Best medicine for pharmaceutical sector M&A deals

09:30 | 22/04/2019 Investment

(VEN) - Vietnam’s pharmaceutical sector is developing at a fast pace, much of it through direct investment and mergers and acquisitions (M&A). 

best medicine for pharmaceutical sector ma deals

According to Vo Tan Thanh, Director of the Vietnam Chamber of Commerce and Industry (VCCI)’s Ho Chi Minh City Branch, Vietnam currently has about 180 pharmaceutical manufacturers, including domestic and foreign-invested companies, with 194 plants of 158 companies meeting Good Manufacturing Practice (GMP) standards of the World Health Organization (WHO). Vietnam consumes an average of about 60,000 tonnes of pharmaceutical material per year, 80-90 percent of which is imported, mostly from China and India.

The Drug Administration of Vietnam under the Ministry of Health predicted the domestic pharmaceutical sector would grow 10-15 percent annually in the next several years, with market value expected to reach US$7.3 billion in 2019 and US$7.7 billion by 2021.

Ramesh Anand, Chairman of the Indian Business Chamber in Vietnam, said Indian companies are increasingly interested in the Vietnamese pharmaceutical market, believing it will offer them a gateway to the entire Southeast Asian market. Along with promoting distribution, Indian companies are seeking opportunities to invest in manufacturing facilities in Vietnam. “Indian pharmaceutical companies have advantages in high-volume manufacturing as well as in product research and development. They can provide Vietnamese pharmaceutical manufacturers with technical assistance and transfer vaccine production technologies, medical equipment and materials, contributing to further development of the Vietnamese pharmaceutical sector,” Ramesh Anand said.

Apart from India, pharmaceutical companies from Thailand, Japan, the Republic of Korea and European countries are also seeking access to the Vietnamese market. Many of them have chosen to join M&A deals with major Vietnamese pharmaceutical manufacturers. For example, Abbott (USA) owns 51.7 percent of the DOMESCO Medical Import Export Joint Stock Corporation and has acquired the Glomed Pharmaceutical Company, Inc; Taisho Pharmaceutical (Japan) has increased the percentage of stock under its ownership at the Hau Giang Pharmaceutical Joint Stock Company to 34.3 percent; Adamed Group (Poland) has spent US$50 million to buy 70 percent of stock of the Dat Vi Phu Pharmaceutical Joint Stock Company.

Domestic pharmaceutical manufacturers expect cooperation with foreign businesses will enable them to access new capital, technology and high-quality human resources to create products meeting higher standards such as EU-GMP and PIC/S. The connection to large retailers will help them expand their sales network and effectively apply Industry 4.0 technologies.

A clear and consistent legal framework is needed for technology transfer and investment in domestic pharmaceutical

companies.

Thanh Thanh