Q2 2013 www.businessmonitor.com VIETNAM PHARMACEUTICALS & HEALTHCARE REPORT INCLUDES 10-YEAR FORECASTS TO 2021 ISSN 1748-2305 Published by:Business Monitor International Vietnam Pharmaceuticals & Healthcare Report Q2 2013 INCLUDES 10-YEAR FORECASTS TO 2021 Part of BMI’s Industry Report & Forecasts Series Published by: Business Monitor International Copy deadline: February 2013 Business Monitor International Senator House 85 Queen Victoria Street London EC4V 4AB United Kingdom Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@businessmonitor.com Web: http://www.businessmonitor.com © 2013 Business Monitor International All rights reserved. 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All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained. Vietnam Pharmaceuticals & Healthcare Report Q2 2013 CONTENTS BMI Industry View . SWOT Business Environment 11 Economic . 12 Political . 13 Industry Forecast 14 Overall Pharma Market Forecast . 14 Table: Pharmaceutical Sales Indicators, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Healthcare Forecast 16 Table: Healthcare Expenditure Indicators, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Table: Healthcare Governmental Indicators, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Table: Healthcare Private Indicators, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Prescription Drug 20 Table: Prescription Drug Sales Indicators 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Patented 23 Table: Patented Drug Market Indicators, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Generics 25 Table: Generic Drug Sales Indicators, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 OTC 27 Table: OTC Medicine Sales Indicators, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Pharma Trade . 30 Table: Exports And Imports Indicators, 2009-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Other Healthcare . 32 Macroeconomic Forecasts . 35 Economic Outlook - Q2 2013 . 35 Inflation Still A Manageable Risk 36 Expenditure Breakdown 37 Table: Vietnam - Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Industry Risk Reward Ratings 39 Industry Risk/Reward Ratings 39 Table: Asia Pacific Pharmaceutical Risk/Reward Ratings, Q213 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Rewards 40 Risks 41 Market Overview . 42 Industry Trends And Developments 44 Epidemiology . 44 © Business Monitor International Page Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Healthcare Financing Hospital Sector Healthcare Financing Hospital Sector Private Healthcare Sector Healthcare Insurance Healthcare And Pharmaceutical Reform . Research And Development 48 49 51 52 53 54 56 58 Biotechnology Sector . 59 Clinical Trials 62 Medical Device Market 62 Regulatory Development 65 Regulatory Regime Pharmaceutical Advertising Intellectual Property Environment . Corruption Pricing Regime Reimbursement Regime 65 67 67 71 71 75 Competitive Landscape 79 Pharmaceutical Sector . Domestic Industry . Foreign Industry Recent Pharmaceutical Industry News Traditional Medicines . Pharmaceutical Distribution . Pharmaceutical Retail Sector 79 80 82 84 85 86 87 Table: Key Aspects Of Good Pharmacy Practice In Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 Company Profile 90 Vietnam Pharmaceutical Corporation (Vinapharm) . 90 Vietnam OPV Pharmaceutical Co . 93 Vietnam Pharmaceutical Joint Stock Company (Ampharco) . 95 Vidipha Central Pharmaceutical Joint Stock Company . 98 Pfizer 100 Sanofi Novartis . Merck & Co GSK 102 105 107 109 Demographic Forecast . 111 Table: Vietnam's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 Table: Vietnam's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 Table: Vietnam's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 © Business Monitor International Page Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Table: Vietnam's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Glossary . 115 Methodology 117 Methodology . 117 Risk/Reward Ratings Methodology 117 Ratings Overview . 118 Table: Pharmaceutical Business Environment Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 Weighting . 119 Table: Weighting Of Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Sources 119 © Business Monitor International Page Vietnam Pharmaceuticals & Healthcare Report Q2 2013 BMI Industry View BMI View: Vietnam represents a high-reward, high-risk market for pharmaceutical firms. We expect the country to be one of the next key emerging markets as growth in countries such as China is expected to slow down as it transits from a developing to a developed country. The current lack of access to healthcare meant unmet medical needs, which pharmaceutical firms and healthcare providers can leverage on for future growth. However, a key downside risk that will stunt growth is corruption. Headline Expenditure Projections ■ Pharmaceuticals: VND59,214bn (US$2.84bn) in 2012 to VND69,574bn (US$3.34bn) in 2013; +17.5% in local currency terms and +17.9% in US dollar terms. ■ Healthcare: VND187,360bn (US$8.98bn) in 2012 to VND210,136bn (US$10.1bn) in 2013; +12.2% in local currency terms and +12.6% in US dollar terms. Risk/Reward Rating: Vietnam's Pharmaceutical Risk/Reward Rating (RRR) score for Q213 is unchanged from the previous quarter. This is also the case for all other countries in BMI's proprietary system that ranks pharmaceutical markets according to