical Requirements, but market authorisation still faces
challenges such as lack of tests for bio-equivalence and bio-availability of drugs, leading to difficulties in the scientific assessment of
drug efficacies. The National Drug Policy was issued by the Vietnamese government in 1996 to ensure regular and sufficient supply
of quality drugs for the population and the rational and safe use of these.
Pharmaceutical Advertising
Pharmaceutical advertising is restricted in Vietnam. All advertising materials must be registered with DAV. Doctors are not allowed to
advertise pharmaceutical products, though reports suggest the practice at times continues under the guise of medical advice. This
is despite a 1996 decree that says doctors and medical officials are banned from using their stature to give recommendations in the
media.
Prescription drugs cannot be advertised directly to consumers, restricting the potential marketplace; however, these products can
be promoted to health officers via qualified representatives of pharmaceutical companies and through product conferences and
health seminars. Foreign firms are required to obtain permission from a provincial health department before holding a conference,
and the department must be made aware of any pharmaceutical displays. Compliance remains uneven, as there is a lack of
cooperation between various government bodies and punishments are weak.
Advertising laws are more liberal for OTC than for prescription products. Consumer marketing is permitted via magazines and
newspapers, as well as leaflets and brochures. The Ministry of Health issues a list of drugs that can be advertised to consumers
through TV, radio and other mass media outlets.
In November 2018, the government brought into effect a law according to which only drug business establishments are allowed to
hire medical representatives, essentially meaning that a representative office cannot hire new medical representatives, as the
definition of drug business establishments excludes representative offices.
Intellectual Property Issues
Vietnam's accession to the WTO was ratified in January 2007 and implemented two years later. The membership has already
resulted in some improvements to the country's intellectual property (IP) regime after the government agreed to immediately
implement IP guidelines to the standards of the Trade-Related Aspects of Intellectual Property Rights agreement.
The government has taken a number of steps to increase IP protection and the country's patent structures are already broadly in
line with those demanded by the WTO. This includes a 20-year patent term and the five-year market exclusivity of undisclosed and
other test data, which was clarified in September 2006 by a more detailed decree. The exception to this rule is when an applicant
grants third-party permission to use its data, such as through a contract manufacturing or partnership agreement, or when a
company generates the data anew. The regulatory authorities will release protected data only if it is deemed necessary to protect
the public.
Concerns remain over the policy that exempts local manufacturers of generic medicines from submitting bioequivalence studies
prior to regulatory approval. Foreign research-based industry members are critical of the lack of strict equivalence requirements,
which negatively impacts patient safety.
Counterfeit Drugs
Despite recent improvements to the IP environment, illegal copying remains commonplace, partly due to the lax enforcement of
legislation. Part of the problem is the fact that the government has little scope to tackle the problem, given that the majority of drug
sales in Vietnam are achieved not through regulated pharmacies but through private dealers that handle drugs. In addition, the
country has long, poorly monitored borders with markets such as Laos, China and Cambodia where the counterfeit drug trade is
active.
The Ministry of Health acknowledged that the high levels of fake and low-quality drugs are owing to lax management and, therefore,
it is planning to introduce more drastic punishments for producers and importers found circulating such products, a move
supported by the WHO. In addition, Vietnam's drug management administration has in the past revoked the licence for a number of
medicines on sale in the domestic market. The seized drugs include anti-allergy treatment astemizole, which can cause dangerous
side effects. Of the banned drugs, five had been imported from India.
Corruption is an additional challenge. Anecdotal evidence suggests that around a quarter of those using healthcare services pay
bribes. The majority of those payments or gifts are given voluntarily, indicating the level of entrenched expectations in the sector.
Pricing Regime
Due to a lack of controls, medicine costs fluctuate wildly throughout the supply chain, which has merged as a key concern for
foreign companies. Imported active pharmaceutical ingredient prices follow the global market's fluctuations. Domestic
manufacturers use mark-ups indiscriminately and wholesalers also take seemingly random cuts. Finally, retail pharmacies do not
adhere to good pharmacy practice (GPP) standards set by the WHO.
These factors combine to create variable prices for the consumer. The DAV wants to end this situation by exerting its influence more
effectively. Under the present system, importers calculate the cost, insurance and freight and then submit wholesale and retail price
recommendations to the DAV. The DAV then decides whether the proposed prices are reasonable before allowing them to be
distributed. However, the management of this system has been criticised as lax. Pharmaceutical companies must also publicly list
product prices and make announcements when changes are made.
In 2006, the Ministry of Health assigned the DAV to assist the Minister of Health to fulfil the task of state management of medicine
prices regulated by pharmaceutical law. Accordingly, the Drug Price Management Division was established. The regulatory
framework for medicine pricing in Vietnam is based on a modified free market pricing structure. Pharmaceutical Law No. 34/2005
states that medicine suppliers and distributors are free to set prices of their products based on market forces, subject to stabilisation
by the state. Establishments are required to declare the projected wholesale, retail and import prices of the drugs to the DAV while
applying for market authorisation. Once the price is stated, the enterprise is not allowed to sell their products at prices higher than
the declared value.
Reimbursement Regime
Public healthcare expenditure accounts for more than half of total healthcare spending in Vietnam; this figure is expected to rise
further on the back of healthcare developments and universal insurance programmes. Some 650 medicines are reportedly covered
by government reimbursement through the national health insurance programme. In Vietnam, reimbursement of prescription
drugs is determined by the reimbursement drug list issued by the Ministry of Health (issued in 2008). The Vietnam Social Security is
the main entity that reimburses services provided to patients covered by social health insurance.
Market Overview
Prescription medicines will remain dominant over the coming decade, with the biggest focus on drugs for the treatment of
infectious and chronic diseases. The OTC sector has the potential to be boosted by the re-categorisation of popular traditional
medicines, although there are currently no such plans. Market figures will remain distorted by the lack of distinction between
prescription and OTC drugs, with most medicines available without a prescription. Generally speaking, market potential will remain
below par, given persistent issues such as low levels of data protection and delays in the drug approval process.
Vietnam's healthcare market had a value of USD20.2bn in 2021, which was 5.6% of the country's GDP. The government accounted
for 46.8% of overall healthcare expenditure in that year, a reflection of the funding provided to the social health insurance scheme.
Total per capita spending, including out-of-pocket payments, stood at a relatively modest USD206.
Vietnamese drugmakers account for about 50% of the total medicines market, while the country imports around 90% of the active
pharmaceutical ingredients used in drug production. In recent years, the authorities have stepped up their efforts to reduce the
country's reliance on imports. As part of their strategy, authorities intend to have 80% of domestic pharmaceutical demand met by
local drugmakers through measures such as tendering preferences.
Although the government aims to increase the share of locally produced pharmaceuticals to 80%, an average of 55% of medicines
in Vietnam are imported every year. One of the reasons for Vietnam’s reliance on imports is that most domestic companies lack
research and development capabilities, and do not meet the European Union Good Manufacturing Practice (EU-GMP)
or Pharmaceutical Inspection Co-operation Scheme Good Manufacturing Practice (PIC/S-GMP) standards required to manufacture
high-quality generic drugs. Furthermore, Vietnam imports more than 90% of drug inputs, half of which are from China.
Healthcare Sector
Vietnam's healthcare system is a mix of public and private systems, in which the public system plays a key role, especially in policy,
prevention, research and training. The public healthcare administration is organised at three levels - central, provincial and local. At
the central level, the Ministry of Health formulates and executes health policies. It also directly controls and finances research
institutions and general and specialised hospitals. At the provincial level, the provincial health bureaus follow the Ministry of Health
policies, but are a part of local provincial governments under the Provincial People's Committees (PPCs). These provincial health
bureaus manage the provincial hospitals and Centers for Preventive Medicine, while the PPCs control their administration and
financial aspects. At the primary level, there are Commune Health Stations, Village Health Workers and district hospitals. They
provide basic services such as primary care, including preventive care, access to drugs, family planning and overall health promotion
in the community.
The public healthcare expenditure in Vietnam is funded by the state's limited budget because it is still a developing country. State
hospitals do not have access to modern equipment because of restricted budgets. Consequently, the quality of service in state
hospitals is weak, and not enough to cover the demand of patients, especially from the province levels to commune levels. Hence,
the optimum choice for healthcare is the private sector.
Economic growth and demographic changes in Vietnam are driving increased demand for healthcare services, not just in the two
traditional economic centres - Hanoi and Ho Chi Minh City - but also in several second-tier cities and provinces. Rapid growth in
healthcare demand in second-tier cities and provinces is resulting in the development of the country's healthcare system. Public
provincial-level hospitals funded by the central and provincial governments are undergoing upgrades to their facilities, including
new departments for specialty treatment. Such development creates new opportunities for medical devices and pharmaceuticals.
Despite this, inadequate bed capacity leads to the prevalence of bed-sharing for inpatient treatment in central and provincial public
hospitals, which undermines the quality of treatment, especially during disease outbreaks. The lack or absence of modern
technology limits the range of treatment provided by provincial hospitals and also makes public hospitals unattractive to doctors,
which further reduces the quality of service.
The private healthcare sector is expanding rapidly. Given the dissatisfaction with the underperforming and underfunded public
healthcare sector, the private healthcare sector will see significant growth in coming years. The long-term rise of household
incomes will also provide a boon for private hospitals that generate a substantial amount of their revenue from out-of-pocket
payments. The number of private hospitals has more than quadrupled, to 170, over the past decade and 200 investment projects in
hospitals have been approved. The government of Vietnam also wants to develop private healthcare, aiming to have privately run
hospitals account for 20% of total hospitals in the country by 2020.
Through its membership of the WTO, Vietnam allows foreign investors to establish wholly foreign-owned hospitals. France-based
and US-based companies are the dominant foreign players running hospitals, while companies based in Thailand (Bumrungrad
Hospital), Indonesia (Lippo Group), Malaysia (IHH Healthcare, KPJ Healthcare) and Singapore (Parkway Holdings) are currently setting
up operations or have expressed an interest in establishing facilities. These private healthcare players anticipate strong growth
within the sector, and we view this as a major driver behind total healthcare market growth - and as a result, medicine sales - over
the coming years.
From a commercial perspective, the development of the private health sector will serve to boost long-term expansion opportunities
for pharmaceutical firms and medical device companies in Vietnam. With the country's economy expected to grow and incomes
expected to steadily rise, per capita spending is also forecast to increase, raising the demand for private healthcare among those
members of the population.
Healthcare Insurance
Vietnam's social health insurance programme was introduced in 1992 (under Decree No. 299/1992/HDBT) covering civil servants
and workers in the formal sector. In 1998, Decree 58/1988/ND-CP was introduced to unify all provincial health insurance funds into
a single health insurance fund. Coverage was also extended to members of the Congress and People Council, socially protected
people, preschool teachers and other groups.
Subsequently, in 2002, the Vietnam Health Insurance system was transferred to the Vietnam Social Security system, which became
the system responsible for both social and health insurance in Vietnam. Since then, several regulatory changes have been made.
The country has two types of health insurance coverage. Compulsory health insurance includes the following demographic groups,
with the remainder covered by voluntary insurance:
• public servants
• contract employees
• commissioned and non-commissioned officers in the armed forces
• social security beneficiaries
• priority people (eg, relatives of armed force personnel and veterans)
• students
• children under six
• low-income citizens
Those covered by health insurance are divided into five groups in terms of cover, namely labourers, employers, groups subsidised by
a social insurance agency, groups subsidised by the government and self-paying members.
According to a report produced by the Vietnam Social Security agency, by the end of May 2019, there were 84mn people
participating in the public health insurance system nationwide, covering 89% of the population. A target set by a resolution of the
6th Plenum of Communist Party of Vietnam states that by 2025, about 95% of the Vietnamese population will be covered by the
national health insurance scheme. Hospital quality has improved continuously, and demands for hospital bribes have dropped to a
10-year low.
Although coverage now approaches the full population, public healthcare remains chronically underfunded, with per capita
spending on public healthcare sitting at just USD96 in 2021. While the government is focused on improving the delivery of public
healthcare services, we believe that limited public financing, uneven distribution of health services, inadequate infrastructure and a
similar shortage of qualified workers will continue to obstruct innovative drugmakers wishing to operate in the market.
Covid-19 could derail universal healthcare coverage plan in Vietnam. Pre-Covid there were already challenges that Vietnam’s health
programme was facing such as financial stability of the healthcare scheme. Budget deficits are prominent in the country due to the
rising demand for health services. While the government is focused on improving the delivery of public healthcare services, we
believe that limited public financing, uneven distribution of health services, inadequate infrastructure and a similar shortage of
qualified workers will affect the goals of the UHC programme going forward. With these limitations already in place along with the
impact of Covid-19, we believe these challenges will be further aggravated. In Vietnam, funds were diverted from UHC to Covid-19
relief, stretching already constrained healthcare budget.
HEALTHCARE RESOURCES (VIETNAM 2016-2020)

