Q4 2011 www.businessmonitor.com VietNam pharmaceuticals & Healthcare Report INCLUDES BMI'S FORECASTS ISSN 1748-2305 Published by Business Monitor International Ltd. VIETNAM PHARMACEUTICALS & HEALTHCARE REPORT Q4 2011 INCLUDES 5-YEAR AND 10-YEAR INDUSTRY FORECASTS BY BMI Part of BMI’s Industry Survey & Forecasts Series Published by: Business Monitor International Copy deadline: September 2011 Business Monitor International 85 Queen Victoria Street London EC4V 4AB UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 email: subs@businessmonitor.com web: http://www.businessmonitor.com © 2011 Business Monitor International. All rights reserved. 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All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained. Vietnam Pharmaceuticals & Healthcare Report Q4 2011 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q4 2011 CONTENTS Executive Summary . SWOT Analysis . Vietnam Pharmaceutical And Healthcare Industry SWOT Vietnam Political SWOT 10 Vietnam Economic SWOT . 11 Vietnam Business Environment SWOT 12 Vietnam – Business Environment Ratings 13 Table: Asia Pacific Pharmaceutical Business Environment Ratings, Q411 . 13 Rewards . 14 Risks 15 Vietnam – Market Summary 16 Regulatory Regime . 17 Pharmaceutical Advertising . 18 Intellectual Property Environment . 18 IP Shortcomings . 19 Counterfeit Drugs 21 Pricing Regime 22 Price Spikes . 23 Reimbursement Regime 24 Recent Pricing and Reimbursement Developments 25 Industry Trends and Developments . 28 Epidemiology . 28 Recent Public Health Developments 29 Communicable Diseases 30 HIV/AIDS . 31 Non-Communicable Diseases 32 Healthcare Financing 33 Hospital Sector 34 Private Healthcare Sector 34 Hospital Sector 35 Healthcare Insurance 36 Healthcare and Pharmaceutical Reforms 37 Foreign Partnerships . 38 Research and Development 39 Biotechnology Sector . 40 Vaccines . 41 Clinical Trials 42 Medical Device Market 43 Industry Forecast Scenario . 45 Overall Market Forecast 45 Table: Pharmaceutical Sales Indicators 2007-2015 46 Key Growth Factors – Industry 47 Table: Healthcare Expenditure Indicators 2007-2015 48 Table: Government Healthcare Expenditure Indicators 2007-2015 . 49 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Table: Private Healthcare Expenditure Indicators 2007-2015 . 49 Key Growth Factors – Macroeconomic . 50 Table: Vietnam – Economic Activity 53 Prescription Drug Market Forecast . 54 Table: Prescription Drug Sales Indicators 2007-2015 56 Patented Drug Market Forecast 57 Table: Patented Drug Market Indicators 2007-2015 58 Generic Drug Market Forecast 59 Table: Generic Drug Sales Indicators 2007-2015 . 60 OTC Medicine Market Forecast 61 Table: OTC Medicine Sales Indicators 2007-2015 62 Medical Device Market Forecast . 63 Table: Medical Devices Sales Indicators 2007-2015 . 64 Pharmaceutical Trade Forecast 65 Table: Exports and Imports Indicators 2007-2015 66 Other Healthcare Data Forecasts 67 Key Risks to BMI’s Forecast Scenario . 68 Competitive Landscape . 69 Pharmaceutical Industry 69 Domestic Pharmaceutical Sector . 70 Foreign Pharmaceutical Sector . 72 Recent Pharmaceutical Industry News . 73 Traditional Medicines 75 Pharmaceutical Distribution 77 Pharmaceutical Retail Sector 77 Table: Key Aspects Of Good Pharmacy Practice (GPP) In Developing Countries 79 Company Profiles . 80 Indigenous Manufacturer Profiles 80 Vietnam Pharmaceutical Corporation (Vinapharm) 80 Vietnam OPV Pharmaceutical Co 82 Vietnam Pharmaceutical Joint Stock Company (Ampharco) . 83 Vidipha Central Pharmaceutical Joint Stock Company . 85 Leading Multinational Manufacturers 86 Pfizer . 86 Sanofi . 87 Novartis . 89 Merck & Co . 90 GlaxoSmithKline (GSK) . 92 Country Snapshot: Vietnam Demographic Data . 93 Section 1: Population . 93 Table: Demographic Indicators, 2005-2030 93 Table: Rural/Urban Breakdown, 2005-2030 . 94 Section 2: Education And Healthcare 94 Table: Education, 2002-2005 94 Table: Vital Statistics, 2005-2030 94 Section 3: Labour Market And Spending Power 95 Table: Employment Indicators, 1999-2004 95 Table: Consumer Expenditure, 2000-2012 (US$) 95 Glossary 96 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q4 2011 BMI Methodology . 98 How We Generate Our Pharmaceutical Industry Forecasts 98 Pharmaceuticals Business Environment Ratings . 99 Risk/Reward Ratings Methodology 99 Ratings Overview . 99 Table: Pharmaceutical Business Environment Indicators 100 Weighting 101 Table: Weighting Of Components .101 Sources .101 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q4 2011 © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Executive Summary BMI View: The overall attractiveness of Vietnam’s pharmaceutical market will continue to be limited by financial and wider regulatory inefficiencies. While the potential of the local industry has been boosted by the introduction of stricter standards, the country will remain import-dependent, especially in relation to higher-tech products. Nevertheless, the growing population numbers (expected to top 96mn in 2020) will remain an attractive proposition for foreign companies. Headline Expenditure Projections ƒ Pharmaceuticals: VND32,842bn (US$1.71bn) in 2010 to VND38,902bn (US$1.89bn) in 2011; +18.5% in local currency terms and +10.3% in US dollar terms. Forecast up slightly from Q311 due to elevated inflation. ƒ Healthcare: VND152,076bn (US$7.93bn) in 2010 to VND180,218bn (US$8.75bn) in 2011; +18.5% in local currency terms and +10.3% in US dollar terms. Forecast up slightly from Q311 due to elevated inflation. ƒ Medical devices: VND13,422bn (US$700mn) in 2010 to VND14,967bn (US$727mn) in 2011; +11.5% in local currency terms and +3.8% in US dollar terms. Forecast down marginally from Q311 due to changes in historical data, but absolute numbers increasing considerably. Business Environment Rating: The addition of New Zealand pushed Vietnam down one place in our latest version of the Asia regional Business Environment Rating (BER) matrix. The country is now ranked 14th, out of the 18 key markets surveyed. The country’s score remained unchanged quarter-onquarter (q-o-q), at 44.7 out of 100, with its Risks and Rewards profiles relatively evenly balanced. Key Trends & Developments ƒ In August 2011, the Vietnam Institute of Vaccines and Medical Biologicals (IVAC) produced a vaccine against rotavirus, the most common cause of diarrhoea among infants and toddlers. The institute has previously successfully produced several vaccines such as those for diphtheria, pertussis, tetanus and tuberculosis. According to IVAC, the price of a Vietnamese-made vaccine is one-third (US$11) the cost of an imported vaccine that cost approximately US$34. ƒ In August 2011, India-based Fortis Healthcare entered the Vietnamese healthcare sector through the acquisition of a 65% stake in Hoan My Medical for US$64mn, as part of its wider expansion plans in Asia Pacific. Since the start of the year, Fortis Malar Hospitals, a subsidiary of Fortis Healthcare, took over the Cardiac Centre at Sri Lanka-based Oasis Hospitals. © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q4 2011 BMI Economic View: Inflationary pressures in Vietnam have proven to be more stubborn than we have previously anticipated, although we expect monetary normalisation to begin in H112. Nonetheless, with inflationary pressures taking longer to cool, we see upside risks to our consumer price index (CPI) forecasts for 2011 and 2012. Still, given that the increase in the healthcare-related component of the CPI has trailed the overall inflation by a large margin in the past, we envisage a modest impact on the current forecasts. In the meantime, from the start of October 2011, the Vietnamese government will be implementing an increase in minimum wages to help workers in coping with high inflation rates. BMI Political View: Recent territorial disputes in the South China Sea have sparked anti-China demonstrations in Vietnam, and we see increasing risks that Hanoi may be pressured to take a tougher stance against Beijing in an attempt to ease public unrest. Meanwhile, the lack of a credible third party to facilitate a compromise between both parties in order to agree on a resolution means that bilateral relations should remain heated in the medium term, which is nevertheless expected to have at best a moderate bearing on the development of the country’s healthcare market. © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q4 2011 SWOT Analysis Vietnam Pharmaceutical And Healthcare Industry SWOT Strengths Weaknesses Opportunities Threats ƒ Significant growth potential, given a large and growing population. ƒ The government’s commitment to developing the health sector. ƒ Sizeable local generic drugs sector, which is being encouraged by the government. ƒ Strong traditional medicines segment with potential to improve the non-prescription drugs market in the longer term, as long as sufficient investment in extraction technologies can be found. ƒ One of the least developed pharmaceutical markets in Asia, with low per capita spending on drugs. ƒ Counterfeit drugs account for a significant amount of market consumption. ƒ Little distinction made between prescription and over-the-counter (OTC) drugs, with most medicines available without a prescription. ƒ Complex drug pricing policy biased towards local drug producers. ƒ Import-reliant market, especially in terms of high-tech products and active pharmaceutical ingredients (APIs), which makes it vulnerable to international currency movements. ƒ Underdeveloped primary care services and shortage of trained pharmacists continuing to hamper access to medicines and improved product market penetration. ƒ Population concentrated in rural, rather than urban areas, preventing access to modern drugs and encouraging dependence upon traditional medicines. ƒ The Association of South East Asian Nations (ASEAN) harmonisation initiative, including the adoption of Western regulatory standards such as International Conference on Harmonization (ICH) and WHO guidelines. ƒ Introduction of five-year exclusivity for clinical dossier data encouraging researchbased multinationals. ƒ If investment can be found for technological improvements, then there is great potential in the traditional Chinese medicine (TCM) market, in addition to fledging biotechnology. ƒ Full World Trade Organisation (WTO) membership improving the trading climate and potentially, in the longer term, redressing pharmaceutical trade issues. ƒ Requirement for domestic companies to comply with international Good Manufacturing Practice (GMP) should boost exports. ƒ Government resistance to aligning patent law fully with international standards deterring multinational sector expansion. ƒ Need to resolve infrastructural and power supply issues, as well as higher education provision, before higher levels of foreign direct investment (FDI) can be expected. ƒ The government