Healthcare Opportunities

An Expert's View about Medical, Health and Cosmetics Products in Vietnam

Last updated: 21 Aug 2011

Vietnam represents a potentially very large health care, pharmaceutical, medical equipment and device market.

Sector briefing Healthcare Opportunities in Vietnam Why Vietnam? Vietnam has a growing population of 87 million, and it is the 13rd most populous country in the world. Over the past decade, Vietnam has become one of the fastest- growing economies in Asia with consistent GDP growth of around 8% in recent years (6.78% in 2010). Vietnam represents a potentially very large health care, pharmaceutical, medical equipment and device market. Identified as one of the national development priorities, the Vietnamese public health care sector has Find general information on Vietnam market received increasing budget allocations along conditions on UKTI?s website. The Doing with incentives from the government. However, Business Guide for Vietnam gives an overview currently, Vietnam?s spending on healthcare is of Vietnam?s economy, business culture, still low, only US$6.6 billion which was equal to potential opportunities and an introduction to 7.3% of the country?s GDP (figure in 2008). other relevant issue. The Government is committed to developing the healthcare sector rapidly and to provide basic healthcare coverage for a population that should reach 100 million by 2018. UK Trade & Investment Sector briefing: Healthcare opportunities in Vietnam care, family planning, hygiene and health Opportunities promotion. Vietnam Healthcare expenditure and funding?s healthcare system is at the infant stage so opportunities exist across the full Traditionally, healthcare is funded by the range of Vietnam?s healthcare industry, State?s budget, which is very limited. State including: hospitals often have problems with budgetary -Selling pharmaceuticals, diagnostics, medical equipment and preventative healthcare deficits and cannot afford the latest equipment products and treatments so that public healthcare . service is very poor, there is a high cost of -Setting up factories to produce pharmaceut bureaucracy. This is the reason why around icals and medical equipment 30,000 Vietnamese people travel abroad locally. annually to seek treatment in foreign hospitals -Providing information technology and software products at cost of more than US$1 billion. for the full chain of healthcare management. As the local grows and living standards -Providing healthcare services: hospitals, increase, expenditure for healthcare is coming clinics? more from the private sector. Total health -Providing health insurance packages. expenditure in 2008 was 7.3% of GDP, with Health government expenditure accounting for only System Overview 38.5% of total health expenditure, the rest, The health system is a mixed public 61.50%, was private expenditures. -private provider system, in which the public system plays a key role in health care, espec Private healthcare sectorially in policy, prevention, research and training. The private sector has grown steadily since the The Min ?reform? of the health sector in 1989, but is istry of Health is the government agency exercising state management mainly active in outpatient care; inpatient care in the is provided essentially through the public field of people?s health care, including prevent sector.ive medicine; consultation and treatment; rehabilitation; traditional medicine; pharmaceut The total number of private facilities rose from icals, including vaccine production; hazardous effects of cosmetics on human 56,000 in 2001 to 65,000 in 2004. In 2008, health there were 83 private hospitals, accounting for ; food hygiene and safety; medical 8.64 % of the total number of hospitals equipment; health facilities; population and nationwide, with 5,429 beds, accounting for family planning; and health system development and management. 3.4% of the total number of hospital beds nationwide. The health care network is organized under sta Challenges to healthcare systemte administrative units: central, provincial, district, commune and village levels, with the Minist · The health system is slow to renew ry of Health at the central level. In 2009, · The quality of health services has not met the in the public sector, there were 1002 hospitals and 682 reg increasingly diversified needs of the people.ional polyclinics. The number of patient beds, excluding private estab · Health care conditions for the poor and those lishments, in remote areas and areas inhabited by totalled 232,900 in 2010, of which 70% were ethnic groups remain very difficult. in hospitals. The establishment of the grassroots health care network ( · Pharmaceutical production and supply including commune and distr capacity remains weak; the price of ict levels) as the foundation pharmaceuticals remains high in comparison for health care has many achievements, especia with people?s incomes.lly that of contributing towards