Indicator 2016 2017 2018 2019 2020
Hospitals, total 1,248 1,289 1,309 1,340 1,368
Hospitals, public 1,077 1,085 1,094 1,086 1,091
Hospitals, private 171 204 225 254 277
Hospitals, beds 248,147 250,691 253,196 255,624 260,009
Hospitals, beds, per '000 population 2.65 2.65 2.65 2.65 2.67
Source: Fitch Solutions
HEALTHCARE PERSONNEL (VIETNAM 2016-2020)
Indicator 2016 2017 2018 2019 2020
Physicians, total 74,912 75,680 77,995 77,169 78,247
Physician, per '000 population 0.80 0.80 0.82 0.80 0.80
Nurses, total 111,865 121,493 128,386 139,436 148,433
Nurses, per '000 population 1.19 1.28 1.34 1.45 1.52
Dentists, total 9,364 9,460 9,559 9,650 9,749
Dentists, per '000 population 0.10 0.10 0.10 0.10 0.10
Pharmacists, total 34,483 37,159 36,507 39,340 41,260
Pharmacists, per '000 population 0.37 0.39 0.38 0.41 0.42

HEALTHCARE ACTIVITY (VIETNAM 2016-2020)
Indicator 2016 2017 2018 2019 2020
Inpatient admissions, '000 5,278.25 5,387.06 5,500.00 5,605.98 5,721.31
Inpatient admissions, per '000 population 56.37 56.95 57.56 58.12 58.78
Hospitals, average length of stay, days 6.8 6.7 6.7 6.7 6.6
Surgical procedures, '000 1,759.42 1,795.69 1,833.00 1,868.66 1,907.10
Outpatient visits, '000 147,791.03 150,837.59 154,011.00 156,967.42 160,196.56
Outpatient visits, per '000 population 1,578.28 1,594.47 1,611.90 1,627.24 1,645.77
Research And Development
The Vietnamese government has insufficient public funding to support clinical research. Vietnam currently depends on
international organisations including the World Bank, the UN and the Asian Development Bank to support 80% of its healthcare
sector. It is predicted that Vietnam will continue to depend largely on foreign funding for clinical research for the foreseeable future.
Local pharmaceutical companies in Vietnam have a shortage in expertise and the relevant financial support to facilitate
pharmaceutical R&D. Furthermore, these companies are reluctant on investing on R&D because of the vast spending involved and
the time frame that is usually associated with the development cycle of a new patented drug.
Clinical Trials
In order to grant marketing authorisation, the Ministry of Health necessitates pharmaceutical companies to conduct clinical trials in
Vietnam for drugs that have not been in the market of their origin for more than five years. At present, there are two main
regulations generally governing clinical trials that apply to finished pharmaceuticals, vaccines and biological products:
• Circular No. 03/2012 of the Ministry of Health, providing guidance on clinical trials.
• Decision No. 799 of the Ministry of Health, promulgating guidelines of good clinical practice.
Regulatory authority responsible for clinical trial approvals, oversight and inspections in Vietnam is the Vietnam's Ministry of Health.
Specific areas have been divided into different bodies.
• National level ethics committee (EC), the Ethical Evaluation Committee in Biomedical Research (EECBR), is responsible for
approving the protocol and study documentation.
• The Administration of Science, Technology and Training (ASTT) reviews clinical study documents, organises the Ethical
Evaluation Committee in Biomedical Research (EECBR) meeting and conducts its review of the Investigator's Brochure (IB)
portion of the dossier.
• ASTT is also responsible for registering contract research organisations that support clinical studies and provide other research
services.
Despite the high prevalence of tropical diseases, Vietnam is a relatively insignificant destination for international clinical trials. This
reflects both the relatively limited capacity of the country's clinical research sector as well as the relative lack of R&D globally in
tropical medicine. Clinical research requires institutions with medical facilities, a strong infrastructure and trained personnel. Few
institutions in Vietnam meet these requirements. There are approximately 1,180 hospitals in Vietnam but only 60 of these have
been authorised by the Ministry of Health to conduct clinical research. Twenty of the 60 have the infrastructure in place but only 12
have been involved in clinical trials. Vietnam also suffers from a lack of clinical investigators and biostatisticians who are essential to
the domestic development of clinical research. Vietnamese medical and public health students tend to have little experience with
clinical research and are mostly untrained in data analysis.
Despite this, the number of clinical trials in Vietnam increased in recent years, and the country has hosted more Phase III trials.
The issuing of a revised set of guidelines for the conduct of clinical trials by the Ministry of Health has helped set in motion a
consistent regulatory framework for the carrying out of clinical trial procedures.
Low operational costs are an obvious advantage, while a relatively young and treatment-naïve population means opportunities for
clinical research organisations, as studies conducted in Vietnam will not be interfered by medication used in previous clinical trials.
The disease profile, particularly for tropical and infectious diseases, is similar to that in neighbouring markets such as Cambodia,
Laos and Myanmar. Therefore, companies seeking to investigate novel treatments for these diseases may consider setting up trials
in Vietnam instead of these markets given its relatively higher level of economic development.
In the short-to-medium term, it is unlikely that Vietnam will be able to surpass the number of trials initiated in Thailand or
Singapore. Being largely rural, Vietnam's population is hard to recruit. Additionally, rural health infrastructure does not have the
appropriate clinical trial facilities nor adequate qualified staff numbers. Moreover, low per capita health and pharmaceutical
expenditure in the country means that the use of herbal medicines is common. This reduces the number of potential
trial participants given that these products may react differently with the trial drug.
New Clinical Trial Registrations

