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August 22, 2023Posted by Vietnam BriefingWritten by Minh Nhat DaoReading Time: 5 minutes Shif

Vietnam’s digital transformation goals, along with two years of COVID-19 outbreaks, have accelerated Acce
digital disruption in the healthcare industry. This has boosted efforts to digitize the healthcare sector,
including incorporating Big Data and Artificial Intelligence into digital health applications. Here’s what that Viet
might mean for foreign firms.
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Vietnam’s digital-savvy population, as well as high internet penetration and smartphone usage, have served
as effective facilitators for MedTech innovations, according to research conducted by Nourhan Shaaban forThe
the Massachusetts Institute of Technology (MIT).

However, there are still challenges that firms should be aware of. Deficient regulatory frameworks and
strictly governed policies can pose difficulties when starting a MedTech business in Vietnam. Understanding
these critical challenges, however, can give firms a competitive edge in making the most out of the
significant potential in Vietnam’s MedTech industry.

Vietnam’s MedTech industry in numbers

Healthcare spending in Vietnam is predicted to increase at an annual rate of 9.2 percent from 2009 to 2025,
reaching US$262 per capita, according to AmCham Vietnam. VIRAC research also shows that Vietnam’s
healthcare market has witnessed significant growth in recent years, with expenditure on healthcare
products and services increasing by 11 percent over the last decade. According to Statista, digital health
revenue reached US$968.2 million in 2023 and is expected to increase by 1.5 times that number by 2027.

This growth is mainly attributable to shifting demographic headwinds, increasing wealth, rising healthcare
demand, and government healthcare policies in Vietnam. Over 31.6 percent of the Vietnamese population is
aged 45 or older. Furthermore, it’s estimated that the fast-growing middle class will represent roughly 20
percent of the population by 2024.
With the increasing demand for higher standards of healthcare services, Vietnamese consumers are seeking
Other To address these
increased transparency, convenience, and personalization from their healthcare providers.
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emerging needs, healthcare technology companies are accelerating their digital transformations as▼ they
work to provide uninterrupted care for patients. To do this, they are collaborating with hospitals,
pharmaceutical businesses, and the Vietnamese Government.

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Leading MedTech startups operating in Vietnam Viet

Despite being at the early stage of development, many MedTech startups are working to transform the Lead
future of healthcare delivery in Vietnam.
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Korean-based venture capital firm Nextrans points out several key areas that are currently popular among
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MedTech companies, including health information technology, telemedicine, consumer medical devices, and
AI-based healthcare services. Shif

In particular, MedTech companies that have put customers at the center of their development have had theAcce
most success.
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This is in line with findings from McKinsey & Company, that adopting a customer-centric approach helps Pha
MedTech companies to generate more significant revenue and much higher total shareholder returns (TSR)
than their peers in today’s medical world. Med

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By focusing on customer-centric innovation, Vietnam’s MedTech startups are also receiving sizable
investments from foreign investors. Take Vietnam-based BuyMed as an example. The company received
$51.5m in Series B funding earlier this year.

BuyMed is a pharmaceutical distribution platform supplying medical products for thousands of pharmacies
and clinics across Vietnam and other Southeast Asian countries. In May 2023, UOB Venture Management
invested US$51.5 million to upgrade BuyMed’s infrastructure and provide cost-effective distribution
methods for medicine, according to Tech in Asia. Currently, the firm is the biggest player in the MedTech
sector in Vietnam, with over 20,000 monthly active clients, and serves over 63 provinces in Vietnam.

Another standout performer has been Jio Heath.

Jio Health is a technology-driven healthcare provider in Vietnam. The startup received fundraising of over
US$20 million in March led by Singapore-based investor Heritas Capital, paving the way for the expansion
of Smart Clinics and the development of its omni-channel ecosystem in Vietnam.

Notable MedTech deals in Vietnam

 Name Category Funding Stage Amount (US$m) Other
Valuation (US$m)
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BuyMed Consumer Marketplace Series B 51.5 247.2

Jio Health Teleconsultation Series B 20.5 98.4

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Med247 Medical Concierge Series A 4.7 21.15
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Medigo Teleconsultation Series A 2 9.00
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Genetica Omics Related Applications Pre-A 2.7 12.86
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Drcom Healthcare Marketing Pre-A 2.1 10.00

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Source: Healthtech Alpha
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Emerging trends and growth opportunities in the MedTech industry
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Armed with robust technological innovation, along with increasing demand in the healthcare sector,
Vietnam’s MedTech industry is poised to rapidly expand. Med

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Shifting demographic headwinds and rising demand for healthcare services

According to research conducted by the World Bank, Vietnam has one of the fastest-aging populations in
the world. The number of people aged 65 and older is projected to increase significantly to 19.6 million by
2049 and will make up nearly 18.1 percent of the population. This will significantly increase the demand for
healthcare services in the future.