is increasingly interfering in the industry, protecting indigenous firms through the use of legal trade barriers, which will affect competitiveness. ƒ Pharmaceutical price inflation threatens to put medicines out of reach of poor and therefore limit market volume growth. ƒ Legalisation of parallel imports negatively impacting performance of patented drugs. ƒ New health insurance legislation decreasing patients’ access to medicines. © Business Monitor International Ltd Page Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Sanofi Strengths Weaknesses Opportunities Threats Company Overview ƒ Direct manufacturing presence in the country, benefiting from the advantages given to locallyproduced drugs. ƒ Among the top three pharmaceutical companies in Vietnam. ƒ Strong product portfolio covering a wide range of therapeutic areas. ƒ Involvement in the vaccines sector. ƒ Long tradition of partnerships with local players. ƒ Substandard IP regime in the country. ƒ Sizeable parallel imports and counterfeit industries. ƒ Need for local vaccine trials before gaining product approval. ƒ Sector modernisation to increase the demand for branded products. ƒ In a strong position to increase its market penetration as the sector continues to open. ƒ Plans for a major overhaul of the regulatory environment, aiming to boost foreign investment. ƒ Relaxation of price freeze to improve product revenues. ƒ WTO membership to improve operating conditions for foreign players in the country. ƒ Government resistance to aligning domestic patent law fully with international standards. ƒ Lack of progress in terms of significantly reducing the role of counterfeit drug industry. ƒ The government aiming to protect local drug companies through the use of legal trade barriers, potentially adversely affecting the company’s market presence. ƒ Vietnam becoming increasingly susceptible to economic fluctuations, which would jeopardise local investment. ƒ Legalisation of parallel imports negatively impacting performance of branded drugs. Sanofi enjoys a strong position in the Vietnamese pharmaceutical market. Sanofi-Aventis Vietnam was established in 1989 and has more than 600 employees. In May 2011, Sanofi-Aventis's shareholders approved a proposal submitted by the board to shorten the company's name to Sanofi and use it with immediate effect. A new logo has also been created. The first pharmaceuticals joint venture (JV) in the country, Sanofi-Aventis Vietnam, was set up by local company Central Pharmaceutical Manufacturing Enterprise and Sanofi-Synthélabo. Medical Export-Import Company (Vietnam) and Rhone-Poulenc (now part of Sanofi-Aventis) followed with Vinaspecia. The firm’s production facilities are GMP and ISO 9002 certified. Main export destinations include other Asian countries and the former USSR. Vietnam is also the site of several clinical trials of pipeline products. Strategy Sanofi-Aventis Vietnam is likely to be negatively affected by government plans to control drug prices in the country. The company is also affected by the high import tariff rate, although WTO membership is responsible for phasing out of such tariffs. The company manufactures products and acts as a distributor for imported medicines, with the product portfolio numbering around 150 items. Its main products include Plavix (clopidogrel), Aprovel (irbesartan), Lovenox (enoxaparin), Tritace (ramipril), Taxotere (docetaxel), Eloxatin (oxaliplatin), Amaryl (glimepiride), Lantus (insulin), Stilnox (zolpidem), and Actonel (risedronate). © Business Monitor International Ltd Page 87 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Sanofi is also affected by regulations in the country that require foreign manufacturers to conduct clinical trials in Vietnam before being able to release their vaccines. In Q409, the Ho Chi Minh City-based Pasteur Institute announced it had produced its first batch of domestically produced swine flu vaccines. The vaccine is soon to be tested in preclinical trials. Developments A rabies vaccine made by Vaccine and Biomedical Product Company No. was removed from the market in September 2007 due to safety fears. The withdrawal was not wholly unexpected as adverse events related to the product have been known about for over a decade and Vietnam was one of only three countries that still used the Fuenzalida-Palacios vaccine. To fill the market void, the health ministry allowed Sanofi-Aventis’s semi-finished rabies vaccine, Verorab, to be imported. Company Contacts ƒ Sanofi-Aventis Vietnam 10 Ham Hghi, District Ho Chi Minh City, Vietnam ƒ Tel: +84 82 98 526 ƒ Fax: +84 91 44 801 ƒ www.sanofi-aventis.com © Business Monitor International Ltd Page 88 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Novartis Strengths Weaknesses Opportunities Threats Company Overview ƒ Well-established presence through its subsidiary Novartis Vietnam, which directly manufactures in the country. ƒ Benefits from the advantages given to locally produced drugs. ƒ Diverse manufacturing presence, including antibiotics, vitamins and OTC pharmaceuticals, consumer, generic and healthcare products, as well as vaccines. ƒ Government drug-pricing policy is biased towards local products, which disadvantages Novartis’ patented drugs offering. ƒ Low purchasing power of the majority of the population. ƒ Widespread counterfeiting. ƒ Underdeveloped healthcare infrastructure. ƒ Demand for branded products to rise with sector modernisation