attractiveness to multinational drugmakers. A minor re-weighting of one of the RRR components is being implemented to improve the tool, and the adjusted scores for all markets will be published in the Q313 updates of the Pharmaceuticals & Healthcare reports. Vietnam has a RRR score of 49.3 out of 100, making it the 11th most attractive pharmaceutical market in Asia Pacific. Key Trends And Developments ■ In March 2013, the government of Vietnam has announced India as its strategic partner in its international biotechnology research and development (R&D) cooperation. The Vietnamese government said that it considers biotechnology as one of the four prioritised science and technology-related segments in the country's socio-economic development strategy. The countries aim to accelerate biotechnology development, especially in the fields of agriculture, health, food and environment. ■ In January 2013, Vietnam Health Minister Nguyen Thi Kim Tien has stated that, due to inadequate bidding management, there are many instances of the same drug being sold at different prices in different provinces. For example, India-based Parex Pharmaceutical's Perabact (cefoperazone) is priced at VND18,000 (US$0.90) in Mekong Delta Dong Thap Province, but costs VND30,000 (US$1.50) in Can Tho. The minister has also stated that some pharmaceutical firms work with hospitals to push up drug prices. Local media, Vietnam News, reported that new regulations will be enforced to prevent such disparity in prices. Drug bidding will be conducted centrally by health departments in provinces and cities, while hospitals will negotiate contracts based on the bidding results. The winning price of each drug product is not allowed to exceed the ceiling price approved by the health department in their bidding plan. ■ In the same month, Singapore-based Inviragen has out-licensed its Japanese encephalitis (JE) technology to Vietnam-based The Company for Vaccine and Biological Production No. (Vabiotech). Under the © Business Monitor International Page Vietnam Pharmaceuticals & Healthcare Report Q2 2013 agreement, Vabiotech can exclusively develop and commercialise JE vaccines in Vietnam, Cambodia and Myanmar. BMI Economic View: The State Bank of Vietnam (SBV)'s surprise decision to cut its policy rate by 100 basis points from 10.00% to 9.00% suggests that policymakers are under increasing pressure to stimulate economic growth in 2013. We believe that the latest move will help reinforce government efforts to boost private sector investment. Given that money supply growth remains considerably low by historical standards, we believe that the risks of reigniting inflationary pressures remain manageable. BMI Political View: The Communist Party of Vietnam (CPV) is facing an uphill task in defending its authoritarian system of government amid growing pressure for democratic reforms. While pressure from international rights groups has failed to deter the CPV from clamping down on anti-government demonstrations in the past, we expect the CPV to soften its stance as the country seeks to pursue closer economic ties with its considerably more democratic trade partners. © Business Monitor International Page Vietnam Pharmaceuticals & Healthcare Report Q2 2013 SWOT Vietnam Pharmaceutical and Healthcare Industry SWOT Analysis Strengths ■ Significant growth potential, given a large and growing population. ■ The government's commitment to developing the health sector. ■ Sizeable local generic drugs sector, which is being encouraged by the government. ■ Strong traditional medicines segment with potential to improve the non-prescription drugs market in the longer term, as long as sufficient investment in extraction technologies can be found. Weaknesses ■ One of the least developed pharmaceutical markets in Asia, with low per capita spending on drugs. ■ Counterfeit drugs account for a significant amount of market consumption. ■ No bioequivalence requirement in place for locally made generic medicines. ■ Little distinction made between prescription and over-the-counter drugs, with most medicines available without a prescription. ■ Complex drug pricing policy biased towards local drug producers. ■ Import-reliant market, especially in terms of high-tech products and active pharmaceutical ingredients, which makes it vulnerable to currency movements. ■ Underdeveloped primary care services and a shortage of trained pharmacists are continuing to hamper access to medicines and product market penetration. ■ Population concentrated in rural, rather than urban, areas, preventing access to modern drugs and encouraging dependence upon traditional medicines. ■ Opportunities ■ The Association of South East Asian Nations (ASEAN) harmonisation initiative, including the adoption of Western regulatory standards such as International Conference on Harmonisation and World Health Organization guidelines. © Business Monitor International Page Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Vietnam Pharmaceutical and Healthcare Industry SWOT Analysis - Continued ■ Introduction of five-year exclusivity for clinical dossier data encouraging researchbased multinationals. ■ If investment can be found for technological improvements, then there is great potential in the traditional Chinese medicine market, in addition to fledging biotechnology. ■ Full WTO membership improving the trading climate