attainment of nationa · The organization and operation of preventive l health care goals for the medicine remain insufficient. A portion of the entire population. The health stations in communes provide primary health care population lacks awareness about self- services, including consultation, outb protection, self-care and health promotion.reak prevention and surveillance, treatment of Environmental health and food safety have not common d been put under tight control.iseases, maternal and child health UK Trade & Investment Sector briefing: Healthcare opportunities in Vietnam 41,849 retailers in Vietnam. In 2005 the Private Public Partnership (PPP) Government launched an ambitious program aiming to have 60% of pharmaceutical needs Apart from traditional funding methods such as supplied by local manufacturers by 2015. the Government?s fund, Overseas Development However, it is clear that this target is still Assistance (ODA) and private funding, PPP has facing two main obstacles: the lack of capacity been recently seen as a real instrument for of local industry in supplying key raw materials Vietnam to improve its infant healthcare and the lack of adequate human resources. system. Interest in the UK?s expertise in PPP is Therefore, the local pharmaceutical sector is high. Regulations on Pilot PPP Investment has still dependant on imported materials despite been approved by the Prime Minister and came expansive growth. into effect on 15 Jan 2011. The Regulations will According to figures from Vietnamese customs, be implemented for a pilot period from 3 to 5 the total import of pharmaceutical products years until replaced by the Government?s reached US$ 1.24n in 2010. By the middle of official legislation on PPP. According to the PPP May, Vietnam's import for pharmaceuticals was Regulations, the investor?s equity capital must $57.3 million, bringing the total figures to account for at least 30% of the privately- $500.2 million for pharmaceutical imports and owned investment in the project. Pilot PPP $71 million for materials. It is forecast that by projects will cover infrastructure and 2012, the value of the country's healthcare. There will be 2-3 projects in each pharmaceutical market will have reached of the priority sectors. The total value of the US$1.85bn, or 1.05% of GDP. Government/State contribution in PPP projects The EU is still by far the main partner with will not exceed, by law, 30% of the total 45% (US$557mn) of the market, followed by project investment. The Ministry of Planning India (13%), South Korea (12%) and Asian and Investment will take the lead in consulting countries (10%). From an EU perspective, the relevant ministries, agencies and provincial France is by far the biggest exporter with up to People?s Committees for project proposal 36% of the export volume followed by assessment. Selection of consultants to Germany (18%), the United Kingdom (8%) facilitate formulation of feasibility reports and and Belgium (7%). European countries should project investors will be done through open maintain this strong position in the coming local and international tendering. years, particularly due to rising demand for quality pharmaceutical products. Among the list of 8 priority projects for PPP model which was recently announced by Vietnam?s pharmaceutical market is considered Ministry of Planning and Investment, there are to be a fertile ground for foreign companies in 2 projects in healthcare sector. Both locate in the coming years. Currently, for the import and Hanoi. distribution of drugs, three foreign firms currently account for nearly 50 percent of the Phu Xuyen General Hospital (1000 beds) market share of drugs including Zuellig Pharma (Singapore), Diethelm (Switzerland), and mega Phu Xuyen General Hospital is located in the Product (Thailand). Despite the huge demand Phu Xuyen district of Hanoi with a capacity of in the market, the number of foreign-owned 1,000 beds. Investment for the project is VND businesses in the medicine market accounts for 3,400 billion (US$170 million). a very small number. Most pharmaceutical producers want to seek local suppliers rather Gia Lam General Hospital (1000 beds) than to invest to build factories in Vietnam, i.e. Sanofi Vietnam was set up by Central Gia Lam General Hospital is located in the Gia Pharmaceutical Enterprises, a local company, Lam district of Hanoi with capacity of 1,000 and Synthelabo of France, Medical Export- beds. Investment for the project is VND 3,400 Import Company (Vietnam) and Rhône-Poulenc billion (US$170 million). (now part of Sanofi-Aventis) of France created Vinaspecia. Other important foreign players Pharmaceuticals include Bristol-Myers Squibb (the U.S), GlaxoSmithKline (the UK) and Roche There are around 1,676 pharmaceutical entities (Switzerland). Moreover, even Vietnamese (state-owned enterprises, joint stock companies import products for domestic companies and private pharmaceutical firms), consumption instead