and regional harmonisation. ƒ Positive economic performance – with an increase in spending power – to underpin the development of pharmaceutical demand. ƒ Developing the potential of the generic sector to open up commercial opportunities for Novartis. ƒ Plans for a major overhaul of the domestic pharmaceutical regulatory environment, with a focus on increasing the level of foreign investment. ƒ Country remains heavily reliant on imported drugs. ƒ Government resistance to aligning patent law fully with international standards. ƒ As a part of its plan to overhaul the pharmaceutical sector, the government is planning to increase intervention and protect local companies through legal trade barriers, potentially affecting margins. ƒ Vietnam’s susceptibility to economic fluctuations, with currency depreciation recently forcing price rises. ƒ Legalisation of parallel imports negatively affecting performance of patented drugs. Novartis Vietnam was established following the merger of Sandoz and Ciba-Geigy in 1997. The company is active in the manufacture and distribution of speciality pharmaceuticals, consumer healthcare and generic medicines. Strategy Novartis’ portfolio includes medicines in transplantation and immunology, cardiovascular diseases, diseases of the central nervous system, Parkinson’s disease, skin allergies, OTC and ophthalmic medications. The following Novartis products maintain a leadership position in their respective segments: Lamisil (terbinafine), Clozaril (clozapine), Diovan (valsartan), Lescol (fluvastatin), Aredia (pamidronate), Navoban (tropisetron), Sandostatin (octreotide), Neoral (cyclosporine), Simulect (basiliximab), Femara (letrozole), Sandoglobulin (immune globulin), Miacalcic (calcitonin) and Lentaron (formestane). The company will strive to continue their promotion to private sector in particular, which will be encouraged by economic development. Company Contacts ƒ Novartis Pharma rd Floor E-Town 364 Cong Hoa St 13 Ward Tan Binh District Ho Chi Minh City, Vietnam ƒ Tel: +84 3810 1111 ƒ Fax: +84 3812 5801 ƒ www.novartis.com © Business Monitor International Ltd Page 89 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Merck & Co Strengths Weaknesses Opportunities Threats Company Overview ƒ One of the leading global producers of medicines. ƒ Considerable product portfolio, including consumer medicines. ƒ Merger with Schering-Plough further strengthening MSD’s presence in Vietnam. ƒ Difficult IP environment, including counterfeit drug trade and lax patent protection. ƒ No direct manufacturing or R&D presence in the country. ƒ Underdeveloped healthcare infrastructure. ƒ Rising demand for branded products following healthcare sector modernisation. ƒ Pending overhaul of the regulatory climate, aiming to boost foreign investment. ƒ Pending creation of a local affiliate. ƒ Legal trade barriers protecting local players and disadvantaging multinationals. ƒ Currency depreciation forcing price adjustments ƒ Legalisation of parallel imports negatively impacting performance of branded drugs. The US drug major Merck & Co operates in Vietnam through its regional division, Merck, Sharp & Dohme (MSD) Asia Pacific, which was established in Vietnam in 1994. The company employs around 100 staff, who are mostly engaged in sales and marketing activities. Merck does not operate any manufacturing or R&D activities in Vietnam. Strategy The company is affected by regulations in Vietnam that require all state companies wishing to import foreign pharmaceutical products to apply for annual quotas. These activities are set to be phased out under the US-Vietnam Bilateral Trade Agreement. In Vietnam, MSD is mostly involved in supplying prescription products for a number of conditions. These include cardiovascular diseases, osteoporosis, asthma, osteoporosis and severe infections as well as range of other conditions such as hepatitis B. In January 2011, MSD announced that it will establish a 100% foreign-owned company in Vietnam. Headquartered in the capital Ho Chi Minh City, the operation will sell high-margin patented drugs, such as the cervical cancer vaccine Gardasil. Developments In March 2009, MSD said it regretted a labelling mistake on its measles, mumps and rubella vaccine. MMRII was labelled with instructions saying ‘for intramuscular injection’ rather than ‘for subcutaneous injections’. No adverse reaction had been reported. MSD’s cervical cancer vaccine Gardasil has been approved in Vietnam, as has its competitor, GSK’s Cervarix. GSK has reduced the price of its products, increasing competitive pressures. At the end of May 2009, distributor Diethelm Vietnam Corp increased the prices of 14 speciality drugs – manufactured Merck – by 7.3-10%. The prices of imported drugs had been increasing as a result of currency depreciation and the growing price of raw materials. In February 2011, MSD, along with the Programme for Appropriate Technology in Health (PATH) and the National Institute of Hygiene and Epidemiology (NIHE), emerged to provide corporate social responsibility (CSR) activities, giving part of their profits to the development of community. © Business Monitor International Ltd Page 90 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Company Contacts ƒ Merck, Sharp & Dohme (MSD) Asia Vietnam Branch th Floor, R.810 Sun Wah Tower, 115 Nguyen Hue Boulevard District 1, Ho Chi Minh City, Vietnam ƒ Tel: +84 382 78100 ƒ Fax: +84 3827 8101 ƒ www.msd-vietnam.com © Business Monitor International Ltd Page 91 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 GlaxoSmithKline (GSK) Strengths Weaknesses Opportunities Threats Company Overview ƒ One of the leading global producers of medicines. ƒ Some of its products are covered by the public insurance scheme. ƒ Considerable product portfolio, including consumer medicines and vaccines. ƒ Difficult IP environment. ƒ No direct manufacturing or R&D presence in the country. ƒ Counterfeiting remains a problem. ƒ Rising demand for branded products following healthcare sector modernisation. ƒ Pending overhaul of the regulatory climate, aiming to boost foreign investment. ƒ Strong regional experience and connections. ƒ Legal trade barriers protecting local players and disadvantaging multinationals. ƒ Country susceptible to economic and currency fluctuations. ƒ Legalisation of parallel imports negatively impacting performance of branded drugs. Glaxo began operating in Vietnam in 1994, with a staff of only seven. In the following years, Glaxo merged with Wellcome, and became GSK Vietnam. The company offers a range of prescription medicines, although not all of its products are covered by public insurance, as is the case with Advair/Seretide (fluticasone + salmeterol). Developments In March 2010, the US Food and Drug Administration (FDA) voiced concerns over GSK's Rotarix vaccine. It was thought that the live oral preventative had been contaminated with a benign pig virus, known as porcine circovirus type (PCV-1). The US FDA recommended that any use of the vaccine be temporarily suspended. The DVA has also requested documents from GSK verifying the safety of the vaccine. GSK’s cervical cancer vaccine Cervarix has been approved in Vietnam. Its competitor, MSD’s Gardasil, also received approval in 2009. GSK reduced the price of its vaccine in mid-2010, in line with its ‘differential pricing’ strategy for certain products in select global markets. The government agency has also ordered 10,000 packets of GSK’s Relenza (zanamivir) for Tamiflu-resistant patients. In late 2009, GSK’s Augmentin‘s retail price rose from VND14,000 to VND15,000 per pack. Company Contacts ƒ GlaxoSmithKline Vietnam The Metropolitan, Unit 701, 235 Dong Khoi St, District HoChiMinh City Vietnam ƒ Tel: +84 3824 8744 ƒ Fax: +84 3824 8742 ƒ www.gsk.com/worldwide/vn.htm © Business Monitor International Ltd Page 92 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Country Snapshot: Vietnam Demographic Data Section 1: Population Population By Age, 2005 and 2030 (m n, total) Population By Age, 2005 (mn) 70-74 70-74 0-64 60-64 50-54 50-54 0-44 40-44 0-34 30-34 0-24 20-24 10-14 10-14 0-4 0-4 -6.0 -4.0 -2.0 0.0 Male 2.0 4.0 6.0 -10.0 -5.0 0.0 2030 Female 5.0 10.0 2005 Source: UN Population Division Table: Demographic Indicators, 2005-2030 2005 2010f 2020f 2030f Dependent population, % of total 34.1 29.9 30.4 31.2 Dependent population, total, ‘000 28,318 26,225 30,950 34,499 Active population, % of total 65.8 70.0 69.5 68.7 Active population, total, ‘000 54,650 61,263 70,706 75,927 Youth population*, % of total 28.8 25.0 23.4 20.3 Youth population*, total, ‘000 23,972 21,887 23,807 22,508 Pensionable population, % of total 5.2 4.9 7.0 10.8 Pensionable population, total, ‘000 4,346 4,338 7,143 11,991 f = forecast. * Youth = under 15. Source: UN Population Division © Business Monitor International Ltd Page 93 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Table: Rural/Urban Breakdown, 2005-2030 2005 2010f 2020f 2030f Urban population, % of total 26.7 29.4 34.7 41.8 Rural population, % of total 73.3 70.6 65.3 58.2 Urban population, total, ‘000 22,509 26,395 35230 46,123 Rural population, total, ‘000 61,729 63,323 66426 64,306 Total population, ‘000 84,238 89,718 101,656 110,429 f = forecast. Source: UN Population Division Section 2: Education And Healthcare Table: Education, 2002-2005 2002/2003 2004/2005 Gross enrolment, primary 98 93 Gross enrolment, secondary 73 75 Gross enrolment, tertiary 10 16 Adult literacy, male, % na 93.9 Adult literacy, female, % na 86.9 Gross enrolment is the number of pupils enrolled in a given level of education regardless of age expressed as a percentage of the population in the theoretical age group for that level of education. na = not available. Source: UNESCO Table: Vital Statistics, 2005-2030 2005 2010f 2020f 2030f Life expectancy at birth, males (years) 68.4 69.9 74.2 75.8 Life expectancy at birth, females (years) 72.4 73.9 78.4 80.0 Life expectancy estimated at 2005. f = forecast. Source: UNESCO © Business Monitor International Ltd Page 94 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Section 3: Labour Market And Spending Power Table: Employment Indicators, 1999-2004 1999 2000 2001 2002 2003 2004 Employment, ‘000 38,120 38,368 39,000 40,162 41,176 42,316 – % change y-o-y 3.1 0.6 1.6 2.9 2.5 2.7 – male 19,029 19,292 19,744 20,356 20,959 21,649 – female 19,091 19,076 19,257 19,807 20,217 20,666 — female, % of total 50.0 49.7 49.3 49.3 49.1 48.8 Unemployment, ‘000 909 886 1,107 871 949 926 – male 439 468 458 398 402 410 – female 470 418 650 473 547 517 – unemployment rate, % 2.3 2.2 2.7 2.1 2.2 2.1 Source: ILO Table: Consumer Expenditure, 2000-2012 (US$) 2000 2007 2008 2009e 2010f 2012f 110 265 301 368 386 427 Poorest 20%, expenditure per capita 49 119 136 166 174 192 Richest 20%, expenditure per capita 243 587 668 815 855 946 Richest 10%, expenditure per capita 