2017-2021
Note: New Trials begun in the given year. Sourced by date of initial registration. Includes clinical trials of drugs, medical devices, surgical procedures and behavioural
interventions. Source: ClinicalTrials.gov, Fitch Solutions
Epidemiology
The burden of chronic diseases in Vietnam is rising even as the country sees a significant fall in the burden of communicable
conditions. Financial ramifications of Vietnam's disease burden are substantial. This creates financial barriers and the risk of
catastrophic health expenditure as such costs far exceed the per capita net income of the Vietnamese population.
Authorities are increasingly promoting preventative measures. For example, in September 2018, the country's Prime Minister
Nguyen Xuan Phuc approved the Vietnam Health Programme (2018-2030) to improve the well-being, stature, lifespan and quality
of life of the citizens. The plan has the following aims:
• Promote healthy diet and lifestyle with appropriate nutrition and increased physical activity to improve Vietnamese people’s
stature and well-being.
• Raise public awareness for behavioural change to protect health and prevent health-related risks.
• Provide constant and long-term primary healthcare services to reduce the burden of illness on the community and enhance
people's quality of life.
Diabetes
There were approximately 3.7mn adults with diabetes in 2017, a prevalence of 5.7%, according to data from the International
Diabetes Federtion (IDF). This figure is forecast to more than double by 2040 to reach approximately 6.1mn. The IDF also notes that
more than half of all diabetics in Vietnam remain undiagnosed and that around 50% of those who have been diagnosed die before
they reach 60. These figures indicate a massive need and untapped potential.
A common approach used by international drugmakers in the country's pharmaceutical market is the roll-out of disease awareness
and education programmes, in cooperation with local health authorities. Sanofi, Novo Nordisk, Merck Sharp & Dohme and Abbott
are active players in the country's diabetes market.
Novo Nordisk, a Denmark-based pharmaceutical company and a world leader in diabetes, supports the country's Ministry of Health
with several diabetes-related activities such as building capacity for professional healthcare and promoting screening programmes.
Under the Vietnam Diabetes Care Program (2013-2015), Novo Nordisk, in collaboration with the Ministry of Health, the Vietnam
Association of Diabetes and Endocrinology and leading hospitals, provided training for 2,000 doctors, free screenings for nearly
30,000 people and offered free insulin for 20 children with Type I diabetes. In 2017, the drugmaker also launched a website on
diabetes in collaboration with the Ministry of Health to enhance public understanding of the chronic disease. The pharmaceutical
company is also actively developing an online learning platform to improve the capacity of general practitioners in diabetes care
and treatment in collaboration with the Ho Chi Minh City Medical Association. In 2018, Novo Nordisk conducted a study to
understand the burden of disease in Vietnam. This study aimed to provide the Vietnamese Government with a better
understanding of Vietnamese people dealing with this disease and to highlight the challenges.
In 2017, the Merck Foundation and the Extension for Community Healthcare Outcomes at the University of New Mexico Health
Sciences Centre, announced the provision of a USD7mn grant to improve access to specialty care for chronic conditions, such as
hepatitis C, HIV, tuberculosis, diabetes and mental health conditions in underserved communities in Vietnam. Additionally, due to
elevated behavioural risks causing a strain on the country's healthcare systems, the government has begun to introduce initiatives
to reduce the burden of the disease, such as collaboration with the WHO to develop and implement a national programme to
control and prevent major non-communicable diseases - such as diabetes, cardiovascular diseases, cancer, chronic obstructive
pulmonary disease and mental health. In 2018, Merck KGaA collaborated with the digital diabetes platform provider GlucoMe for a
pilot collaboration in several hospitals across Vietnam, comparing its system to the current standard of care in the country.
Cardiovascular Disease
Cardiovascular diseases are a key healthcare challenge in Vietnam. In 2012, the disease accounted for 33% of all deaths in the
country, ahead of cancers, which were found to cause 18% of the total cases of mortality in the country. By 2017, the World Heart
Federation estimated that 20% of the Vietnamese population would suffer from cardiovascular diseases and hypertension.
Cancer
Vietnam has relatively high rates of cancer because of tobacco use, exposure to occupational carcinogens, the ageing of the
Vietnamese population and increasing in life expectancy, alcohol and obesity due to changing lifestyles. The number of new cases
of cancer is expected to increase from 182,563 in 2020 to 291,094 by 2040, according to Globocan. The majority of new cases are
expected in men, with those under the age of 65 accounting for the majority of new incidences. Among men, liver cancer is the
most common followed by lung cancer, stomach cancer and prostate cancer. For women, breast cancer is the most
common followed by lung cancer, stomach cancer and liver cancer.
Early diagnosis remains a key challenge in Vietnam. According to the Hanoi International Cancer Centre, an estimated 70% of
patients only seek hospital treatment after the disease has progressed to a more advanced stage. The director of Hung Viet
Oncology Hospital suggested in February 2015 that 80% of patients are hospitalised only in terminal stages. This lags behind the
cancer detection in developed markets, where an estimated 60-70% of breast cancers are detected in the earlier stages.
Competitive Landscape
According to the Vietnam Pharmaceutical Companies Association, 30% of the approximately 1,000 pharmaceutical firms operating
in the country are foreign funded. Imports account for over 50% of the pharmaceutical market by value, while just over a fifth of
medicines made locally are produced by foreign firms. Overseas firms are increasingly collaborating with domestic players, thereby
leveraging each others' specialities to grow mutual sales.
Many major pharmaceutical companies such as Abbott (US), Taisho Pharmaceutical (Japan) and Sanofi (France) have been in
Vietnam for several years, and some have been in the market for decades. Not only have their products become available across the
country, but they have also invested new plants and R&D facilities.
Over recent years, there has been a growing number of mergers and acquisitions (M&A), with many foreign investors purchasing
large amounts of shares in Vietnamese companies. These moves ease market access for foreign firms and help them avoid
restrictions on foreign direct investment. For domestic companies, the integration creates more R&D opportunities and allows for
the sharing of expertise and best governance practices, as well as access to foreign markets.
Research-Based Industry
The Vietnamese government's support for the local pharmaceutical industry will remain steadfast. This is in part driven by the
authorities' push to meet domestic healthcare needs. In addition, the economic potential of the pharmaceutical sector will
incentivise continued government support for the domestic industry. Vaccine shortages for example, remain a persistent challenge
and were cited by the Ministry of Health (MoH) as a contributing factor to the spread of several infectious diseases in August 2016.
To address this, rulings such as Decision No.68/QD-TTg have been issued, setting out the objective to gradually reduce the
country's reliance on pharmaceutical imports and ensure the adequate supply of drugs. Although the government aims to increase
the share of locally produced pharmaceuticals to 80%, an average of 55% of medicines in Vietnam are imported every year. One of
the reasons for Vietnam's reliance on imports is that most domestic companies lack R&D capabilities, and do not meet the EU Good
Manufacturing Practice (EU-GMP) or Pharmaceutical Inspection Co-operation Scheme Good Manufacturing Practice (PIC/S-GMP)
standards required to manufacture high-quality generic drugs. Furthermore, Vietnam imports more than 90% of drug inputs, half of
which are from China.
In 2019, Pfizer struck a deal with Medochemie, a Cyprus-based drugmaker with three manufacturing sites in Vietnam. Pfizer will
transfer technology that will permit Medochemie to manufacture 11 of Pfizer's products, including four sterile injectables and seven
tablets. The partnership is aligned with the Vietnam government's vision to boost and promote the development of the local
pharmaceutical industry.
Partnerships with local firms are integral. As a result of government initiatives, domestic pharmaceutical firms will play an
increasingly dominant role in Vietnam. This accentuates the need for multinational pharmaceutical companies to partner with local
drugmakers to adapt to this trend. Finding a local company to start such a joint venture is an important first step to enter the market
in Vietnam. Foreign companies often work with domestic companies, such as Diethelm Vietnam, Zuellig Pharma Vietnam and Mega
Lifesciences, to fill in different needs in the supply chain. For example, in 2017 Zuellig Pharma Vietnam established a two-year
agreement with the National Centre for Control of Vaccines and Biologicals and the National Institute of Hygiene and Epidemiology
to train workers to keep constant cool temperatures during the manufacturing and storage of vaccines to help keep them effective.
In September 2016, Sanofi signed an agreement with Vinapharm to expand a strategic partnership, with the Vietnam-based firm
agreeing to invest into the French company's subsidiary, Sanofi Vietnam. Similarly, Taisho Pharmaceutical's acquisition of a 24.5%
stake in DHG Pharmaceutical represents a greater shift towards incorporating local drugmakers into their market strategies in
Vietnam. This represents an evolution from current practices where partnerships were needed for foreign-based pharmaceutical
firms largely to secure distribution rights for their products.
A shift from pharmaceutical production to a more research-based industry is likely. The boost in attractiveness of the Vietnamese
market comes at a time when the business environment for drugmakers in neighbouring markets has not been favourable. In
December 2018, Indonesia enacted a regulation for the compulsory licensing of every medical product that is not being made in
the country. This is expected to have significant negative consequences for foreign direct investment in the country, with Vietnam
being the one of the beneficiaries of pharmaceutical companies shying away from Indonesia. This, combined with the geopolitical
position of Vietnam, place the country in a favourable position to become a regional pharmaceutical research and export hub. In
July 2019, Pharma Group, the Pharmaceutical Sector Committee of the European Chamber of Commerce in Vietnam, highlighted
that the country has the ability to reach a higher position in the value chain of the science and life sector in comparison with other
markets in the ASEAN region. However, it was noted that further deliberation is required before the positive steps taken by the
country can materialise.
Generic Drugmakers
Although there are indigenous pharmaceutical companies that produce medicines for local consumption, the country is
characterised by a strong dependence on imports of raw materials (90% are imported). The pharmaceutical market in Vietnam is
mainly driven by generics and local pharmaceutical companies mostly produce generics. There are several small- and medium-
sized foreign generic companies (mostly from India, South Korea and China) that operate in the country. However, only 28% of
these companies have a GMP certification, which states that the manufacturer must meet certain standards in order to substantiate
that their products are of high quality and do not pose any risk to consumers. The generics market in Vietnam is very competitive,
and the first to penetrate can claim to have the first recognised drug to be embraced by customers. To survive and attract more
clients, companies resort to advertising and differentiation tactics by developing new medicines.
Pharmaceutical Distribution
After Vietnam joined the WTO in 2007, foreign pharmaceutical companies were allowed to open branches and import their
products into the country. However, they were prohibited from distributing their products directly and had to partner with local
distributors to sell their products.
On May 8 2017, a new pharmacy decree detailing articles and measures to implement the Law on Pharmacy was promulgated by
the Vietnamese government, scheduled to take effect from July 1 2017. In an effort to update some aspects of the country's
regulations to fulfil its WTO Commitments, the new decree set forth a legal framework for foreign-invested enterprises (FIEs) to trade
in drugs and drug ingredients. Until now, foreign invested companies with import rights had not been able to get the relevant
import licence from the MoH due to lack of legal basis from the ministry's side. With the new decree in place, foreign pharmaceutical
companies who have successfully applied for an import licence from the MoH will be allowed to directly import pharmaceutical
products from abroad into the domestic market.
Under Vietnam's WTO commitments, the country agreed to allow FIEs to conduct distribution services for most types of products,
but it specifically excluded pharmaceutical products and drugs. Vietnam's WTO Schedule of Commitments on Services has
intentionally excluded pharmaceuticals from the sectors for which market access is open to distribution by foreign investors.
Pursuant to the new pharmacy decree, an FIE pharmaceutical importer will be allowed to sell its imported pharmaceuticals to
pharmaceutical wholesalers who have been certified by the MoH as qualified to buy pharmaceuticals from a FIE pharmaceutical
importer. FIE pharmaceutical importers are, however, prohibited from conducting any of the following activities, which are
considered distribution activities:
• The selling of drugs/ingredients or delivering to pharmacies, hospitals and clinics, retailer, individuals and other organisations
that are not wholesalers;
• The transport and provision of drug storage services;
• Participation in developing or making decisions on the distribution strategy or business policy for drugs distributed by other
enterprises.
At present, there are no set conditions imposed by the MoH on pharmaceutical wholesalers seeking to purchase pharmaceuticals
from FIE pharmaceutical importers. Wholesalers have the right to purchase imported products as long as they have the capability to
directly perform the distribution of the products purchased from FIEs without being manipulated or controlled by the sellers.
Foreign-invested pharmaceutical companies in Vietnam believe that there is room for administrative improvement regarding
current policies on imports and distribution. The American Chamber of Commerce in Vietnam (AmCham) and the Vietnamese
Association of Foreign Invested Enterprises (VAFIE) chaired a discussion in early 2018 on new managing policies for foreign-invested
enterprises in the pharmaceutical field. AmCham and VAFIE reported, 'According to foreign enterprise and trade representatives,
some new regulations are inadequate and not fully in line with Vietnam’s international commitments.' Nguyễn Huy Quang, the
head of the MoH's legal department stated that 'there will be a time when foreign-funded enterprises have the right to freely
distribute pharmaceutical products in the Vietnamese market, but that time is not now.' The provisions under the new law will force
pharmaceutical companies to reconsider their business models in Vietnam.
Unlike most of the global pharmaceutical market, where manufacturing and distributing companies are independent units that
focus on a certain area of specialisation, drug distribution in Vietnam is complex. The structure involves many levels, such as:
• Professional drug distributing enterprises;

