07 DHG PHARMA PENETRATES THE SWISS MARKET

DHG PHARMA PENETRATES THE SWISS MARKET Prepared by: Group - BUS12A06 Lecturer: Nguyen Thu Huong INTERNATIONAL TRADE AND FINANCE Group International trade and finance Members Lê Thị Tươi 22A4050141 Hoàng Kiều Anh 22A4050039 Nguyễn Thị Quỳnh Anh 22A4050207 Định Thị Ngọc Châm 22A4050244 Phùng Thị Thuỳ Dương 22A4050166 Nguyễn Khánh Hương 22A4050280 Chu Ngọc Lam 22A4050269 Vũ Thị Nhật Lệ 22A4050464 Group Contents INTRODUCTION OF THE COMPANY AND PRODUCT 01 REASON FOR FINDING A NEW FOREIGN MARKET 03 PESTLE ANALYSIS 05 3.1 Political factors 06 3.2 Economic factors 07 3.3 Social factors 10 3.4 Technological factors 12 3.5 Environmental factors 13 3.6 Legal factors 14 METHOD OF ENTRY 15 4.1 Direct exporting 16 4.2 Another method 20 CONCLUSION 21 REFERENCES 22 DHG PHARMA PENETRATES THE SWISS MARKET INTRODUCTION DHG Pharma DHG Pharma stands for DHG Pharmaceutical Joint Stock Company It is one of the leading companies in the pharmaceutical industry in Vietnam, owning a large number of medicinal products on the market today to meet the needs of consumers DHG Pharmaceutical Joint Stock Company is formerly a 2/9 Pharmaceutical Enterprise established in 1974 In 2004, the company transformed into the Joint Stock Company The company owns modern plant and product line systems and uses advanced technologies under quality certificates WHO - GMP, GSP, and GLP by the Drug Administration of Vietnam The product of DHG Pharma The company mainly operates in researching and manufacturing pharmaceutical products: tablets, coated tablets, capsules, effervescent powders, etc At present, DHG Pharmaceutical has more than 200 products and has the capability to provide 100% demand for cold medicines and vitamins as well as 80% antibiotics for the Vietnamese market 01 Distribution network Domestic market DHG Pharma is the only enterprise in the pharmaceutical industry with a deep and wide distribution network throughout Vietnam, with 18 distribution subsidiaries, 34 branches, 68 pharmacies, and drugstores at hospitals across the country Export market Beyond the border of Vietnam, a series of products of DHG Pharma is now present in more than 14 countries and territories, meeting both advanced and demanding markets such as Singapore, Cambodia, Laos, Myanmar, Moldova, Mongolia, Nigeria, Yemen, Indonesia, etc with about 100 product registration numbers 02 Group REASON FOR FINDING A NEW FOREIGN MARKET The reason why DHG Pharma needs to find a new foreign market With the current trend of globalization, enterprises in the pharmaceutical industry have more and more competitors both domestically and internationally, and the domestic market share is increasingly narrowing Therefore, DHG Pharma needs to transform itself to find new consumption markets Entering new markets will bring the company many benefits such as: 01 02 03 04 Helping the company increases its internal business capacity; learning and acquiring technology and know-how to manufacture products of partners; using a team of management and native science and technology… Helping DHG Pharma to penetrate deeply into the world market, and seek better investment opportunities, thereby improving capital efficiency and reducing the costs, and risks and increasing income for the company Helping businesses to contribute to improving investment and business efficiency, enhancing service quality, and contributing to realizing the company's aspiration to reach the international level that the company is aiming for Helping companies extend product life cycles DHG PHARMA PENETRATES THE SWISS MARKET 03 Group Switzerland's market potential DHG Pharma chooses to penetrate the Swiss market Switzerland is the third country in the top 16 countries with the best medical system in the world A rich, beautiful and healthy country that has simple but transparent laws as well as a developed Swiss socioeconomic background For this reason, penetration in Switzerland helps the company increase many significant competitive advantages when doing business abroad, especially in the European region Switzerland is a newly opened country with high potential for economic development, especially in chemicals and pharmaceuticals and medical equipment to serve people's health care needs Switzerland is considered a "promised land" with many foreign businesses because of its potential for development Switzerland is currently very interested in attracting investment from Vietnamese pharmaceutical and medical equipment manufacturing and trading enterprises In recent years, economic and trade relations between Vietnam and Switzerland have developed positively Up to now, the legal corridor in economic and trade relations between Vietnam and Switzerland has been relatively complete These are also the legal bases and great opportunities for Vietnamese businesses to promote penetrating into the Swiss market → In summary, the choice to enter Switzerland of DHG Pharma is a potential choice, opening up new cooperation opportunities, and realizing the potential and goals of the company 04 Group PESTEL ANALYSIS P E S T E L DHG PHARMA PENETRATES THE SWISS MARKET Political Political