Businesses in the pharmaceutical industry return to the race for growth
Businesses in the pharmaceutical industry return to the race for growth
As we step into 2022, with the pandemic gradually receding and the Government pushing to complete vaccination coverage, as well as introducing new economic stimulus packages, it is predicted that the industry will gradually recover.
Pharmaceutical Industry Prior to the COVID-19 Pandemic
The pharmaceutical industry in Vietnam has faced numerous difficulties over the past two years due to the impact of the COVID-19 pandemic, including supply chain disruptions, increased raw material and transportation costs, as well as strict disease prevention regulations from the Government, leading to a stagnant pharmaceutical market.
Currently, the average life expectancy in Vietnam is 73.5 years, but the number of healthy years is low compared to many other countries. The average number of years women live with illness is about 11 years and men about 8 years. It is noteworthy that in the burden of double diseases, Vietnamese people often suffer from chronic diseases, with an average of 3 diseases per elderly person aged 65 and above, mainly non-communicable diseases, requiring long-term treatment and care.
Demand for healthcare and social care increases with age. The Vietnamese healthcare market is growing rapidly, with total healthcare spending increasing from USD 16.1 billion in 2017 to over USD 20 billion in 2021. Spending on pharmaceuticals also increased to over USD 6.6 billion in 2021. Investment in upgrading factories to high standards to bid through the ETC channel (tendering channel at the department and hospital) will be the solution to the growth puzzle in the future.
Before the impact of the pandemic, the pharmaceutical industry faced certain challenges due to supply chain disruptions, increased raw material and transportation costs, as well as strict disease prevention regulations from the Government, with people limiting their visits to healthcare facilities leading to a stagnant pharmaceutical market. The impact of COVID-19 on the pharmaceutical industry in 2021 showed that up to 57.14% of businesses assessed their business situation as declining.
The recovery of the pharmaceutical industry after the pandemic
In 2022, there will be more positive signals for the pharmaceutical industry than in 2021. While the industry in 2021 was evaluated as having difficulty making breakthroughs and with a high degree of differentiation between businesses, the prospects for 2022 are more prominent.
The new generation free trade agreements (FTA) that Vietnam has signed will be a driving force for the growth of the pharmaceutical industry in the coming time, creating opportunities for pharmaceutical companies to expand their export markets, develop distribution networks, access more capital, technology, and high-quality human resources towards products that meet higher standards such as EU-GMP, Japan-GMP.
The scale of the Vietnamese pharmaceutical industry is forecasted to reach approximately VND 141.4 trillion, up 9.2% compared to the same period last year, driven by the increasing demand for immune system support products and epidemic prevention, as well as the need for treatment of nervous system, cardiovascular, respiratory, endocrine disorders, and other sequelae after contracting COVID-19.
Investors can also take advantage of tariff preferences under agreements such as the EU-Vietnam Free Trade Agreement (EVFTA). EU investors are currently allowed to establish companies to import pharmaceutical products and sell to local distributors or wholesalers. EU investors are also allowed to build warehouses and conduct research and clinical trials.
Under the EVFTA, Vietnam will also comply with international standards for pharmaceuticals, meaning that products already certified in the EU will not need to undergo additional certification in Vietnam, reducing time and costs in the Vietnamese market.
Currently, retail businesses not only compete with each other but also fiercely compete for market share with established pharmaceutical giants. The pharmaceutical supply market is also quite diverse; in which, many businesses import products from Germany, the United States, China, France, Belgium, India, among others. It is noteworthy that Vietnam's pharmaceutical imports in 2021 from some markets increased sharply compared to the previous year, such as China, Belgium, Thailand, and Russia.