• State-owned distributing companies: These state-owned pharmaceutical companies are mostly distributors of imported
products. For instance, Vinapharm, a state-owned company under the MoH, has seventeen companies responsible for trade
across the country;
• Private distributing companies- private distributing companies also act as distributors for imported products;
• Foreign distributing companies - there are only three foreign distributors in the market, namely Zuellig Pharma, Diethelm
and Megaproduct.
Currently not all local pharma companies have qualified distribution infrastructure, but leaders like Traphaco JSC, Imexpharm
Pharmaceutical JSC (IMP), Domesco Medical Import-Export JSC and Hau Giang Pharmaceutical JSC (DHG) have nationwide
distribution networks with qualified warehouses and storages. This will put pressure on MNCs in ensuring their distribution network
in Vietnam, and guaranteeing high standards from local wholesalers.
Pharmaceutical Retail Sector
The drug retail market is bustling with the presence of tens of thousands of traditional drugstores throughout the country that are
run by pharmacists and modern drugstore chains, such as Phano, My Chau, Eco, Pharmacity, Vistar, Pharmacity and Phuc An Khang.
Traditional drugstores hold an advantage over modern chains because they are present everywhere in large cities and rural areas.
The number of pharmacy outlets in Ho Chi Minh City and other urban areas are above the national average but still below
international standards. By contrast, the lack of qualified staff in rural areas is an acute issue. In terms of organisation, Vietnam's
pharmacy sector is problematic: patients can get most drugs without a prescription, the number of qualified pharmacists is
inadequate, counterfeits are not uncommon and many doctors still illegally disburse medicines from their private offices.
Regulators had hoped that the implementation of good pharmacy practice (GPP) in 2011 would have solved these problems, but
numerous challenges had to be addressed first. According to Pham Khanh Phong Lan, the health department's deputy director, the
number of GPP compliant pharmacies in Ho Chi Minh City reached 140 out of 3,816 in October 2012. In Hanoi, 249 out of the 1,500
registered pharmacies were certified, according to the Department of Health. The main obstacle to the programme roll-out is the
substantial investment required by pharmacies as well as the need for strict compliance with dispensing requirements that means
patients are often turned away for lacking proper prescriptions. Most of the GPP-compliant pharmacies are concentrated in urban
areas, while medicines supplied to rural regions are not as well preserved during the transport process.
In a sign of untapped potential, the competition in the sector has been intensifying. For example, in late 2017, Mobile World
Investment Group bought the Ho Chi Minh City-based Phuc An Khang pharmacy and FPT Digital Retail JSC Nguyen Bach Diep
acquired the Long Chau pharmacy. Earlier in the same year, Digiworld Corp signed up to distribute Vinamedic's supplements for
men.
Company Profile
DHG Pharmaceutical
SWOT Analysis
Strengths • Extensive distribution network in Vietnam.
• The government is committed to developing the health sector, which bodes well for the domestic
drugmaker.
Weaknesses • Produces mainly low-value products and is thus not able to rival neighbouring South East Asia markets, such
as Singapore.
• Limited access to new capital.
• Key export markets are high risk.
Opportunities • The Association of South East Asian Nations (ASEAN) harmonisation initiative, including the adoption of
Western regulatory standards, such as International Conference on Harmonisation and WHO guidelines,
allowing easier access to other ASEAN peers.
• Government's encouragement of local manufacturing.
Threats • Limited revenue in absolute terms as the company is mainly Vietnam-focused.

• Vulnerable to competition from larger regional players.
Company Overview
DHG Pharmaceutical Joint Stock Company, together with its subsidiaries, produces and trades in pharmaceutical products in
Vietnam. The company has its products registered in Cambodia, Moldova, Mongolia, Myanmar and Nigeria. DHG Pharmaceutical
Joint Stock Company was founded in 1974 and is headquartered in Can Tho, Vietnam.
Strategy
Similarly to Kalbe Farma in Indonesia, a key to DHG Pharmaceutical's success is its vertical integration strategy. DHG Pharmaceutical
has 31 branches nationwide, and 61 retail counters as pharmacies in hospitals. It has more than 1,000 sales staff.
DHG ranks fourth in market share behind three multinational pharma giants. In the course of 2017, the firm restructured its
distribution system, which reportedly streamlined and improved logistics and general operations. DHG Pharmaceutical has also
sought to modernise its production facilities to bring them in line with PIC/S and Japanese Pharmaceutical and Medical Devices
Agency standards.
The firm exports 85 products to five markets: Cambodia, Moldova, Mongolia, Myanmar and Nigeria. While these markets represent
high-risk environments, we highlight that DHG's low-value portfolio of drugs is suitable for the low spending power of these markets.
DHG is also venturing into the OTC sector, focusing on medicines made from herbs and supplements. This will be further
strengthened through its partnership with Taisho, which is one of the leading OTC players in Japan. DHG also has a deal with
Vinamilk to collaborate in distribution, marketing and supply of functional foods.
Over the coming years, DHG is planning to also increase its focus on distribution and research. In terms of the former, the company
aims to seek distribution deals with multinationals and is looking for production partnerships with foreign firms.
Developments
2020
• In June, DHG contributed VND2.6bn to support frontline hospitals, such as the National Hospital of Tropical Diseases (Dong Anh
branch), HCM Hospital of Tropical Diseases and Ha Noi University of Medical. In addition, DHG sponsored 5,000 bottles of BioSkin
antibacterial hand gel to hospitals treating Covid-infected patients and equipment worth VND100mn to the Ministry of Health.
• In February, DHG accompanied with the Medical industry of Can Tho in the process of preventing the Covid-19 epidemic, and
sponsored a body heat scanner for monitoring the epidemic.
2019
• In April 2019, Hậu Giang (DHG) became a subsidiary of Japan’s Taisho Pharmaceutical after the Japanese drugmaker acquired an
additional 20.6mn shares of DHG, lifting its stake to 50.78%.
• In March 2019, Japan’s Taisho Pharmaceutical proposed increasing its ownership in DHG Pharmaceutical Joint Stock Company by
21.7%. According to DHG Pharmaceutical, the Japanese firm has made a public offer to purchase more than 28.35mn shares.
Financial Data
2021
• In July, the company stated its operating profit for the three months to June 30 2021 was VND232.2bn, up from VND204.6bn in
the same period in 2020. Its operating profit for the six months to the same date was VND464.2bn, up from VND403.8bn over
the same period in 2020.
GlaxoSmithKline
SWOT Analysis
Strengths • One of the leading global producers of medicines.
• Some of its products are covered by the public insurance scheme.
• Considerable product portfolio, including consumer medicines and vaccines.
Weaknesses • Difficult intellectual property environment.

• No direct manufacturing or R&D presence in the country.
• Counterfeiting remains a problem.
Opportunities • Rising demand for branded products as a result of healthcare sector modernisation.
• Pending overhaul of the regulatory climate, aiming to boost foreign investment.
• Strong regional experience and connections.
• Local companies increasingly looking to collaborate with foreign partners, both in terms of production and
distribution.
Threats • Country susceptible to economic and currency fluctuations.

