Drug market forecast to grow by 15 percent

HCM City (VNS/VNA) - The pharmaceutical industry grew by just 2.8 percent last year, much lower than its average 11.8 percent growth in the last five years.

It is expected to recover and grow by 15 percent this year, mainly due to a rapidly ageing population and increasing incomes, analysts at SSI Securities Corporation said.

According to a report by the company, social distancing and strict control at hospitals last year meant people with minor ailments did not go for treatment due, resulting in lower sales of both prescription and non-prescription drugs.

The incidence of health checks was 10-15 percent down until the fourth quarter.

Then, in the final quarter, after the pandemic was controlled, people again began going to hospitals that the number visiting hospitals went up by 5 percent year-on-year.

Last year there was a short supply of active pharmaceutical ingredients (API) from China and India due to social distancing and lockdowns and higher demand for them globally, causing drug prices to rise.

India and China account for 55 percent of the global API supply and nearly 70 percent of Vietnam’s requirements.

The prices of most APIs increased by 5-8 percent and pharmaceutical companies’ gross profit margin decreased by 1-3 percentage points in 2020 since they could not increase prices to compensate for this.

Construction of new pharmaceutical plants fell behind schedule.

According to the Ministry of Health, domestic drug production grew at 13.8 percent per year in 2015 - 19 backed by Government policies and construction of new plants.

SSI Research said however the industry was recovering.

M&A

Last year was notable for mergers and acquisitions in the industry. According to SSI Research, the total value of M&A deals was 1.68 trillion VND (73 million USD) and they involved a number of foreign investors.

German generic drugmaker Stada paid 400 billion VND to increase its stake in Pymepharco JSC from 70 percent to 76 percent.

Japan’s Aska Pharmaceutical paid 350 billion VND to acquire a 25 percent stake in Ha Tay Pharmaceutical JS Company./.