Furthermore, Vietnam’s growing middle and upper class has also surged in recent years and is anticipated
to account for more than 20 percent of Vietnam’s population by 2024. These affluent groups are
demanding high-quality services from their healthcare providers, including care delivery, outpatient
treatment, and wellness services.

Acknowledging this trend, more and more hospitals in Vietnam are forming strategic partnerships with
companies providing teleconsultation, telemedicine, or virtual surgery to add value to their healthcare
offerings.

Accelerating pace of digital adoption, transformation, and delivery

At the start of 2022, there were 72.1 million internet users in Vietnam, accounting for over 73.2 percent of
the population. The country also has relatively high internet penetration compared to other Southeast
Asian nations, which adds to its potential for technology-driven companies in Vietnam.
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Although Vietnam’s adoption of Industry 4.0 technologies is still in the early stages, the country is making
progress in technological innovation and trying to accelerate its digital transformation agenda. Vietnam
ranked 42nd out of 131 countries in the Global Innovation Index, this indicates that efforts to build digital
readiness among tech companies are working. MedTech companies are also employing cutting-edge In t
technology in their services, like Big Data and AI, which is paving the way for more affordable healthcare
services.
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Supporting government policies Lead

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The Vietnamese government has several policies that focus on promoting investment in the healthcare
sector and the digital transformation of Vietnam. Eme

Decision No. 749/QD-TTg, for example, states that the healthcare sector in Vietnam is among one of the Shif
top priorities for digital transformation. Resolution No. 52-NQ/TW also proposes initiatives and provides
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guidelines for Vietnam’s participation in the Fourth Industrial Revolution, and Decision No. 127/QD-TTg sets
out a national strategy for the research and development of AI in Vietnam. These policies play a vital role in
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encouraging MedTech companies and investors to digitize Vietnam’s healthcare sector.

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Vietnam MedTech regulations
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Vietnam’s increasing demand for digitally integrated healthcare services has been relatively steady, but the
country’s telemedicine and teleconsultation sectors still lack solid regulatory frameworks.

“The law is not very clear yet. Ministries keep changing the regulations, especially in the medical equipment
area. Things keep changing all the time,” according to Huynh Phuong Tho, co-founder of eDoctor.

However, there are a number of regulations in other sectors that might be relevant to MedTech companies.

For example, the Law on Medical Examination and Treatment requires any institutional healthcare provider
to obtain an operating license that is appropriate for their operation level and their range of services.

Furthermore, in the field of pharmaceuticals and medical devices, Vietnamese authorities have also
established strict regulations.

Pharmaceuticals

The Law on Pharmacy declares the regulatory framework for the process of registering, selling, and
distributing pharmaceutical products. Circular No. 32/2018/TT-BYT sets out the registration process for
pharmaceutical items and the marketing authorization of medicinal ingredients in Vietnam.
Medical devices
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The Vietnamese government has issued Decree No. 36/2016/NP-CP, which unifiesBriefings
control ▼of both ▼

domestically produced and imported medical equipment. This decree declares that all medical devices must
be registered and issued a permit by the Ministry of Health. In addition, all medical devices should be
categorized into specific classifications depending on the degree of risk they pose. The requirements In t
become stricter as the classification level increases. This is outlined in the table from Decree 98/2021/NĐ-
CP below.
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Levels of Risk Classification Examples

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Low Class A Thermometer, Wheelchair
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Low to Moderate Class B Blood Pressure Monitor
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Moderate to High Class C Ventilator, Hemodialysis Device
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High Class D Infant Incubators, MRI
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Depending on the classification of a medical device, firms may be required to complete additional Pha
compliance procedures.
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These strict regulations and cumbersome administrative procedures pose many challenges for MedTech The
companies operating in this field as they can delay access to the Vietnamese market and the provision of
healthcare services.

The future of Vietnam’s MedTech sector

Vietnam’s MedTech industry is still very much in its infancy, but many Vietnam-based MedTech companies
have already found their growth drivers and received significant investments. The industry has strong
growth opportunities as consumers demand more digitally integrated healthcare services and the
Vietnamese government strives to accelerate Vietnam’s digital transformation.

However, firms should be aware of the regulatory frameworks and legal aspects of the healthcare system
in Vietnam. These can be complicated and firms looking to enter Vietnam’s MedTech market or to invest in
MedTech companies should consult a knowledgeable local professional.

For support with legal and regulatory requirements in Vietnam, contact the legal experts at Dezan Shira
and Associates.

About Us
 Vietnam Briefing is published by Asia Briefing, a subsidiary of Dezan Shira & Associates. We produce
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Dezan Shira & Associates provide business intelligence, due diligence, legal, tax and advisory services In t
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well as throughout China, South-East Asia, India, and Russia. For assistance with
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investments into Vietnam please contact us at vietnam@dezshira.com or visit us
at www.dezshira.com Lead

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