rights Political stability The relationship between Switzerland and Vietnam Economic GDP and GDP per capita Inflation rates - Swiss Franc Employment levels Household income Healthcare expenditure Social Population and population growth structure Religion and culture Technological Biotechnology The relationship between Switzerland and Vietnam Environmental Environmentally friendly manner Biotechnology CO2 emissions Legal Tax Product standards Legal related to business activities 05 Group 06 3.1 POLITICAL The Swiss political system is characterized by a high degree of decentralization, with much authority delegated to the 26 states or cantons Direct democracy, neutrality and federalism are central components of the Swiss political system Political rights In Switzerland, the people play a large part in the decision-making process at all political levels All Swiss citizens aged 18 and over have the right to vote in elections and on specific issues They can either propose legislation of their own or work to defeat legislation already approved by parliament Political stability Switzerland has benefited immensely from its stable political environment It is one of the safest countries in the world In a country with different religious and linguistic groups, the federalism model makes it possible to accommodate both national unity and cultural diversity The relationship between Switzerland and Vietnam Switzerland has maintained diplomatic relations with Vietnam since 1971 Bilateral relations have become closer in recent years Up to now, the legal corridor in economic and trade relations between Vietnam and Switzerland has been relatively complete The two countries have signed an investment protection agreement, an agreement to avoid double taxation, an agreement on the protection of intellectual property rights, etc Vietnam and Switzerland have also effectively cooperated and supported each other within the framework of international organizations and international multilateral forums such as the United Nations, the Association of Southeast Asian Nations, and the ASEAN Summit With a stable political background, the citizenship and human rights of the Swiss people are cared for and respected, which helps DHG Pharma when entering the market will not face any political problems Moreover, thanks to the good bilateral diplomatic relationship between Vietnam and Switzerland, this is the premise to help DHG Pharma penetrate the market more easily, creating opportunities to develop in this potential market 3.2 ECONOMIC GDP and GDP per capita The Gross Domestic Product of Switzerland in 2021, grew by 3.7% compared to last year, ranked 20th in the ranking GDP of the 196 countries The GDP per capita of Switzerland in 2021 was $93,717, $6,366 higher than in 2020 In order of the countries according to their GDP per capita, Switzerland is very well positioned in terms of the standard of living of its population, coming 5th out of the 196 countries DHG PHARMA PENETRATES THE SWISS MARKET 07 Swiss Franc The Swiss franc strengthened to 0.98 per USD, rebounding from trading below parity with the dollar at levels not seen since May of 2019, as risk-off sentiment in global markets strengthened demand for safer currencies Following Russia's invasion, the franc strengthened to a 7-year high against the euro Household income In 2019, the average household disposable income in Switzerland was CHF 6609 per month A large part of this amount was used for the consumption of goods and services, namely CHF 4985 Healthcare expenditure Switzerland has one of the priciest healthcare systems in the world Healthcare costs amount to about 12% of the gross domestic product (GDP) → Switzerland is a prosperous and modern market economy with low unemployment, a highly skilled labor force, and a per capita GDP among the highest in the world Moreover, household incomes have increased, allowing people to buy essential medicines or buy more expensive medicines This brings great benefits to DHG Pharma when entering the Swiss market However, this can also be a challenge for the company as Switzerland is a demanding market in the pharmaceutical industry, requiring high-quality products 09 Group 3.3 SOCIAL Swizz population structure prediction table (2020-2050) a Population and population growth structure As of May 13, 2022, the population of Switzerland is 8,765,850, accounting for 0.11% of the world's population (according to the United Nations) This country has a high proportion of the elderly population The average life expectancy of people is 84 years old, ranking 10th in the world With the current high proportion of the elderly population, especially after the Covid-19 pandemic, the number of elderly patients with chronic respiratory diseases will increase significantly Moreover, the obesity rate in Switzerland is also relatively high, leading to related diseases such as high blood pressure, diabetes, osteoarthritis, etc The foregoing shows that pharmaceutical consumption in this country will be continuous and uninterrupted for all ages Thus, this is an advantage for DHG Pharma 10 Group 3.3 SOCIAL b Religion and culture Switzerland is