316 763 868 1,060 1,112 1,230 Middle 60%, expenditure per capita 85 206 235 286 301 332 Consumer expenditure per capita 556 1,196 1,297 na na na Poorest 20%, expenditure per capita 250 538 583 na na na Richest 20%, expenditure per capita 1,231 2,649 2,872 na na na Richest 10%, expenditure per capita 1,600 3,444 3,734 na na na 433 931 1,009 na na na Consumer expenditure per capita Purchasing power parity Middle 60%, expenditure per capita e/f = BMI estimate/forecast. na = not available. Source: World Bank, Country data; BMI calculation © Business Monitor International Ltd Page 95 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Glossary ƒ Pharmaceuticals, medicines, drugs: synonym terms used interchangeably. ƒ Pharmaceutical market/sales: the sum of revenues generated by generic, patented, and over-thecounter (OTC) drugs through hospitals, retail pharmacies and other channels. Unless otherwise stated, market value is reported at final consumer price including mark-ups, taxes, etc. ƒ Prescription drugs: patented and generic drugs regulated by legislation that requires a physician’s prescription before they can be sold to a patient. ƒ Patented drug: an innovative medicine granted intellectual property protection by the patent and trademark office. The patent may encompass a wide range of claims – such as active ingredient, formulation, mode of action, etc. – giving the patent holder the sole right to sell the drug while the patent is in effect. ƒ Generic drug: a bioequivalent medicine that contains the same active ingredient as an originator drug. The originator drug is an innovative medicine that no longer has intellectual property protection due to patent expiry. ƒ OTC drug: a medicine that does not require a prescription to be sold to patients. Also known as nonprescription medicines. ƒ Counterfeit drugs: unregistered and illegal medicines which have not been subject to regulatory assessments to ensure quality, safety, efficacy and manufacturing standards. ƒ Similares: non-bioequivalent alternatives to either an originator patented drug or a generic drug. While similares and the originator/generic drug have a common indication, similares not always contain the same active ingredient as an originator and invariably have a different pharmacokinetic and pharmacodynamic profile. Prevalent in select South American countries, similares are legal. BMI does not include their sales in total pharmaceutical market values. ƒ Health expenditure: the sum of the funds mobilised by government and private systems for the operation of a healthcare system, according to the World Health Organization (WHO). It includes the purchase of healthcare services and goods by public entities such as ministries and social security institutions; or by private entities such as non-profit institutions, commercial insurances and households acting as complementary funders to the previously cited institutions or unilaterally disbursing health commodities. The revenue base of these entities varies by country and comprises multiple sources. The inclusion of this in BMI forecasts necessitates taking into account the essential © Business Monitor International Ltd Page 96 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 attributes of country-specific health accounting such as comprehensiveness, consistency, standardisation and timeliness. ƒ Government health expenditure: the sum of outlays for health maintenance, restoration or enhancement paid by government entities such as a Ministry of Health, other ministries, parastatal organisations and social security agencies, including transfer payments to households to offset medical care costs and extra-budgetary funds to finance healthcare provision. ƒ Private health expenditure: the sum of outlays for health by private entities such as commercial or mutual health insurance, households, non-profit institutions serving households, resident corporations and quasi-corporations not controlled by governments – according to the WHO. ƒ Medical devices: products used for diagnosis or therapy in patients. Whereas pharmaceuticals achieve their principal action by pharmacological, metabolic or immunological means, medical devices act by physical or mechanical means. Medical devices include a wide range of products, including syringes, thermometers, blood-sugar tests, prosthetic limbs, ultrasound scans and X-ray machines, among others. ƒ Burden of Disease Database (BoDD): BMI’s disease database incorporates WHO, World Bank, International Monetary Fund (IMF) and BMI’s own data to create a proprietary dataset. BoDD data are quantified as the sum of disability-adjusted life years (DALYs) lost to a disease in a particular country. ƒ Disability-Adjusted Life Years (DALYs): the sum of the years of life lost (YLL) due to premature mortality in a population and the years lost due to disability (YLD) for incident cases of the health condition. The DALY is a health gap measure that extends the concept of potential years of life lost due to premature death (PYLL) to include equivalent years of ‘healthy’ life lost in states of less than full health (broadly termed ‘disability’). One DALY represents the loss of one year of equivalent full health. © Business Monitor International Ltd Page 97 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 BMI Methodology How We Generate Our Pharmaceutical Industry Forecasts Pharmaceutical sub-sector forecasts are generated using a