of producing medicine 11,629 private drug stores and more than themselves. This has brought the market into UK Trade & Investment Sector briefing: Healthcare opportunities in Vietnam trouble: prices are getting higher and the the next 10 years. The investment will be used demand is continuing to increase. Under WTO for many programmes, including upgrading commitments, since January 2009, foreign- GMP standards, development and expansion of invested companies and branches of foreign supply network to rural areas, establishment of firms are allowed to import drugs directly to joint ventures with foreign players and meeting Vietnam. However, guidelines which specify the a greater percentage of domestic operational requirements for such imports are pharmaceutical demand. The Government also still to be issued. In addition, foreign intends to invest in the biotechnology sector. companies are still not allowed to distribute There are plans to invest US$241 million in drugs direct to the end-users, but have to work eight projects in the local drug production with the local companies as only these industry, including construction of four drug companies have the right to supply the market factories in the next four years. and have direct access to hospitals and pharmacies. Furthermore, Vietnam also has a relatively strict pharmaceutical pricing Medical Devices environment and a tender system is run for most public procurement. According to the Most modern health equipment in hospitals is Drug Administration of Vietnam (DAV), a imported as the quality of domestic health number of firms failed to fulfil supply contracts equipment in Vietnam has yet to meet the with hospitals, choosing instead to incur national and international standards. Local penalties amounting to 10-20% of the tender production accounts for only 5% of the market. value. The domestic companies can only supply low- end products or some basic items such as In Vietnam it is also easy to buy prescription beds, stretchers, patient trolleys... Such high- drugs without a prescription due to the lack of tech health equipments like ultrasound and x- family doctors in Vietnam and the habit of self- ray machines are imported from Japan, diagnosis. German, South Korea or from the US to ensure The OTC market consists mainly of alimentary the quality and accuracy of the result. 48 tract and metabolism medicines (36.7% of agencies are manufacturing more than 620 which are vitamin and minerals 15.5%), basic pieces of hospital equipment. This is still analgesics (5.6%), cough and cold remedies very far from the strategy of manufacturing (9.0%), cardiovascular (5.5%), skin 60% of the markets need by 2010. treatments (9.3%) sensory organ (3.4%) and others. At present, EU exports of equipment increased According to the Ministry of Health (MOH), to to roughly US$51 in 2010 from around tighten drug safety management systems, by US$47mn in 2009. Germany accounts for over the end of 2010, all medicine plants have to 50% of EU exports, followed by France, meet the GMP (Good Manufacturing Practice) Austria, Italy and Spain. standard and, by end of 2011, all drug stores should have a GPP (Good Pharmacy to During recent years, a series of new hospitals, Practices) certificate, and from January 2013, which are equipped with modern machines and all drug outlets require GPP certificates. a team of professional doctors and technicians, Currently Vietnam has 1,676 distributors and have been built in big cities in the south like Ho 165 drug manufacturers, of which 48 have Chi Minh City, Hue, Da Nang, Can Tho. been certified as GMP compliant. According to the MOH, between 2006-2020, the Government is expected to spend $1.8 The Government is encouraging and giving billion to build and equip 57 new hospitals, preferential treatment to foreign-invested district clinics and communal health centres, as projects using advanced technology to produce well as fund epidemic prevention drives and drugs which meet international standards. In medical check-ups for the poor. In 2009, the November 2008, the Health Ministry and the Prime Minister approved an investment fund Industry and Trade Ministry have signed an for local development with a cost of US$198.7 MoU, which co-ordinates activities in drug million. This was to supplement extra expense manufacture, trade and distribution and spending for health in the coastal southern provides an important step to making central region in order to improve the medical pharmaceuticals a key economic and technical system of eight disadvantaged provinces; raise industry. The government plan to invest up to the quality of medical services and local US$ 1.5 billion in pharmaceutical production in UK Trade & Investment Sector briefing: Healthcare opportunities in Vietnam residents? access to these services. The project will be carried out from 2009 till 2013. With the existence of international hospitals in the country, the requirement for imported