• Legalisation of parallel imports negatively impacting performance of branded drugs.
• Authorities' aim to increase the role of locally produced medicines in meeting local demand.
Company Overview
GSK was one of the first healthcare companies to establish a presence in Vietnam, and have grown to become the biggest
healthcare company in Vietnam. The company offers a range of prescription medicines as well as consumer products and employs
approximately 400 people.
Strategy
GSK has all its three core areas here in Vietnam: medicines, vaccines and consumer healthcare products. The company has invested
heavily in global R&D and introduced innovative solutions that meet Vietnam's disease patterns, ensuring patients have better
access to essential medicines and vaccines. The company continuously supports health-care professionals to update treatment
guidelines as well as medical practices around the world, educate patients about the burden of disease as well as the importance of
early prevention and adherence to treatment. GSK has also helped build capabilities of local partners by conducting various clinical
trials in Vietnam as part of a global medicines developing program. The company has also awarded PATH Vietnam, an international
non-governmental organisation, a significant grant to support the implement the health ministry's Immunization Management
System.
In December 2020, it was reported that GSK had decided to discontinue Hiberix (haemophilus influenzae type b vaccine) in
Vietnam due to low medical demand for this vaccine. Hiberix is one of the 20 pharmaceuticals of multinational corporations that
got approval from the Drug Administration of Vietnam under the Ministry of Health to discontinue in the local market.
Sanofi
SWOT Analysis
Strengths • Direct manufacturing presence in the country, benefiting from the advantages given to locally produced
drugs.
• Among the top three pharmaceutical companies in Vietnam.
• Strong product portfolio covering a wide range of therapeutic areas.
• Involvement in the local vaccines sector, through Sanofi Pasteur.
• Long tradition of partnerships with local players.
Weaknesses • Sub-standard intellectual property regime in the country.

• Sizeable parallel imports and counterfeit industry.
• Local companies increasingly looking to collaborate with foreign partners, both in terms of production and
distribution.
Opportunities • Sector modernisation to increase the demand for branded products.

• In a strong position to increase its market penetration as the sector continues to open.
Threats • Government resistance to aligning domestic patent law fully with international standards.
• Lack of progress in terms of significantly reducing the role of counterfeit drug industry.
• Authorities' aim to increase the role of locally produced medicines in meeting local demand.
Company Overview
With more than 50 years of presence in Vietnam, Sanofi is the leading pharmaceutical company in various segments of the market:
ethical, consumer healthcare and vaccine. Its main activities consist in importing, developing, manufacturing, promoting and
distributing pharmaceutical products for Vietnam, Cambodia and Laos.
Strategy
The first pharmaceutical joint venture in the country, Sanofi-Aventis Vietnam, was set up by local company Central Pharmaceutical
Manufacturing Enterprise and Sanofi-Synthélabo. Medical Export-Import Company (Vietnam) and Rhone-Poulenc (now part of
Sanofi) followed with Vinaspecia. The firm's headquarters in Vietnam is in Ho Chi Minh City.
Sanofi has a wide portfolio of more than 100 pharmaceutical products and vaccines covering main therapeutic areas. It is the only
pharmaceutical international company with three factories in Vietnam. Besides, 20% of the medicines produced by Sanofi in
Vietnam are exported to other markets in Asia. Its main products include Plavix (clopidogrel), Aprovel (irbesartan), Lovenox
(enoxaparin), Tritace (ramipril), Taxotere (docetaxel), Eloxatin (oxaliplatin), Amaryl (glimepiride), Lantus (insulin), Stilnox (zolpidem) and
Actonel (risedronate).
Sanofi has strengthened its footing in Vietnam over the years. In November 2017, Sanofi and Vinapharm ratified their strategic
partnership, consolidating the collaboration the two companies have enjoyed since 1993. The deal allows Vinapharm a partnership
in Sanofi's new Good Manufacturing Practice production facility in Ho Chi Minh City and access to Sanofi Vietnam's healthcare
solutions.
Developments
2021
• In January, Sanofi Vietnam was one of seven companies to receive a certificate of appreciation from the minister of health for its
contribution to Covid-19 prevention in the country. Sanofi contributed VND1.3bn (USD56,310) during the first outbreak to help
those living in the Mekong Delta, with the money used to provide masks and hand sanitisers, plus help those affected by
saltwater intrusion in rivers.
2019
• In August, Sanofi received an import licence for pharmaceutical trading in Vietnam, pursuant to the Ministry of Health's Decision
No.2542/QD-BYT and Decree No.54/2017/ND-CP. This accreditation turns Sanofi into the first lawful multinational importer in
the drug production industry in the country. The license is expected to enable the company to increase its contribution to the
local community healthcare landscape, since being granted the license indicates that Sanofi is capable of satisfying all relevant
statutory, quality and technical requirements and regulations.
• The company will provide medicinal products researched and developed by Sanofi and sourced from its domestic TGA, WHO-
GMP factories and other sister facilities in its global production network.
Traphaco
SWOT Analysis
Strengths • Extensive distribution network in Vietnam.
• The government's commitment to developing the healthcare and pharmaceutical sector.
Weaknesses • Competing with DHG Pharmaceuticals - a firm with a higher market capitalisation.
• Focus is largely on traditional medicines.
Opportunities • The Association of South East Asian Nations (ASEAN) harmonisation initiative, including the adoption of
Western regulatory standards, such as International Conference on Harmonisation and WHO guidelines,
allowing easier access to other ASEAN peers.
• Significant growth potential, given a large and growing population.
Threats • As the country develops, the need for inexpensive pharmaceutical or herbal products may decline as the
demand for high-quality pharmaceuticals increases with affluence.
Company Overview
Traphaco's history can be traced back to 1972 when it was founded as Medicines Production Group as a part of Railway Health
Services. Today, its business focuses on the manufacture and supply of pharmaceuticals, as well as cosmetics and other food types.
Its facilities are compliant with good manufacturing, storage and laboratory practices.
The company has a number of foreign shareholders. Citigroup Global Markets, for example, holds a 4.75% share. Other supporters
include Vietnam Holding with around 10.5%. In November 2017, Vietnam Azalea Fund sold its share in Traphaco.
Traphaco's current market capitalisation is some USD400mn, which it aims to increase further to over USD450mn in the coming
decade. Investment is expected to further strengthen its vertically integrated business. In May 2017, Traphco was for the first time
named one of the top 50 best listed companies in the country by Forbes Vietnam, a testament to its development trajectory.
Strategy
Given that the firm engages in all levels of the pharmaceutical supply chain, its success in the sector is due to a vertical integration
strategy - making it an attractive partner for foreign firms looking to invest in the country. In addition to partnerships, the firm is also
interested in mergers and acquisitions to further expand its network in the country. This strategy is positive given that distribution
services in a developing country can be challenging, especially for foreign players. In addition to Vietnam, the firm also distributes
products to other frontier markets such as Cambodia and Laos, although we believe that the majority of its revenues are derived
from its Vietnam businesses.
The company's product portfolio includes vitamins and minerals, herbal supplements and various topical products, antihistamines,
antifungals and antibiotics, among others. In addition, Traphaco manufactures and distributes a range of consumer products,
including functional foods and cosmetics. In late 2017, the firm started manufacturing a new eye drop product. Traphaco is also
focusing on expanding its portfolio to paediatric probiotics and similar foods.
As its focus is on traditional medicines, its reach across the whole market is relatively limited. Nevertheless, it boasts a 23-branch
strong distribution network (which it plans to increase to 40) and two GMP-compliant manufacturing facilities. Traphaco's long-term
goal is to further develop its manufacturing, distribution, research and development capacities, and to expand locally. By 2020 the
firm aims to have one more manufacturing facility (one plant was opened in November 2017) and to invest in upgrading its other
facilities to make them compliant with EU and other global GMP standards. The aim is to achieve USD180mn in annual revenue.
Developments
2019
• In September, Traphaco announced an adjustment of the annual business plan. In detail, the company lowered the consolidated
revenue target from VND2.16trn (USD92.1mn) to VND1.85trn (USD79.5mn), a decrease of 14.3%. Accordingly, the consolidated
profit after tax plan also decreased from VND205bn (USD8.8mn) to VND170bn (USD7.3mn), a decrease of 17%.
• On March 28, Traphaco organised the annual general meeting of shareholders, which approved the business plan for 2019. It set
a consolidated revenue target of VND2.16trn (USD93.91mn), up 15%, and a consolidated profit after tax of VND205bn
(USD8.9mn), a 30% increase compared to 2018.
• Daewoong Pharmaceutical announced on March 14 that it is negotiating with Vietnam’s second-biggest drug maker Traphaco
to expand its presence in the country. The South Korean firm acquired a 15% stake in the Vietnamese firm as a strategic investor
in 2018 and has a memorandum of understanding for partnership.
Financial Data
2022
• In March, Traphaco announced its 2021 full-year result. The company reached a net revenue of VND2.16trn, up 13.2% from the
previous year.
Vietnam Pharmaceutical Corporation

SWOT Analysis
Strengths • Wide product portfolio, including ethical products, consumer health items, medical devices and traditional
medicines.
Weaknesses • The majority of the corporation's state-owned units are small in size.
• Underdeveloped healthcare infrastructure hampering access to medicines.
• Need to comply with international standards requiring substantial financial investment.
• Need to import most raw materials for pharmaceutical production.
Opportunities • Plans for a major overhaul of the domestic pharmaceutical regulatory environment, with a focus on local
production of drugs in order to reduce the country's dependence on imports.
• In a strong position to benefit from any domestic increases in demand and government-promoted
measures to increase domestic manufacturing.
Threats • Complex and discriminatory pricing policy.