top-down approach from BMI’s Drug Expenditure Forecast Model. The semi-automated tool incorporates historic trends, macroeconomic variables, epidemiological forecasts and analyst input, which are weighted by relevance to each market. The following elements are fed into the model: ƒ BMI’s historic pharmaceutical market data, which has been collected from a range of sources including: – regulatory agencies; – pharmaceutical trade associations; – company press releases and annual reports; – subscription information providers; – local news sources; – information from market research firms that is in the public domain. ƒ Data that has been validated by BMI’s pharmaceutical and healthcare analysts using a composite approach, which scores data sources by reliability in order to ensure accuracy and consistency of historic data. ƒ Five key macroeconomic and demographic variables, which have been demonstrated, through regression analysis, to have the greatest influence on the pharmaceutical market. These have been forecast by BMI’s Country Risk analysts using an in-house econometric model. ƒ The burden of disease in a country. This is forecast in disability-adjusted life years (DALYs) using BMI’s Burden of Disease Database, which is based on the World Health Organization’s burden of disease projections and incorporates World Bank and IMF data. ƒ Subjective input and validation by BMI’s pharmaceutical and healthcare analysts to take into account key events that have affected the pharmaceutical market in the recent past or that are expected to have an impact on the country’s pharmaceutical market over the next five years. These may include policy/reimbursement decisions, new product launches or increased competition from generic drugs. © Business Monitor International Ltd Page 98 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Pharmaceuticals Business Environment Ratings Risk/Reward Ratings Methodology BMI’s approach in assessing the risk/reward balance for Pharmaceutical & Healthcare Industry investors globally is fourfold. First, we identify factors (in terms of current industry/country trends and forecast industry/country growth) representing opportunities to would-be investors. Second, we identify country and industry-specific traits which pose or could pose operational risks to would-be investors. Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/trends to avoid subjectivity. Finally, we use BMI’s proprietary Country Risk Ratings (CRR), ensuring that only the aspects most relevant to the Pharmaceutical & Healthcare Industry are incorporated. Overall, the system offers an industry-leading, comparative insight into the opportunities and risks for companies across the globe. Ratings Overview Ratings System Conceptually, the ratings system divides into two distinct areas: Rewards: Evaluation of the sector’s size and growth potential in each state, as well as broader industry/state characteristics that may inhibit its development. Risks: Evaluation of industry-specific dangers and those emanating from a state’s political/economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. Indicators The following indicators have been used. Overall, the ratings use three subjectively measured indicators and 41 separate indicators/datasets. © Business Monitor International Ltd Page 99 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Table: Pharmaceutical Business Environment Indicators Indicator Rationale Rewards Industry Rewards Market expenditure, US$bn Denotes breadth of pharmaceutical market. Large markets score higher than smaller ones Market expenditure per capita, US$ Denotes depth of pharmaceutical market. High value markets score better than low value ones Sector value growth, % y-o-y Denotes sector dynamism. Scores based on annual average growth over five-year forecast period Country Rewards Urban-rural split Urbanisation is used as a proxy for development of medical facilities. Predominantly rural states score lower Pensionable population, % of total Proportion of the population over 65 years of age. States with ageing populations tend to have higher per-capita expenditure Population growth, 2003-2015 Fast-growing states suggest better long-term trend growth for all industries Overall score for Country Structure is also affected by the coverage of the power transmission network across the state Risks Industry Risks Intellectual property (IP) laws Markets with fair and enforced IP regulations score higher than those with endemic counterfeiting Policy/reimbursements Markets with full and equitable access to modern medicines score higher than those with minimal state support Approvals process High scores awarded to markets with a swift appraisal system. Those that are weighted in favour of local industry or are corrupt score lower Country Risks Economic structure Rating from CRR evaluates the structural balance of the economy, noting issues such as reliance on single sectors for exports/growth, and past economic volatility Policy continuity Rating from CRR evaluates the risk of a sharp change in the broad direction of government policy Bureaucracy Rating from CRR denotes ease of conducting business in the state Legal framework Rating from CRR denotes the strength of legal institutions in each state. Security of investment can be a key risk in some emerging markets Corruption Rating from CRR denotes the risk of additional illegal costs/possibility of opacity in tendering/business operations affecting companies’ ability to compete Source: BMI © Business Monitor International Ltd Page 100 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Weighting Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal weight. Consequently, the following weight has been adopted. Table: Weighting Of Components Component Weighting Rewards 60% – Industry Rewards – 75% – Country Rewards – 25% Risks 40% – Industry Risks – 60% – Country Risks – 40% Source: BMI Sources Sources used include national industry associations, government ministries, global health organisations, officially released pharmaceutical company results and international and national news agencies. © Business Monitor International Ltd Page 101 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. [...]