medical equipment will also increase. However UK medical products will face stiff competition from China, Korea and Japan. Though UK companies cannot compete them on price, the perception locally is that UK products are of a much higher quality. Moreover, most of the hospitals have not paid enough attention to training their staff to manage the equipment. One challenge facing the country in general and southern provinces in particular, is the serious shortage of doctors, pharmacists and technicians. Currently, there are only 6.5 doctors for every ten thousand people, much lower than the ratio in developed nations worldwide. To deal with this situation, the Prime Minister has issued Decision No. 1544/QD-TTg on training medical workers for disadvantaged localities, mountainous areas in the north, central, Mekong delta and central highlands. The scheme aims to train more 12,000 medical workers to provide these regions by 2018. If you have any questions on the opportunities above, contact the UKTI contacts named in this report. Business opportunities aimed specifically at UK companies are added daily to UKTI?s website. These leads are sourced by our staff overseas in British Embassies, High Commissions and Consulates, across all sectors and in over 100 markets. You can be alerted to business opportunities on a regular basis by registering on the UKTI website. Find out more on UKTI?s business opportunities service on the UKTI website UK Trade & Investment Sector briefing: Healthcare opportunities in Vietnam UKTI contacts Major events and activities Mrs Le Nguyen Lan Anh VIETNAM MEDI-PHARM 2012 Senior Commercial Officer VIETNAM HOSPITAL 2012 UKTI, British Embassy Hanoi Add: Friendship Cultural Palace, 91 Tran Hung 4 Floor, Central Building, 31 Hai Ba Trung Dao Street, Hoan Kiem District, Hanoi, Vietnam Street, Hanoi, Vietnam Time: May 2012 Tel: (84) (4) 39360521 Fax: (84) (4) 39360561 Contact: Vietnam Advertisement & Fair E-mail address: Le.Anh@fco.gov.uk Exhibition JSC - VIETFAIR Add: 4th Floor, Bien Phong Newspaper Ms Luong Buu Hoang Anh Building, 40A Hang Bai Street, Hoan Kiem Commercial Officer District, Hanoi, Vietnam UKTI, British Consulate General Hochiminh city Tel: (84-4) 3936 5566/70 25 Le Duan Str., District 1, Ho Chi Minh City, Fax: (84-4) 3936 5568 Vietnam Email: vietfair@vnn.vn Tel: (84-8) 3825 1380 ext. 2231 Fax: (84-8) 3822 1971 PHARMED & HEALTHCARE VIETNAM E-mail address: luong.anh@fco.gov.uk Add: Tan Binh Exhibition and Convention Centre, 446 Hoang Van Thu, Tan Binh Dist., HCMC Time: Sep 2012 Website: www.pharmed.vn Contact: Adpex Joint-stock Corporation Add: Suite G3, Fosco Building No 6 Phung Khac Khoan, Dist.1, HCMC Tel: (84-8) 3823 9051 Fax: (84-8) 3823 9053 Email: info@adpex.vn Website: www.adpex.vn Find full details of all events in this country and sector on the UKTI website. New export events are added daily to the site and you can register to be alerted to them on a daily, weekly or monthly basis UKTI?s Tradeshow Access Programme (TAP) provides grant support for eligible Small & Medium Sized Enterprises (SME's) to attend trade shows overseas. Find out more about UKTI support for attendance at overseas events UK Trade & Investment Sector briefing: Healthcare opportunities in Vietnam Next steps - How UKTI can help British companies wishing to develop their business in the Vietnam?s market are advised to undertake as much market research and planning as possible in the UK. UKTI?s team in Vietnam, with its wide local knowledge and experience, can provide a range of services to British-based companies wishing to grow their business in global markets. This can include: ? Provision of market information ? Validated lists of agents/distributors ? Key market players or potential customers in the Vietnam?s market ? Establishment of interest of such contacts in working with you ? Arranging appointments ? Organise seminars or other events for you to meet contacts and promote your company in the Chinese market This work is available via our Overseas Market Introduction Service (OMIS) a chargeable service which assists British-based companies wishing to enter or expand their business in overseas markets. To find out more about commissioning this work, or accessing other UKTI services and specialist advice, please visit the UKTI website to find contact details for your local UKTI office. Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2011 by UK Trade & Investment. Crown Copyright © You may reuse this information (not including logos, images and case studies) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government- licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk . This publication is also available from our website at www.ukti.gov.uk or for more information please telephone +44 (0)20 7215 8000. UK Trade & Investment Sector briefing: Healthcare opportunities in Vietnam
Posted: 21 August 2011, last updated 21 August 2011

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