and potentially, in the longer term, redressing pharmaceutical trade issues. ■ Requirement for domestic companies to comply with international good manufacturing practices should boost exports. ■ Threats ■ Government resistance to aligning patent law fully with international standards deterring multinational sector expansion. ■ Need to resolve infrastructural and power supply issues, as well as higher education provision, before higher levels of foreign direct investment can be expected. ■ The government is increasingly interfering in the industry, protecting indigenous firms through the use of legal trade barriers, which will affect competitiveness. ■ Pharmaceutical price inflation threatens to put medicines out of reach of poor and therefore limit market volume growth. ■ Legalisation of parallel imports negatively impacting performance of patented drugs. ■ New health insurance legislation decreasing patients' access to medicines. © Business Monitor International Page 10 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Novartis SWOT Analysis Strengths ■ Well-established presence through its subsidiary Novartis Vietnam, which directly manufactures in the country. ■ Benefits from the advantages given to locally produced drugs. ■ Diverse manufacturing presence, including antibiotics, vitamins and OTC pharmaceuticals, consumer, generic and healthcare products, as well as vaccines. Weaknesses ■ Government drug-pricing policy is biased towards local products, which disadvantages Novartis' patented drugs offering. Opportunities ■ Low purchasing power of the majority of the population. ■ Widespread counterfeiting. ■ Underdeveloped healthcare infrastructure. ■ Demand for branded products to rise with sector modernisation and regional harmonisation. ■ Positive economic performance - with an increase in spending power - to underpin the development of pharmaceutical demand. ■ Developing the potential of the generic sector to open up commercial opportunities for Novartis. ■ Plans for a major overhaul of the domestic pharmaceutical regulatory environment, with a focus on increasing the level of foreign investment. Threats ■ Country remains heavily reliant on imported drugs. ■ Government resistance to aligning patent law fully with international standards. ■ As a part of its plan to overhaul the pharmaceutical sector, the government is planning to increase intervention and protect local companies through legal trade barriers, potentially affecting margins. © Business Monitor International Page 105 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 SWOT Analysis - Continued ■ Vietnam's susceptibility to economic fluctuations, with currency depreciation recently forcing price rises. ■ Legalisation of parallel imports negatively affecting performance of patented drugs. Company Overview Novartis Vietnam (representative office) was established following the merger of Sandoz and Ciba-Geigy in 1997. The company is active in the manufacture and distribution of speciality pharmaceuticals, consumer healthcare and generic medicines, as well as eye care products (through Alcon). Strategy Novartis' portfolio includes medicines in transplantation and immunology, cardiovascular diseases, diseases of the central nervous system, Parkinson's disease, skin allergies, OTC and ophthalmic medications. The following Novartis products maintain a leadership position in their respective segments: Lamisil (terbinafine), Clozaril (clozapine), Diovan (valsartan), Lescol (fluvastatin), Aredia (pamidronate), Navoban (tropisetron), Sandostatin (octreotide), Neoral (cyclosporine), Simulect (basiliximab), Femara (letrozole), Sandoglobulin (immune globulin), Miacalcic (calcitonin) and Lentaron (formestane). The company will strive to continue their promotion to private sector in particular, which will be encouraged by economic development. Company Details ■ ■ Novartis Pharma Services AG Unit 1001A, Centec Tower 72-74 Nguyen Thi Minh Khai Street Ward 6, District Ho Chi Minh City Vietnam ■ Tel: +84 3823 9090 © Business Monitor International Page 106 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Merck & Co SWOT Analysis Strengths Weaknesses Opportunities Threats ■ One of the leading global producers of medicines. ■ Considerable product portfolio, including consumer medicines. ■ Merger with Schering-Plough further strengthening MSD's presence in Vietnam. ■ Difficult IP environment, including counterfeit drug trade and lax patent protection. ■ No direct manufacturing or R&D presence in the country. ■ Underdeveloped healthcare infrastructure. ■ Rising demand for branded products following healthcare sector modernisation. ■ Pending overhaul of the regulatory climate, aiming to boost foreign investment. ■ Pending creation of a local affiliate. ■ Legal trade barriers protecting local players and disadvantaging multinationals. ■ Currency depreciation forcing price adjustments. ■ Legalisation of parallel imports negatively impacting performance of branded drugs. Company Overview The US drug major Merck & Co operates in Vietnam through its regional division, Merck, Sharp & Dohme (MSD) Asia Pacific, which was established in Vietnam in 1994. The company employs around 100 staff, who are mostly engaged in sales and marketing activities. Merck does not operate any manufacturing or R&D activities in Vietnam. Strategy The company is affected by regulations