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Analysis: Winning in Vietnam

In the second part of his series about operating healthcare companies across the APAC region, Marcus Pitt, managing partner of Fortuna Corpus Asia, focuses on the opportunities in Vietnam.

For the last two years, I have had the privilege of working with one of Vietnam’s largest pharmaceutical companies, Traphaco, in the capacity of a board and sub-committee member. Having this opportunity with a domestic company has provided me a unique insight into the challenges and opportunities in the market. Similar to the Indonesian setting, Vietnam enjoys steady double digit growth and this looks set to continue.

Larger pharmaceutical companies such as Traphaco, DHG, Imexpharm and Domesco (with Sanofi the larger of the multinational companies) enjoy significant market share and are typically categorised by their generic and traditional medicine portfolios. There has been a recent push by the government to lift the image and potential of domestic companies. They have done this through engaging with service providers and healthcare professionals to promote the use of locally produced medicines and the development of a 2030 vision for the industry. The government will be encouraging greater investment in the industry and has the ambition of Vietnam becoming a regional hub for manufacturing and innovation.

Vietnam has also attracted a mix of investors. Groups such as Taisho and Abbott have partnered and taken positions with local pharmaceutical companies – a strategy aimed at creating a truly local presence. Similarly, financial investors have also seen opportunities. Mekong Capital, to take just one example, was an early investor in Traphaco and has contributed significantly to the group’s continued growth and performance since 2011. Other financial investors such as Quadria Capital, have focused on the hospital sector with a recent investment in FV Hospital in Ho Chi Minh City.

Another interesting recent development is in the pharma retail space. New startup Pharmacity based in HCM attracting funding earlier this year from a number of local investors. Last year, Saigon Asset Management acquired a 15% stake in My Chau Pharmacy, a retail group that has operated in Vietnam for more than 30 years. New regional healthtech startups are also seeing Vietnam as an opportunity. Recently Singapore based mClinica raised more than US$6 million in a series A round for the purposes of continued expansion across the region. The tech startup has a platform that helps government, Industry and donors; it collects information / data to help groups better access quality medicines and create efficiencies across the value chain.

The government is also focused on improving access to medical treatment facilities. Top foreign investors of hospitals include European and US groups, such as Eukaria, a company that owns Hanoi French Hospital. In addition to adding more hospitals, improvements of the healthcare system open up many opportunities for foreign medical equipment and pharmaceutical manufacturers. Manufacturers of medical equipment and devices are being encouraged to invest and establish operations in Vietnam and recent changes in policy allow foreign firms to own a majority share in a local entity. Currently, most products are being imported and the government is providing a range of policy changes and incentives to encourage both domestic and foreign firms to invest in locally manufactured products. 

I have tried to highlight just a few examples, of course there are many more. There are many challenges and understanding this market, its culture, investing in relationships and partnering with local players is key. Opportunities exist across the whole value chain: drug manufacturing, distribution, service providers (and auxiliary services), labs, diagnostics, and so on.

Marcus Pitt is a board member, advisor and consultant for the healthcare and life-sciences industries across southeast Asia. He can be reached via email: marcus.pitt@fortunacorpusasia.com.

Posted on: 01/11/2017 UTC+08:00


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