Good medicine for investors
Vietnam’s healthcare spending will rise sharply from an estimated $8.5 billion in 2011 to $14.5 billion in 2016, an annual average growth of 11.5 per cent, according to Healthcare and Pharmaceuticals Report recently released by The Economist Intelligence Unit.
However, the healthcare system in Vietnam is generally of a low standard and, according to the World Health Organization (WHO), more than one-half of Vietnamese are dissatisfied with it.
Many public healthcare centres struggle to operate effectively because of poor local infrastructure and inadequate equipment.
The WHO estimated there were only 0.6 doctors per 1,000 people in Vietnam in 2011, higher than the ratio in Indonesia and Thailand (0.3), but lower than that in Malaysia (0.8) and the Philippines (1.2).
The government announced in mid-2009 that it would spend $2.7 billion in the following four years on improving its network of hospitals.
"It is hoped that by 2015 the number of hospital beds will rise to 2.5 for every 1,000 people, but this goal will be difficult to achieve,” said the Economist Intelligence Unit.
Also according to The Economist Intelligence Unit, pharmaceutical sales were worth an estimated $2.2 billion in 2011, making Vietnam a fairly small market in South East Asia.
It forecasted that total pharmaceutical sales would grow by 11.7 per cent a year to reach $3.8 billion by 2016, equivalent to a spend of around $40 per person, roughly around the same pace as the overall growth rate in healthcare spending.
The fact is that around 50 per cent of total demand for pharmaceuticals is accounted for by imported products. South Korea, India, China, the UK, France and the US are Vietnam’s leading suppliers of imported pharmaceuticals and India is the main supplier of generic drugs.
The Business Monitor International (BMI) expects more private healthcare involvement in the country, which will bring opportunities for pharmaceutical companies and medical devices suppliers.
Early 2012, Japan-based Nipro Corporation announced to invest $250 million for a plant in VSIP Industrial Zone in Hai Phong.
The new plant which will be commenced this month and is expected to begin operations in April 2015 will provide high-quality medicines mainly injectable drugs to developed countries, including Japan, at a low price. In the future, it can be expanded to the manufacture of various types of medicines, including oral agents and external medicines.
Previously, US-based Watson Pharmaceuticals, after acquiring Ascent Pharmahealth of Strides Arcolab for $399 million in January, also gained sale office in Vietnam.
In healthcare, Vietnam welcomed some brand-names such as Singapore-headquartered Fortis Healthcare International and Hoa Lam-Shangri-La Healthcare LLC which will inaugurate a hi-tech 320-bed healthcare park in HCM City early next year.
By last month, Vietnam had attracted 78 foreign direct invested projects worth $1.1 billion in the healthcare services industry, according to Foreign Investment Agency.
The Ministry of Health estimated deficits in healthcare technology and service standards had led to 30,000 Vietnamese travelling abroad annually to seek treatment in foreign hospitals, causing an annual outflow of more than $1 billion.