a multi-religious country, the majority of Swiss people are Christian (about 68%), about 23.9% have no religion at all and 5% are Muslim, the rest are other religions Meanwhile, Vietnam has religions and Buddhism is the main religion Although there are religious differences between the two sides, it does not cause a big barrier when DHG exports its drugs because pharmaceutical products are specific products used based on the characteristics of each patient Switzerland is a multilingual country with languages: 63.3% 22.7% 8.1% 0.5% English, German French Italian Romansh Switzerland's business culture is characterized by formality, risk aversion and tight planning Besides, the Swiss are also quite open to doing business with foreigners The majority of Swiss consumers place a great deal of importance on the origin of products, for the same price, local products will be preferred over non-originated products land For purchasing decisions, Swiss consumers tend to look for value for money rather than design or brand reputation Moreover, aftersales service is very important for these consumers For a multilingual and multicultural country, language will be a barrier when DHG Pharma penetrates this market However, this can be overcome when there is an interpreter during the negotiation and cooperation between the two sides In addition, on the packaging and labels of each drug, in addition to English is considered mandatory, the printing of German / Italian is extremely necessary This will increase the patient's awareness of the medication they are taking Since this is a difficult market, quality issues must be considered a top priority when exporting 11 Group 3.4 TECHNOLOGICAL The pharmaceutical industry is greatly dependent on technology, especially biotechnology Switzerland is one of the best and most innovative locations for biotechnology in Europe This country spends over CHF 22.5 billion on research and development (R&D) annually With leading biotech specializing in new technological advancements such as cell and gene therapy, CRISPR and AI integration in the life sciences, this country's influence in the pharmaceutical industry can be seen on a global scale In addition, the use of digital health solutions, big data and artificial intelligence will make pharmaceutical manufacturing and distribution processes more efficient, allowing pharmacies to track patients at risk and their progress in therapy Currently, there is fierce competition in the Swiss pharmaceutical industry between the Swiss pharmaceutical giants Roche and Novartis and the new biotech groups BioNTech and Moderna (companies behind the success of COVID-19 mRNA technology) Vietnam and Switzerland have signed an Agreement on intellectual property protection and cooperation in the field of intellectual property and implemented the Vietnam - Switzerland Special Cooperation Program on intellectual property (SPC) and Project cooperation on intellectual property (SVIP) Therefore, the entry into this market of DHG Pharma will face great challenges, competing with domestic products in both production technology and access to patients 12 3.5 ENVIRONMENTAL Environmentally friendly manner Switzerland Is One Of The World's Most Eco-Friendly Countries A factor that makes Switzerland such an eco-friendly country is its exemplary waste recycling system It boasts one of the highest waste recycling rates in the world - achieving over 50% Part of this improvement came by improving separated waste collection So they demand that the goods they consume are produced in an environmentally friendly manner Biotechnology Biotechnology in Switzerland: genetically modified organisms (GMO) and pathogenic organisms (PO) are regularly used in the research and development of new drugs in the pharmaceutical sector and medicine The production of drugs results in the creation of different biotechnological pollutants The company needs to take care of this waste to maintain the safety of the people CO2 emissions The production of drugs is related to a large carbon footprint In Switzerland, the production of chemicals and pharmaceuticals exceeds all other industrial sectors in terms of energy use and CO2 emissions According to the latest Environmental Law in Switzerland, which is in effect and is in the process of being implemented, including efforts to reduce CO2 emissions → The environment is an important issue that DHG Pharma needs to pay attention to as goods are produced in an environmentally friendly manner They also reduce CO2 emissions in the production process and various biotechnological pollutants 13 3.6 LEGAL Switzerland’s investment climate is considered favorable for investors The federal government has adopted a relaxed attitude of noninterference toward foreign investment Additionally, Switzerland is considered to be a low corruption country Tax All goods arriving in Switzerland from abroad are generally subject to customs duty and import VAT Regarding import VAT, a reduced rate of 2.5% applies to pharmaceutical products Product standards Medicinal products are regulated by the Federal Law on Medicinal Products and Medical Devices (Law on Therapeutic