... Page 10 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Vietnam Economic SWOT Strengths Vietnam has been one of the fastest-growing economies in Asia in recent years, with GDP growth averaging 7.2% annually between 2000 and 2010 The economic boom has lifted many Vietnamese out of poverty, with the official poverty rate in the country falling from 58% in 1993 to 12.0% in 2009 Weaknesses Vietnam. .. by 3-30%, reported saigon-gpdaily.com in May 2011 The study surveyed more than 4,000 drugs, with the prices of imported drugs and local drugs increasing by 5-8% and 10-40%, respectively Plateau Over For Medical Services Vietnam' s Consumer Price Index (CPI) Source: Vietnam General Statistics Office © Business Monitor International Ltd Page 26 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Anecdotal... Development Programme in support of healthcare services in Vietnam The Australian government has co-financed the programme with an US$11mn aid package According to the ADB, healthcare spending by the Vietnamese government has failed to keep pace with the economic growth of the country © Business Monitor International Ltd Page 33 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Hospital Sector State hospitals... there were more than 10,000 kinds of medicines registered for sale in Vietnam, of which some 60% were produced locally © Business Monitor International Ltd Page 16 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Regulatory Regime The main regulatory authority in Vietnam is the Ministry of Health (MoH) and its Drug Administration of Vietnam (DAV), established in 1996 The basis for market regulation... lingering threat A failure by the authorities to boost skills levels could leave Vietnam a second-rate economy for an indefinite period © Business Monitor International Ltd Page 12 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Vietnam – Business Environment Ratings Table: Asia Pacific Pharmaceutical Business Environment Ratings, Q41 1 Rewards Risks Industry Rewards Country Rewards Rewards Industry Risks... takes more time due to late diagnoses, usually at the metastasis phase © Business Monitor International Ltd Page 32 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Healthcare Financing According to a panel of stakeholders that includes UN representatives, Vietnam needs to increase healthcare spending significantly and improve the distribution of funds to reduce inequalities among its population... 2020, we expect © Business Monitor International Ltd Page 13 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Vietnam to consolidate its placing above other markets such as Pakistan and Bangladesh, as the country’s market matures Globally, Vietnam ranks 62nd out of the 84 countries surveyed in our pharmaceutical universe The key components of Vietnam s score are: Rewards Pharmaceutical market and country... be less expensive than the same drug already registered in Vietnam However, the move also allowed imports by third companies that have no prior approval from patent holders, which violates the rights of the latter Vietnamese consumers stand to benefit © Business Monitor International Ltd Page 19 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 from the parallel import law, although the country’s... healthcare is free Students, employees and others not obliged to buy health insurance will have to pay 20% of healthcare costs out-of-pocket It is calculated that 90% of patients will have to make a co-payment © Business Monitor International Ltd Page 24 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Vietnam previously also had a law that stipulated co-payments on medical services, although this was not... authorities reported that the price increase was ‘normal’ and expected due to market forces, although unauthorised price hikes could result in the revoking of import permissions In fact, South Korean Dasan Medichem Co and Vietnam- France Pharma recently had their import licences revoked for this reason © Business Monitor International Ltd Page 25 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 Although . deadline: September 2011 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 © Business Monitor International Ltd Page 2 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 ©. 101 Sources 101 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 © Business Monitor International Ltd Page 6 Vietnam Pharmaceuticals & Healthcare Report Q4 2011 © Business. country’s healthcare market. Vietnam Pharmaceuticals & Healthcare Report Q4 2011 © Business Monitor International Ltd Page 9 SWOT Analysis Vietnam Pharmaceutical And Healthcare