in Vietnam that require all state companies wishing to import foreign pharmaceutical products to apply for annual quotas. These activities are set to be phased out under the US-Vietnam Bilateral Trade Agreement. In Vietnam, MSD is mostly involved in supplying prescription products for a number of conditions. These include cardiovascular diseases, osteoporosis, asthma, osteoporosis and severe infections as well as range of other conditions such as hepatitis B. © Business Monitor International Page 107 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 In January 2011, MSD announced that it will establish a 100% foreign-owned company in Vietnam. Headquartered in the capital Ho Chi Minh City, the operation will sell highmargin patented drugs, such as the cervical cancer vaccine Gardasil. Recent Developments In November 2011, MSD established the Vietnam Society for Reproductive Medicine with Vietnam Gynaecology and Obstetrics Association. In February 2011, MSD, along with the Programme for Appropriate Technology in Health (PATH) and the National Institute of Hygiene and Epidemiology (NIHE), emerged to provide corporate social responsibility (CSR) activities, giving part of their profits to the development of community. At the end of May 2009, distributor Diethelm Vietnam Corp increased the prices of 14 speciality drugs - manufactured Merck - by 7.3-10%. The prices of imported drugs had been increasing as a result of currency depreciation and the growing price of raw materials. In March 2009, MSD said it regretted a labelling mistake on its measles, mumps and rubella vaccine. MMRII was labelled with instructions saying 'for intramuscular injection' rather than 'for subcutaneous injections'. No adverse reaction was reported. MSD's cervical cancer vaccine Gardasil has been approved in Vietnam, as has its competitor, GSK's Cervarix. GSK has reduced the price of its products, increasing competitive pressure. Company Details ■ ■ Merck & Co Merck, Sharp & Dohme Asia Vietnam Branch 16th Floor, Kumho Asiana Plaza 39 Le Duan Street, District Ho Chi Minh City Vietnam ■ Tel: +84 3915 5800 © Business Monitor International Page 108 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 GSK SWOT Analysis Strengths Weaknesses Opportunities Threats Company Overview ■ One of the leading global producers of medicines. ■ Some of its products are covered by the public insurance scheme. ■ Considerable product portfolio, including consumer medicines and vaccines. ■ Difficult IP environment. ■ No direct manufacturing or R&D presence in the country. ■ Counterfeiting remains a problem. ■ Rising demand for branded products following healthcare sector modernisation. ■ Pending overhaul of the regulatory climate, aiming to boost foreign investment. ■ Strong regional experience and connections. ■ Legal trade barriers protecting local players and disadvantaging multinationals. ■ Country susceptible to economic and currency fluctuations. ■ Legalisation of parallel imports negatively impacting performance of branded drugs. GSK began operating in Vietnam in 1994, with a staff of only seven. In the following years, GSK merged with Wellcome, and became GSK Vietnam. The company offers a range of prescription medicines, although not all of its products are covered by public insurance, as is the case with Advair/Seretide (fluticasone + salmeterol). Recent Developments In July 2012, it was revealed that GSK's Singapore division worked with a local pharmaceutical manufacturer to manipulate drug prices in Vietnam. The firm sold the drugs at prices 4-5 times higher than their original rates. The DAV granted licences to Vietnam-based Savi Pharmaceutical for the circulation of 15 types of medicines in 2008-2011. Between October 18 2011 to May 17 2012, Savipharm produced six of the © Business Monitor International Page 109 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 drugs and sold them to GSK under an in-country export transaction, with the help of importer Phytopharma, at very low prices. In July 2011, after the recall of Augmentin (amoxicillin clavulanate) in Hong Kong, DAV requested the firm send samples of the drug to be tested for plasticisers. This was after the Taiwan di(2-ethylhexyl)phthalate (DEHP) scandal, where the Taiwanese government detected DEHP, a plasticiser, in various food and health products in May 2011. DEHP is known to disrupt hormonal actions, reducing testosterone levels in boys and causing early sexual development in girls. In March 2010, the US FDA voiced concerns over GSK's Rotarix vaccine. It was thought that the live oral preventative had been contaminated with a benign pig virus, known as porcine circovirus type (PCV-1). The US FDA recommended that any use of the vaccine be temporarily suspended. The DVA has also requested documents from GSK verifying the safety of the vaccine. GSK's cervical cancer vaccine Cervarix has been approved in Vietnam. Its competitor, MSD's Gardasil, also received approval in 2009. GSK reduced the price of its vaccine in mid-2010, in line with its 'differential pricing' strategy for certain products in select global markets. The government agency has also ordered 10,000 packets of GSK's Relenza (zanamivir) for Tamiflu-resistant patients. In late 2009, GSK's Augmentin's retail price rose from VND14,000 to VND15,000 per pack. Presently, the product costs in the region of VND175,000. