In the past 2 years, Vietnam’s pharmaceutical industry has faced many difficulties due to supply chain disruptions, high prices of raw materials and transportation, along with tight regulations on disease prevention by the Government.
Entering 2022, when the epidemic is gradually over, along with the Government promoting the completion of vaccine coverage, adding a new economic stimulus package, shifting the strategy from “Zero COVID” to “living safely with the epidemic”. ,” the pharmaceutical industry is forecasted to gradually return to growth.
Overview of the pharmaceutical industry in the first 6 months of 2022
The revenue structure of the pharmaceutical industry has changed markedly
The outbreak of the disease in Vietnam has caused people to limit their visits to hospitals for medical examination and treatment, causing ETC channel’s revenue (from hospitals) to decline since the beginning of 2021 until now. At the same time, people also switched to buying drugs to treat COVID-19 symptoms and health-recovery supplements at the pharmacy channel, leading to a shift in the revenue structure of the pharmaceutical industry.
TTM revenue (trailing 12 months) of the OTC channel (from pharmacies) remained stable at 10% in 2021 and continued to improve until the end of the first quarter of 2022. In contrast, ETC channel’s TTM revenue declined in the second half of 2021 and is showing signs of improvement in the first quarter of 2022.
Pharmaceutical production increases sharply in the first half of 2022
After witnessing a continuous decline in the last 9 months of 2021, the industrial production index of the drug, pharmaceutical and pharmaceutical industries has begun to show signs of growth again in the first quarter of 2022. In the second quarter of 2022, the industrial production index of this industry group grew by 24.6%, nearly reaching the growth rate compared to 2020 when the pandemic had not yet broken out in Vietnam.
Source: VIRAC, GSO
Pharmaceutical market – Imports continue to record growth in the first 6 months
According to VIRAC’s report, in the first half of 2022, Vietnam’s main pharmaceutical import markets such as the EU, US, India, and South Korea all recorded growth in import turnover. In which, imports from the Japan market (+76.0%) had a sudden high growth rate. Medicinal products originating from Japan are increasingly popular among Vietnamese consumers such as Ginkgo Biloba brain tonic, Taisho Pabron cold medicine, etc.
The EU continues to be Vietnam’s main pharmaceutical supply market with a turnover accounting for 51.7% of Vietnam’s total pharmaceutical import turnover. Following is the US with a turnover of 153.4% over the same period in 2021 and accounting for 12.9% of the market share. In third place is India with an increase of 5.3% in import value compared to the first 6 months of 2021.
Vietnam’s pharmaceutical exports are mainly exported on the spot
According to statistics from the General Department of Customs, about 84% of Vietnam’s pharmaceutical exports are in the form of local exports.
In Southeast Asia, Vietnam exports to 8 other countries, in which exports to Singapore have the largest value, mainly medicines such as pain relievers, antipyretics and pharmaceuticals used to treat pain. cough and cold treatment.
In addition, in Asia, Vietnamese pharmaceutical products are also exported to the Japanese market. Japan is the world’s second largest pharmaceutical market and has a very strict pharmaceutical management system.
Fierce competition of drugstore chains
According to VIRAC‘s report, currently, in the pharmaceutical retail market, there is fierce competition among big names such as Pharmacity, Long Chau and An Khang.
In the future, the plan of the top 3 drugstore chains will bring the total number of drug stores in the pharmacy chain to 7,300 stores in 2025, equivalent to 16% of the market share and thus stimulate the pharmaceutical industry’s revenue to increase higher. actual needs of people in the next 2 – 5 years, mainly because these new stores will promote drug inventory.
Pharmaceutical industry outlook in the second half of 2022
According to VIRAC‘s analysis, in the second half of 2022, compared with the low growth base in 2021 due to the 4th Covid-19 outbreak, pharmaceutical sales at the hospital channel are expected to have a strong recovery, especially especially in the southern provinces, helping the industry’s revenue growth to reach about 13% yoy in the second half of 2022 and 11% yoy for the whole of 2022, recovering close to pre-Covid revenue levels. .
In the long term, the pharmaceutical industry has great potential for both manufacturing companies and retail groups due to Vietnam’s large population size and rapidly aging population fast.
According to research and synthesis, Vietnam is one of the countries with the fastest population aging in the world, people aged 60 and over will account for more than 12% of the population by 2021 and by 2050, this number is expected to increase. is expected to increase to over 25%. Compared to other countries, it only took Vietnam 18 years for the population over 65 to increase from 7% to 14%, shorter than Thailand, Japan, Australia and France.
In addition, consumers’ awareness of healthcare is increasing and people’s incomes are higher, leading to spending on healthcare in general and per capita consumption of pharmaceuticals in particular will be more.
According to VIRAC‘s report, Vietnam’s healthcare market is growing rapidly. Total spending on health increased from 16.1 billion USD in 2017 to more than 20 billion USD in 2021. Pharmaceutical spending also increased to more than 6.6 billion USD in 2021. Investment and upgrading of factories Raising high standards for bidding on ETC channel (the bidding channel at departments and hospitals) will be the solution to the growth problem in the coming time.
In addition, unhealthy lifestyle, unsanitary food and polluted environment cause chronic and infectious diseases, which increases the demand for pharmaceuticals to treat these diseases.
According to GSO, Vietnam has a very high death rate from non-communicable diseases compared to other countries. This percentage is on an increasing trend in recent years. Currently, the average life expectancy of Vietnamese people stands at 73.5 years, but the number of years of healthy life is low compared to many countries. The average number of years women live with disease is about 11 years and men about 8 years.
Notably, in the double burden of disease, Vietnamese people often suffer from chronic diseases. On average, each elderly person aged 65 years and over has 3 diseases, mainly non-communicable diseases, requiring treatment and treatment. long-term care.
Moreover, the new-generation Free Trade Agreements (FTAs) that Vietnam has signed will be the growth engine of the pharmaceutical industry in the coming time when creating favorable conditions for pharmaceutical enterprises to expand their markets. export, develop distribution network, access more capital, technology and high-quality human resources towards higher standard product lines such as EU-GMP, Japan-GMP.
VIRAC provides a variety of research reports on many economic sectors in Vietnam; including analysis from overview to details of the market, products – services according to the needs of customers in many different fields.
Vietnam Industry Research And Consultancy is confident to be a reliable companion of your business on the way to conquer the Vietnamese market.