The participation of retail giants with strong financial strength and modern technology and management is expected to create a big push for the drug distribution market (Photo: plo.vn) Hanoi (VNA/VNS) - Vietnam’s pharmaceutical retail industry is forecast tosee significant competition in 2018, with the entry of new players with strongfinancial capacity and experience in distribution.
In the final days of 2017, Mobile World Investment Group (MWG)announced its acquisition of HCM City-based Phuc An Khang pharmacy for anundisclosed sum. However, the annual shareholders’ meeting in April approved abudget of 2.5 trillion VND (110 million USD) for merger and acquisition (M&A)activity, of which 500 billion VNDwill be pumped into pharmaceutical retail.
Also in early December, chairwoman of FPT Digital Retail JSC Nguyen Bach Diep bought Long Chau pharmacy, HCM City’s biggest drugstore chain. Thoughsaying it was just Diep’s private investment, the deal is speculated as aninitial step for FPT Retail to enter the pharmaceutical distribution sector.
Another big electronics retailer, Nguyen Kim Group, in Novembermade a public bid for Lam Dong Pharmaceutical JSC’s shares, following which itis ready to spend about 3 million USD to raise its ownership from 24 percent toover 51.14 percent. Apart from Lam Dong Pharmaceutical, Nguyen Kim Group is alsoinvesting in FT Pharma.
Earlier in August, Digiworld Corp signed up with Vinamedic todistribute food supplements for men.
Vietnam’s pharmaceutical retail sector is considered ‘fertileground’ for big distributors, with total revenues of up to 4.7 billion USD in2017, up 13 percent year-on-year, according to Business Monitor International(BMI), and is expected to swell to 7.7 billion USD in 2021 and 16.1 billion USD in2026.
Demand for drugs in the country is also rising stably in line withimproved income per capita. The drug spending per capita in Vietnam rose from9.9 USD in 2005 to 37.97 USD in 2015. With a rapidly ageing population, averagespending on drugs is forecast to climb to 85 USD in 2020 and 163 USD in 2025.
The market holds big potential for retailers to establish theirdominance, in the context that drug distribution in Vietnam is still in the handsof private pharmacies with no one seizing a market share of up to 20 percent.
FPT Retail’s chairwoman Diep in a FPT Retail roadshow in Decembersaid the company would make a ‘pilot investment’ in a new retail sector beforemaking an official decision in 2018. She highly valued the pharmaceuticalindustry with its positive market growth potential.
Meanwhile, Mobile World’s chairman Nguyen Duc Tai has targeted 500stores nationwide through the acquisition of pharmaceutical brands, especiallythose with 10-15 stores. However, he said this is a specific industry whichneeds careful contemplation.
According to Phan Van Hieu, chairman of CVI Pharmaceutical andCosmetics JSC, this year would not see any big change in the drug distributionmarket as now is still a period of exploration and evaluating market approachfor new players.
“I think the pharmaceutical retail market is not an easy sectorfor even big distributors such as MWG or FPT. The pharmaceutical market has alot of barriers and is different from other markets,” Hieu was quoted as sayingto the Dau tu chung khoan (Securities Investment) newspaper.
Mai Hai Ninh, a founder of thuocvasuckhoe.com drugstorechain, said the biggest risk for drug retailers is the lack of medicalexpertise as drug sales depend on prescriptions or just apatients’ declaration on their health status.
“The pharmaceutical industry is a specific industry, so managers and salespeople need to have strong medical knowledge,” Ninh said,adding that training of medical staff requires 2-3 years.
The participation of retail giants with strong financial strengthand modern technology and management is expected to create a big push for thedrug distribution market but actual changes are expected to take place over thenext 5-10 years. – VNA/VNS
In the final days of 2017, Mobile World Investment Group (MWG)announced its acquisition of HCM City-based Phuc An Khang pharmacy for anundisclosed sum. However, the annual shareholders’ meeting in April approved abudget of 2.5 trillion VND (110 million USD) for merger and acquisition (M&A)activity, of which 500 billion VNDwill be pumped into pharmaceutical retail.
Also in early December, chairwoman of FPT Digital Retail JSC Nguyen Bach Diep bought Long Chau pharmacy, HCM City’s biggest drugstore chain. Thoughsaying it was just Diep’s private investment, the deal is speculated as aninitial step for FPT Retail to enter the pharmaceutical distribution sector.
Another big electronics retailer, Nguyen Kim Group, in Novembermade a public bid for Lam Dong Pharmaceutical JSC’s shares, following which itis ready to spend about 3 million USD to raise its ownership from 24 percent toover 51.14 percent. Apart from Lam Dong Pharmaceutical, Nguyen Kim Group is alsoinvesting in FT Pharma.
Earlier in August, Digiworld Corp signed up with Vinamedic todistribute food supplements for men.
Vietnam’s pharmaceutical retail sector is considered ‘fertileground’ for big distributors, with total revenues of up to 4.7 billion USD in2017, up 13 percent year-on-year, according to Business Monitor International(BMI), and is expected to swell to 7.7 billion USD in 2021 and 16.1 billion USD in2026.
Demand for drugs in the country is also rising stably in line withimproved income per capita. The drug spending per capita in Vietnam rose from9.9 USD in 2005 to 37.97 USD in 2015. With a rapidly ageing population, averagespending on drugs is forecast to climb to 85 USD in 2020 and 163 USD in 2025.
The market holds big potential for retailers to establish theirdominance, in the context that drug distribution in Vietnam is still in the handsof private pharmacies with no one seizing a market share of up to 20 percent.
FPT Retail’s chairwoman Diep in a FPT Retail roadshow in Decembersaid the company would make a ‘pilot investment’ in a new retail sector beforemaking an official decision in 2018. She highly valued the pharmaceuticalindustry with its positive market growth potential.
Meanwhile, Mobile World’s chairman Nguyen Duc Tai has targeted 500stores nationwide through the acquisition of pharmaceutical brands, especiallythose with 10-15 stores. However, he said this is a specific industry whichneeds careful contemplation.
According to Phan Van Hieu, chairman of CVI Pharmaceutical andCosmetics JSC, this year would not see any big change in the drug distributionmarket as now is still a period of exploration and evaluating market approachfor new players.
“I think the pharmaceutical retail market is not an easy sectorfor even big distributors such as MWG or FPT. The pharmaceutical market has alot of barriers and is different from other markets,” Hieu was quoted as sayingto the Dau tu chung khoan (Securities Investment) newspaper.
Mai Hai Ninh, a founder of thuocvasuckhoe.com drugstorechain, said the biggest risk for drug retailers is the lack of medicalexpertise as drug sales depend on prescriptions or just apatients’ declaration on their health status.
“The pharmaceutical industry is a specific industry, so managers and salespeople need to have strong medical knowledge,” Ninh said,adding that training of medical staff requires 2-3 years.
The participation of retail giants with strong financial strengthand modern technology and management is expected to create a big push for thedrug distribution market but actual changes are expected to take place over thenext 5-10 years. – VNA/VNS
VNA