Products) (Heilmittelgesetz) of 2000 (LTP), the Federal Act on Research involving Human Beings (Human Research Act) (HRA) of 2011 and related ordinances Legal related to business activities Foreign nationals are permitted to conduct business in Switzerland and are subject to Swiss labor laws Swiss and foreign parties are free to enter into agreements and business relations at their own discretion The protection of intellectual property rights is well developed in Switzerland For internationally active companies, worldwide protection can be achieved through a single entry → The legal factors of Switzerland are quite favorable for DHG Pharma Enterprises need to pay attention to business laws and regulations on product standards so that the penetration is smooth and the company's pharmaceutical products are qualified for export 14 METHOD OF ENTRY 4.1 Direct exporting 4.2 Justify another method DHG PHARMA PENETRATES THE SWISS MARKET 15 4.1 DIRECT EXPORTING Through analyzing the Swiss market using the PESTLE Models, it can be seen that the potential for developing pharmaceutical products of DHG Pharma is huge, although there are still many challenges However, with the company's existing potential, the entry method can help Hau Giang pharmaceutical products be more widely known, and the scale of operations in foreign markets is expanded using the direct export method This is a method when a company sells directly to the end-user Indirect export, the export is undertaken directly by the manufacturer The reason why DHG Pharma should penetrate the Swiss pharmaceutical market by direct export: a The size of the firm DHG Pharma owns a nationwide system with 12 distribution subsidiaries and 24 branches and 20,000 agents, DHG is also the enterprise with the largest revenue, the leading enterprise in Vietnam's pharmaceutical market with a valuation of $46.6 million, accounting for 14% of the market share of domestically manufactured drugs In 2021, DHG Pharma had a year of overcoming difficulties and challenges and reaping impressive business results: Revenue: VND 4,003 billion, reaching 100.8% of the year plan, up 6.6% over the same period Profit: 864 billion dong, reaching 105.3% of the year plan, up 5.2% over the same period 16 Group b The level of resources available With Taisho as the second-largest shareholder, DHG Pharma can continue to maintain its leading position, take advantage of Taisho's multinational market strength to strengthen domestic resources, initiate steps to exploit markets and expand exports In the production process of DHG Pharma, there are: Good experts in the field of product research The system of factories, modern machinery lines, and advanced technology meets international standards, the GLP-achieved laboratory is ready to welcome new drug inventions and innovative technologies DHG Pharma can use existing domestic facilities, employees, and administration The quality management system, DHG Pharma is the first unit to be granted the Japan-GMP certificate - Japan's good manufacturing practice standard Make good use of available domestic resources as well as partners' technological potential for production → → The most active and involved method is of course direct exporting, which is also the most ambitious and challenging so we choose direct exporting as a method for them to enter the Switzerland market DHG PHARMA PENETRATES THE SWISS MARKET 17 c The previous experience in exporting (Reference source: Chau Cao - cafef.vn) DHG's exports have increased sharply in recent years The export market of DHG Pharma in 2021 reached VND 86 billion, contributing 2% of total revenue Revenue had a slight decrease due to the impact of the Covid pandemic, but still reached an impressive number Under support from Taisho, DHG Pharma marked an important transformation with improved quality and increased competitiveness of products by global standards Currently, the enterprise has built a sales network in Cambodia, Laos, Myanmar, Singapore, Malaysia, Russia, Ukraine with about 100 product registration numbers and for the Switzerland market, this is also a way to penetrate to help products directly reach to end user → This can lead to potentially higher profit and can build close relationships with their overseas customers and markets DHG PHARMA PENETRATES THE SWISS MARKET 18 Group d The nature of the product being sold The main export products are the mainstay products of the Company and the group of herbal origin with the strength of natural herbal sources of Vietnam Because of the strict censorship process, DHG Pharma's products have competitive advantages in the market, bringing benefits to consumers Prominent are 100 products manufactured on two lines of tablets and film-coated tablets meeting Japan-GMP standards DHG Pharma's products are of high quality, meeting international standards and suitable for distribution to more advanced channels New and demanding markets like Switzerland will not be too difficult for the company's products → e General conditions in the selected foreign market The two biggest benefits that Vietnam has gained through signing an FTA with EFTA are increasing export opportunities and attracting direct investment (FDI) from member countries including Switzerland Economic and trade relations between Vietnam and Switzerland develop positively With Switzerland's high per capita income, consumers can afford to pay a lot for quality products Switzerland's manufacturing industry is dominated by products specializing in chemicals, medical care, pharmaceuticals, Switzerland is always an ideal investment destination for Vietnamese businesses that want to challenge the European market For a large enterprise like DHG Pharma, this will be a desirable place to try → 19 Group 21 However, this method also has disadvantages that DHG Pharma needs to adapt and solve DHG Pharma will have to compete strongly with domestic enterprises because Switzerland is a thriving place in pharmaceutical manufacturing as well as related industries However, this cannot be considered a big barrier because DHG Pharma has advantages in products as well as supply chain, ready to meet the needs of customers The company may have limited access to foreign market information, potential need and the cost of staffing foreign sales offices and long-distance customer service Due to the geographical distance being quite far, the supply of goods will not be as fast as compared in Asian countries, however, when DHG Pharma builds a distribution system and branch in Switzerland, this problem will be solved Group 4.2 JUSTIFY ANOTHER METHOD Along with manufacturing and selling its own products, DHG Pharma will take advantage of its sales network and facilities This will pave the way for the company to provide outsourcing and cooperate with foreign firms in the late stages of production DHG Pharma can combine with many prestigious partners in Switzerland to produce medicines - this type of penetration is called a strategic alliance → With this method, DHG Pharma can get a competitive advantage through access to a partner’s resources, including markets, technologies, capital, and people while remaining an independent organization If it finds suitable partners, DHG Pharma will also franchise its technology and the brands of products that have become reputable in the domestic market In addition, DHG Pharma can consider the method of entering into a joint venture Because Switzerland is very famous for biotechnology Therefore, DHG Pharma can consider a joint venture with a company that is strong in biotechnology, thanks to the advanced and modern technology the company can produce a new product to compete directly with products from two leading Swiss pharmaceutical companies, Novartis and Roche 20 CONCLUSION In the current open economy, in order to develop and expand business activities, finding new markets is extremely necessary and important, and DHG Pharma is no exception In order for business development to take place smoothly, finding a potential market and penetrating it with a suitable method is something that needs to be researched and considered carefully Through studies on the Swiss market based on the PESTLE model, it can be seen that Switzerland is a stable market in terms of political, economic, social, legal and environmental conditions However, DHG Pharma will face difficulties in terms of technology when competing with local businesses By the direct export method, DHG Pharma has full potential and capacity in terms of scale, products, experience and labor to conquer this difficult market 21 REFERENCES Dhgpharma.com.vn 2022 [online] Available at: [Accessed 13 May 2022] Moit.gov.vn 2021 [online] Available at: [Accessed 12 May 2022] FOEN, F., 2022 Biotechnology: In brief [online] Bafu.admin.ch Available at: [Accessed 12 May 2022] Practical Law 2021 Medicinal product regulation and product liability in Switzerland: overview | Practical Law [online] Available at: [Accessed 15May 2022] Misicka, T., 2022 Healthcare expenses keep rising in Switzerland [online] SWI swissinfo.ch Available at: [Accessed 17May 2022] NEWS, V., 2022 Europeans eye Vietnam’s pharma industry [online] VIETNAM ECONOMIC NEWS Available at: [Accessed 14May 2022] Office, F., 2021 Household Budget Survey: results 2019 | Federal Statistical Office [online] Household Budget Survey: results 2019 | Federal Statistical Office Available at: [Accessed 14 May 2022] PWC 2022 Switzerland Corporate - Other taxes [online] Available at: [Accessed 15 May 2022] countryeconomy.com 2021 Switzerland GDP - Gross Domestic Product 2021 [online] Available at: [Accessed 16 May 2022] 10 United-legal-network.com 2022 Switzerland | United Legal Network [online] Available at: [Accessed 16 May 2022] 22 ... 16 4.2 Another method 20 CONCLUSION 21 REFERENCES 22 DHG PHARMA PENETRATES THE SWISS MARKET INTRODUCTION DHG Pharma DHG Pharma stands for DHG Pharmaceutical Joint... customers and markets DHG PHARMA PENETRATES THE SWISS MARKET 18 Group d The nature of the product being sold The main export products are the mainstay products of the Company and the group of... that the company is aiming for Helping companies extend product life cycles DHG PHARMA PENETRATES THE SWISS MARKET 03 Group Switzerland's market potential DHG Pharma chooses to penetrate the Swiss