• Vietnam being increasingly susceptible to economic fluctuations, which impacts the company's bottom line
and investment potential.
• Competition from regional generic manufacturers with larger capacities and higher standards, some of
which are also investing in local production facilities.
• New health insurance regulations hampering access to pharmaceuticals.
• Domestic production and the trading of pharmaceutical products facing difficulties due to rising prices of
pharmaceutical materials and medicines in the world market.
Company Overview
Vinapharm has been a joint stock company since 2016 and controls a number of pharmaceutical manufacturers. These include
nine pharmaceutical factories - five in Ho Chi Minh City, three in Hanoi and one in Haiphong - and a number of other medical
products companies. Vinapharm's status as a national monopoly supplier has in the past significantly contributed to its a strong
market position.
Established in 1971, the Vietnam Pharmaceutical Corporation (Vinapharm), previously known as Pharmaceutical Corporation, was
formed through the merger of three departments under the Ministry of Health: the Department of Pharmaceutical Distribution, the
pharmaceutical department and the production department. In 2014, the firm was granted certification of good distribution
practice and good storage practice.
Vinapharm's vertical integration supports its position in the market. In addition to manufacturing and API services, it also provides
warehousing and distribution support.
Strategy
The Vietnam Pharmaceutical Corporation has demonstrated its desire to enter into international partnerships in recent years. It has
signed technology transfer partnerships with Chinese and US-based firms in order to modernise its plants and portfolio. Vinapharm
is one of the handful of local facilities authorised by the Ministry of Health to carry out bioequivalence research. This positions it well
in the market that supports the use of generics.
In addition, a domestic appliances and personal care factory in the northern port city of Hai Phong and an Apatite Flotation Factory
in northern Lao Cai province, as well as some fertiliser and antibiotics manufacturing plants, also receive funding. This will further
expand its production base.
The government is promoting self-sufficiency in terms of satisfying pharmaceutical demand. The authorities expected locally made
medicines to account for 60% of the market by 2010, anticipating a rise to 70% by 2015 and 80% by 2020. To achieve these goals,
in late 2016 Vinapharm restructured to operate under a holding company.
Currently, its two major shareholders hold over 80% of its capital (the Ministry of Health has 65% and Viet Phuon Investment Group
owns 17%). The firm is looking to sell more of its stock as a means of raising capital for further expansion. The group is also aiming to
develop a network of local factories to satisfy the basic needs of the average citizen, although no confirmation of the progress is
available.
Developments
2019
• In June, local press reported that the state-owned company plans to sell a 35% stake in 2019 and another 30% in 2020.
Vietnam Demographic Outlook

Demographic analysis is a key pillar of our macroeconomic and industry forecasting model. The total population is a key variable in
consumer demand, and an understanding of the demographic profile is essential to understanding issues ranging from future
population trends to productivity growth and government spending requirements.
The accompanying charts detail the population pyramid for 2019, the change in the structure of the population between 2019 and
2050 and the total population between 1990 and 2050. The tables show indicators from all of these charts, in addition to key
metrics such as population ratios, the urban/rural split and life expectancy.
Population
Vietnam - Population, mn (1990-2050)
e/f = Fitch Solutions estimate/forecast. Source: World Bank, UN, Fitch Solutions
Population Pyramid
Vietnam – 2019 Male vs Female Population, '000 (LHS) & 2019 vs 2050 Population, '000 (RHS)
Source: World Bank, UN, Fitch Solutions
POPULATION HEADLINE INDICATORS (VIETNAM 1990-2025)

Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, % y-o-y 1.11 0.93 1.01 1.05 0.91 0.69
Population, total, male, '000 33,653.3 39,570.5 41,531.5 43,746.4 46,197.5 48,598.3 50,471.2
Population, total, female, '000 34,335.6 40,339.9 42,301.1 44,221.3 46,479.6 48,740.3 50,635.6
Population, total, '000 67,988.9 79,910.4 83,832.7 87,967.7 92,677.1 97,338.6 101,106.8
Population ratio, male/female 0.98 0.98 0.98 0.99 0.99 1.00 1.00
KEY POPULATION RATIOS (VIETNAM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Dependent ratio, % of total working age 75.4 61.3 50.7 43.1 42.2 45.1 47.7
Dependent population, total, '000 29,236.3 30,360.4 28,206.9 26,493.4 27,514.1 30,233.4 32,643.8
Active population, % of total population 57.0 62.0 66.4 69.9 70.3 68.9 67.7
Active population, total, '000 38,752.6 49,550.0 55,625.8 61,474.3 65,162.9 67,105.2 68,463.1
Youth population, % of total working age 65.4 50.9 40.8 33.8 32.8 33.6 33.2
Youth population, total, '000 25,330.7 25,230.6 22,720.5 20,784.3 21,343.4 22,576.7 22,732.5
Pensionable population, % of total working age 10.1 10.4 9.9 9.3 9.5 11.4 14.5
Pensionable population, '000 3,905.5 5,129.8 5,486.4 5,709.1 6,170.8 7,656.7 9,911.3
URBAN/RURAL POPULATION AND LIFE EXPECTANCY (VIETNAM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Urban population, % of total 20.3 24.4 27.3 30.4 33.8 37.3 40.9
Rural population, % of total 79.7 75.6 72.7 69.6 66.2 62.7 59.1
Urban population, '000 13,772.5 19,477.4 22,870.4 26,757.1 31,333.2 36,346.2 41,361.8
Rural population, '000 54,216.4 60,433.0 60,962.3 61,210.5 61,343.9 60,992.4 59,745.0
Life expectancy at birth, male, years 66.0 68.4 69.7 70.7 71.0 71.4 72.1
Life expectancy at birth, female, years 75.1 77.7 78.4 78.9 79.2 79.6 80.1
Life expectancy at birth, average, years 70.6 73.0 74.1 74.8 75.1 75.5 76.1
POPULATION BY AGE GROUP (VIETNAM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 0-4 yrs, total, '000 9,142.0 7,190.8 6,697.0 7,210.3 7,642.8 7,892.5 7,374.4
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 75-79 yrs, total, '000 746.9 972.4 1,062.1 1,241.9 1,143.5 1,126.5 1,373.8
Population, 80-84 yrs, total, '000 426.5 588.0 713.7 790.7 929.8 860.6 854.8
Population, 100+ yrs, total, '000 1.9 6.3 10.4 14.0 19.3 23.8 30.6
POPULATION BY AGE GROUP % (VIETNAM 1990-2025)
Indicator 1990 2000 2005 2010 2015 2020e 2025f
Population, 0-4 yrs, % total 13.45 9.00 7.99 8.20 8.25 8.11 7.29
Population, 100+ yrs, % total 0.00 0.01 0.01 0.02 0.02 0.02 0.03
Pharmaceuticals & Healthcare Glossary

Terms Used In Datasets, Daily Analysis And Reports
Pharmaceuticals, medicines, drugs: synonym terms used interchangeably.
Pharmaceutical market/sales: the sum of revenues generated by generic, patented and over-the-counter (OTC) drugs through
hospitals, retail pharmacies and other channels. Unless otherwise stated, market value is reported at final consumer price including
mark-ups, taxes, etc.
Prescription drugs: patented and generic medicines regulated by legislation that requires a physician's prescription before they
can be sold to a patient.
Patented drug: an innovative medicine granted intellectual property protection by a patent office. The patent may encompass a
wide range of claims, such as active ingredient, formulation, mode of action, etc, giving the patent holder the sole right to sell the
drug while the patent is in effect.
Generic drug: a bioequivalent medicine that contains the same active ingredient as an originator drug. The originator drug is an
innovative medicine that no longer has intellectual property protection due to patent expiry. The definition for generic drugs
includes off-patent originator medicines.
Over-the-counter (OTC) drug: a medicine that does not require a prescription to be sold to patients. Also known as non-
prescription medicines.
Biosmilar: a drug that is similar to a biological reference product, and which is manufactured by a company other than the
originator. Regulatory approval of biosimilars is technically possible following patent expiry of the reference product. There are
several terms used to describe these drugs in various markets, including 'similar biologics' (India), 'similar biological products'
(Singapore) and 'subsequent entry biologics' (Canada). However, biosimilars is the official name given in the EU pharmaceutical
directives, and that was adopted in the 2010 US legislation.
Healthcare expenditure: government and private spending on medical products and services. This includes the purchase of
healthcare services and goods by public entities such as ministries and social security institutions; government purchase of new
assets including investments into buildings, machinery (capital expenditure); or by private entities such as non-profit institutions and
households. The inclusion of this factor in our forecasts necessitates taking into account the essential attributes of country-specific
healthcare sector characteristics such as comprehensiveness, consistency, standardisation and timeliness. The inclusion of this
factor in our forecasts necessitates taking into account the essential attributes of country-specific healthcare sector characteristics
such as comprehensiveness, consistency, standardisation and timeliness.
Government healthcare expenditure: (includes capital healthcare expenditure): refers to current healthcare expenditure which
includes healthcare goods and services used or consumed during the year, capital expenditure on assets, restoration or
enhancement paid by government entities such as a ministry of health, other ministries, parastatal organisations and social security
agencies, including transfer payments to households to offset medical care costs and extra-budgetary funds to finance healthcare
provision.
Private healthcare expenditure: spending on health by private entities such as commercial or mutual health insurance
providers, households, non-profit institutions serving households, resident corporations and quasi-corporations not controlled by
governments.
Medical devices: equipment and products used for diagnosis or therapy in patients. Whereas pharmaceuticals achieve their
principal action by pharmacological, metabolic or immunological means, medical devices act by physical or mechanical means.
Medical devices include a wide range of products, including syringes, thermometers, blood glucose tests, prosthetic limbs,
ultrasound scans and X-ray machines.
Clinical trials: for the purposes of registration, a clinical trial is any research study that prospectively assigns human participants or
groups of humans to one or more health-related interventions to evaluate the effects on health outcomes. Clinical trials may also be
referred to as interventional trials. Interventions include, drugs, cells and other biological products, surgical procedures, radiologic
procedures, devices, behavioural treatments, process-of-care changes and preventive care. This definition includes Early Phase I to
Phase IV trials.
Hospitals: health facilities larger than clinics, including general hospitals, specialised hospitals, public hospitals and private hospitals.
Hospital beds: a piece of furniture for recovery from illness, available at all facilities classified as hospitals by the relevant national
statistical office.
Public inpatient admission: a person receiving medical treatment overnight in a hospital as defined by the relevant national
statistical organisation. Excludes outpatient (non-overnight) visits. Units: thousands of visits.
Outpatient visit: a person who is not hospitalised overnight but who visits a hospital, clinic or associated facility for diagnosis or
treatment.
Physician: a skilled healthcare professional trained and licensed to practice medicine.
Proprietary Tool Terminology
Disease Database: a fully country-comparative interactive tool that provides dynamic forecasts of the burden and number of
deaths of 268 diseases and injuries in 178 countries, from 1990 to 2030. Fitch Solutions’ disease database incorporates WHO, World
Bank, IMF and Fitch Solutions data to create a proprietary dataset. The data is quantified as the sum of disability-adjusted life years
lost to a disease in a particular country.
Disability-adjusted life years (DALYs): the sum of the years of life lost (YLL) due to premature mortality in a population and the
years lost due to disability (YLD) for incident cases of the health condition. The DALY is a health gap measure that extends the
concept of potential years of life lost due to premature death (PYLL) to include equivalent years of 'healthy' life lost in states of less
than full health (broadly termed 'disability'). One DALY represents the loss of one year of equivalent full health.
Communicable disease: an infectious disease transmissible (as from person to person) by direct contact with an affected
individual or the individual's discharges or by indirect means (as by a vector).
Non-communicable disease: also known as chronic diseases, non-communicable diseases are not passed from person to
person. They are of long duration and generally of slow progression.
Innovative Pharmaceuticals Risk/Reward Index (RRI): quantifies and ranks a country's attractiveness in terms of its
pharmaceuticals industry; it balances the Risks and Rewards of launching innovative medicines in different countries. It should be
emphasised that the RRI broadly assess the rewards and the risks that a company will face when looking to launch an innovative
drug in a market. For example, we do not differentiate between drugs that are part of different therapeutic groups or whether the
drug being launched is the first to be launched in the market or will be one of the many different drugs of the same therapeutic
class that has been launched in the market.
Rewards: this component of the RRI is composed of an evaluation of an industry's size and growth potential (Industry Rewards),
and also macro industry and/or country characteristics that directly impact the size of business opportunities in a specific sector
(Country Rewards).
Risks: this component of the RRI is composed of an evaluation of micro, industry-specific characteristics, crucial for an industry to
develop to its potential (Industry Risks) and a quantifiable assessment of the country's political, economic and operational profile
(Country Risks).
Acronyms
CAGR: compound annual growth rate
WHO: World Health Organization
LHS: left-hand side
RHS: right-hand side
EUR: euro
USD: US dollar
Pharmaceuticals & Healthcare Methodology

Connected Thinking
We use a simple and transparent forecasting model as a base for our industry forecasts, but rely heavily on our analysts' expert
judgement to ensure our forecasts capture all of the insights we derive using our unique Connected Thinking approach. We believe
analyst expertise and judgement are the best ways to provide the most accurate, up-to-date and comprehensive insight to our
customers.
Our Connected Thinking approach to forecasting and analysis integrates macroeconomic variables from Fitch Solutions Country
Risk to provide our customers with unique and valuable insight on all relevant macroeconomic, political and industry risk factors
that will impact their operations and revenue-generating potential in the industry/industries they operate in.
For the Pharmaceuticals & Healthcare sector, we have historical data and 10-year forecasts for 10 pharmaceutical market-level, core
industry variables, and six for healthcare. Healthcare indicators include private and public healthcare spending. Pharmaceutical sales
are broken down into over-the-counter (OTC) and prescription (generic and patented) drugs. We also have historical data and five-
year forecasts for pharmaceutical trade balance for each market covered.
Our forecasts are a combination of regression modelling and analyst expert judgement. Our Pharmaceuticals & Healthcare analysts
interact with other analytical teams in Fitch Solutions, primarily the Country Risk team, to ensure they have a comprehensive
understanding of external factors that may impact the Pharmaceuticals & Healthcare industry outlook either on a market, regional
or global level.
In addition, our Pharmaceuticals & Healthcare forecasts draw on considerations of burden of disease levels, healthcare access,
spending power, market and regulatory regime characteristics (pricing, approvals and intellectual property) and company activity.
There is a rolling cycle of data monitoring, with databases being updated on a quarterly basis. Analysts will intervene outside of
these cycles to implement forecasts changes when necessary.
* Historical data only. ** Five-year forecasts.
Pharmaceutical Sales Forecast Model
Historic pharmaceutical sales data is collected from a range of sources, including:
• national statistics offices

• regulatory agencies
• pharmaceutical trade associations
• company press releases and annual reports
• local news sources
Our pharmaceutical sales forecasts are based on a regression model, using a market's historical time series and key
macroeconomic explanatory variables, primarily total final consumption, from Fitch Solutions Country Risk.
To remove the effect of inflation, real pharmaceutical sales figures are calculated by removing the annual average consumer price
index (CPI).
In addition, we also apply analyst expert judgement to refine and finalise the pharmaceuticals sales forecast based on exogenous
and endogenous variables or events that are not captured by our regression model.
Pharmaceutical sales are expressed in local currency, US dollars and euros.

Healthcare Expenditure Forecast Model
Historic healthcare expenditure data comes from the World Health Organization (WHO).
Healthcare is defined by the WHO as the sum of the funds mobilised by government and private systems for the operation of a
healthcare system. It includes the purchase of healthcare services and goods by public entities such as ministries and social security
institutions; or private entities such as non-profit institutions, commercial insurances and households acting as complementary
funders to the previously cited institutions or unilaterally disbursing health commodities.
Our public and private healthcare expenditure forecasts are based on a regression model, using a market's historical time series and
key macroeconomic explanatory variables, primarily Government and Private Final Consumption, from Fitch Solutions Country Risk.
To remove the effect of inflation, real healthcare expenditure figures are calculated by removing the annual average CPI. The overall
healthcare expenditure forecast is then calculated by combining government and private healthcare expenditure.
In addition, we also apply analyst expert judgement to refine and finalise the healthcare data and forecast based on exogenous and
endogenous variables or events that are not captured by our regression model.
Healthcare expenditure is expressed in local currency, US dollars and euros.
Pharmaceuticals Trade – Exports/Imports Forecast Model
Historic pharmaceutical trade data is collected from UN COMTRADE and the ITC Trade Map.
Our trade balance is calculated as exports minus imports to determine if a market is a net exporter or importer of pharmaceuticals.
Pharmaceuticals trade data is broken down into blood, vaccines and cultures; pharmaceuticals in bulk form; and pharmaceuticals in
finished dose form.
Our five-year forecasts are based on a regression model, using a market's historical time series. In addition, we also apply analyst
expert judgement to refine and finalise the pharmaceuticals sales forecast based on exogenous and endogenous variables or
events that not captured by our regression model.
Pharmaceutical trade is expressed in local currency, US dollars and euros.
Notes On Methodology
Note 1: National Health Accounts methodology. The global health expenditure database that WHO has maintained for the past 10
years, provides internationally comparable numbers on national health expenditures. WHO updates the data annually, taking,
adjusting and estimating the numbers based on publicly available reports (national health account reports, reports from the Ministry
of Finance, Central Bank, National Statistics Offices, public expenditure information and reports from the World Bank, the
International Monetary Fund, etc). The estimates are sent out to the Ministries of Health for validation prior to publication but users
are advised that data may still differ in terms of definitions, data collection methods, population coverage and estimation methods
used. This database is the source for the health expenditure tables in the World Health Statistics Report and the WHO Global Health
Observatory.
Note 2: System of Health Account 2011
In response to the pressing need for reliable and comparable statistics on health expenditure and financing, the OECD, in co-
operation with experts from OECD members, developed the manual, A System of Health Accounts (SHA), releasing the initial 1.0
version in 2000. Building on SHA 2000, the OECD worked with the World Health Organization (WHO) and Eurostat to publish A
system of health accounts 2011 edition (SHA 2011). The formal process of producing SHA 2011 started in 2007 as a co-operative
activity of health accounts experts from the OECD, WHO and Eurostat, known collectively as the International Health Accounts Team
(IHAT). The resulting manual has been the subject of an extensive and wide-reaching consultation process aimed at gathering
inputs from national experts and other international organisations around the world.
This year, the WHO reported healthcare expenditure data using the framework of System of Health Accounts 2011 (SHA 2011). The
macroeconomic variables were also updated to calculate some indicators. At present, National Health Accounts (previously used
methodology) are at different stages of development in various markets and may not only differ in the boundaries drawn between
health and other social and economic activities but also in the classifications used, the level of detail provided and in the accounting
rules.
The SHA 2011 framework makes health accounts more adaptable to rapidly evolving health financing systems, further enhances
comparability of health expenditures and financing data, and ultimately improves the information base for the analytical use of
national health accounts (NHAs). SHA 2011 reinforces the tri-axial relationship and the description of healthcare and long-term care
expenditure – that is, what is consumed has been provided and financed. The framework provides an approach that better reflects
the complex and changing systems of healthcare financing, eliminates ambiguities regarding some of the financing categories,
provides new approaches for market-specific analysis and is sufficiently flexible to accommodate future changes. The framework
also allows middle and low-income markets to provide a more transparent picture regarding foreign assistance.
In summary, the SHA 2011 financing framework increases the transparency of health financing systems, creating the possibility to
monitor changes, compare health expenditures across markets and over time, as well as providing better information for analysis of
the performance of healthcare financing systems. This is due to the clear distinction between the following four elements: financing
schemes, financing agents managing the schemes; revenues of each scheme and the institutional units providing those revenues.
Note 3: Linear regression equation.
y = mx + b
Where y = unknown variable, m = slope of gradient, x = known variable, and b = where the line crosses the y-axis.
Note 4: Final consumption is the sum of government final consumption expenditure and private final consumption expenditure.
Government final consumption expenditure is the sum of expenditure on final goods and services made by the government.
Included in this are investments into healthcare infrastructure, buildings, machinery, public sector salaries, but it does not include
transfer payments such as unemployment benefits or pensions. Private final consumption expenditure is the sum of all private
consumption of goods and services within the economy, including both durable and non-durable goods. Housing purchases,
however, are excluded. Government final consumption expenditure and private final consumption expenditure are the 'G' and 'C' in
this equation:
GDP = C + I + G + (X - M)
Where GDP = gross domestic product, C = private final consumption expenditure, I = gross investment, G = government final
consumption, X = exports, and M = imports.
Innovative Pharmaceuticals Risk/Reward Index Methodology
Our Innovative Pharmaceuticals Risk/Reward Index (RRI) quantifies and ranks a market's attractiveness in terms of its
pharmaceuticals industry; it balances the Risks and Rewards of launching innovative medicines in different markets. It should be
emphasised that the RRI broadly assesses the rewards and the risks that a company will face when looking to launch an innovative
drug in a market. For example, we do not differentiate between drugs that are a part of different therapeutic groups or whether the
drug being launched is the first to be launched in the market or will be one of the many different drugs of the same therapeutic
class that has been launched in the market.
To form an RRI score, we combine industry-specific characteristics with broader economic, political and operational market
characteristics. We weigh these inputs in terms of their importance to investor decision-making in a given industry - in this case, that
of innovative pharmaceuticals. The result is a nuanced and accurate reflection of the realities facing investors in terms of the
balance between 1) opportunities and risk; and 2) sector-specific and broader market traits. This enables users of our RRI to assess a
market's attractiveness in both a regional and global context.
The RRI also encompasses a combination of our proprietary forecasts and analyst assessment of the regulatory climate, as well as
globally acceptable benchmark indicators (eg, Transparency International's Corruption Perceptions Index). As regulations evolve and
forecasts change, so does the RRI score, providing a highly dynamic and forward-looking result.
The Innovative Pharmaceuticals RRI universe comprises 109 markets.
Benefits Of Using Fitch Solutions’ Innovative Pharmaceuticals RRI
• Global Rankings: One global table, ranking 109 markets for the launch of innovative pharmaceuticals from least (closest to zero)
to most attractive (closest to 100).
• Accessibility: Easily accessible, top-down view of global, regional or sub-regional Risk/Reward profiles.
• Comparability: Identical methodology across 109 markets allows users to build lists of markets they wish to compare, beyond the
confines of a global or regional grouping.
• Scoring: Scores out of 100 with a wide distribution, provide nuanced investment comparisons. The higher the score, the more
favourable the market profile.
• Quantifiable: Quantifies the Risks and Rewards of doing business in the innovative pharmaceuticals sector in different markets
around the world and helps identify specific flashpoints in the overall business environment.
• Comprehensive: Comprehensive set of indicators, assessing industry-specific risks and rewards alongside political, economic and
operational risks.
• Entry Point: A starting point to assess the outlook for the innovative pharmaceuticals sector, from which users can dive into more
granular forecasts and analysis to gain a deeper understanding of the market.
• Balanced: Multi-indicator structure prevents outliers and extremes from distorting final scores and rankings.
Weightings Of Categories And Indicators
The RRI matrix can be split into two distinct components:
Rewards: This component of the RRI is composed of an evaluation of an industry's size and growth potential (Industry Rewards),
and also macro industry and/or market characteristics that directly impact the size of business opportunities in a specific sector
(Country Rewards).
Risks: This component of the RRI is composed of an evaluation of micro, industry-specific characteristics, crucial for an industry to
develop to its potential (Industry Risks) and a quantifiable assessment of the political, economic and operational profile (Country
Risks).
Assessing Our Weightings
We deliberately afford Rewards a greater weighting (65% of a market's final RRI score) and within this, the Industry Rewards pillar
accounts for a majority 75%. This is to reflect the fact that when it comes to long-term investment potential, industry size and
growth potential carry the most weight in indicating opportunities, with other structural factors weighing in but to a slightly lesser
extent. In addition, our focus and expertise in emerging and frontier markets has dictated this bias towards industry size and growth
to ensure we are able to identify opportunities in markets where regulatory frameworks are not as developed and industry size is
not as big (in USD terms) as in developed markets, but where we know there is a strong desire to invest.
INDICATORS - RATIONALE AND SOURCES

Source Rationale
Rewards
Industry Rewards
Denotes breadth of pharmaceutical market. Large markets score higher than

Market Expenditure, USDbn Fitch Solutions Forecast smaller ones. Scores are based on annual average expenditure over a five-
year forecast period.
Denotes depth of pharmaceutical market. High-value markets score better

Spending Per Capita, USD Fitch Solutions Forecast than low-value ones. Scores are based on annual average expenditure over a
five-year forecast period.
Denotes sector dynamism. Scores are based on annual average growth over
Sector Value Growth, % Fitch Solutions Forecast
a five-year forecast period.
Country Rewards
Urbanisation is used as a proxy for the development of medical facilities.

Urban/Rural Split Fitch Solutions Forecast
Predominantly, rural markets score lower.
Shows the proportion of the population over 65. Markets with ageing
Pensionable Population, % Fitch Solutions Forecast
populations tend to have higher per capita expenditure.
Fast-growing markets suggest better long-term demand and thus growth for
Population Growth, % Fitch Solutions Forecast all industries. Scores are based on annual average growth over a five-year
forecast period.
Risks
Industry Risks
Fitch Solutions Markets with fair and enforced intellectual property regulations score higher
Patent Respect
Subjective Indicator than those with endemic counterfeiting.
Markets with a free pricing environment score higher than markets where
Fitch Solutions
Pricing Regime governments and private sector payers put downward pressure on
Subjective Indicator
pharmaceutical prices as a mechanism to control expenditure.
High scores are awarded to markets which have realised the economic and
Fitch Solutions social benefit of pharmaceuticals, in turn modernising the provision of
Protectionism
Subjective Indicator healthcare through reforms and essential drug lists and encouraging local
manufacturing and research and development by foreign firms.
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Q3 2022

Industry Risk/Reward Index ....................................................................................................................................................24

Vietnam Demographic Outlook ..............................................................................................................................................49

Pharmaceuticals & Healthcare Glossary .............................................................................................................................52

Pharmaceuticals & Healthcare Methodology ....................................................................................................................54

Headline Expenditure Projections

HEADLINE PHARMACEUTICALS & HEALTHCARE FORECASTS (2020-2026)

Pharmaceutical sales, VND per

Pharmaceutical sales, USD per

Pharmaceutical sales, % of health

Key Economic View

Key Political View

Pharmaceutical Market Forecast

PHARMACEUTICAL SALES, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)

Healthcare Market Forecast

Healthcare Market Forecast

f = Fitch Solutions forecast. Source: WHO, Fitch Solutions

HEALTHCARE EXPENDITURE TRENDS, HISTORICAL DATA AND FORECASTS (VIETNAM 2018-2026)

Vietnam Prescription Drug Market Forecast

Prescription Drug Market Forecast

Patented Drug Market Forecast

Patented Drug Market Forecast

Vietnam Generic Drug Market Forecast

Generic Drug Market Forecast

OTC Medicine Market Forecast

OTC Medicine Market Forecast

Pharmaceutical Trade Market Forecast

Pharmaceutical Trade Forecast

PHARMACEUTICAL TRADE DATA AND FORECASTS (VIETNAM 2020-2026)

Industry Risk/Reward Index

Vietnam: Innovative Pharmaceuticals RRI - Global And Regional Rank

• Regional rank (out of 20): 11th

Vietnam: Innovative Pharmaceuticals Risk/Reward Index

• Develop and issue legal documents on pharmaceuticals;

Intellectual Property Issues

HEALTHCARE RESOURCES (VIETNAM 2016-2020)

Hospitals, total 1,248 1,289 1,309 1,340 1,368

Hospitals, public 1,077 1,085 1,094 1,086 1,091

Hospitals, private 171 204 225 254 277

Hospitals, beds 248,147 250,691 253,196 255,624 260,009

Physicians, total 74,912 75,680 77,995 77,169 78,247

Physician, per '000 population 0.80 0.80 0.82 0.80 0.80

Nurses, total 111,865 121,493 128,386 139,436 148,433

Nurses, per '000 population 1.19 1.28 1.34 1.45 1.52

Dentists, total 9,364 9,460 9,559 9,650 9,749

Dentists, per '000 population 0.10 0.10 0.10 0.10 0.10

Pharmacists, total 34,483 37,159 36,507 39,340 41,260

Pharmacists, per '000 population 0.37 0.39 0.38 0.41 0.42

Inpatient admissions, '000 5,278.25 5,387.06 5,500.00 5,605.98 5,721.31

Surgical procedures, '000 1,759.42 1,795.69 1,833.00 1,868.66 1,907.10

Outpatient visits, '000 147,791.03 150,837.59 154,011.00 156,967.42 160,196.56

Research And Development

New Clinical Trial Registrations

• Professional drug distributing enterprises;

Pharmaceutical Retail Sector

Threats • Limited revenue in absolute terms as the company is mainly Vietnam-focused.

Weaknesses • Difficult intellectual property environment.

Threats • Country susceptible to economic and currency fluctuations.

Weaknesses • Sub-standard intellectual property regime in the country.

Opportunities • Sector modernisation to increase the demand for branded products.

Vietnam Pharmaceutical Corporation

Threats • Complex and discriminatory pricing policy.

Vietnam Demographic Outlook

Source: World Bank, UN, Fitch Solutions

Vietnam Pharmaceuticals & Healthcare Report - Q3 2022 - Shared by WorldLine Technology

Vietnam Pharmaceuticals & Healthcare Report - Q3 2022 - Shared by WorldLine Technology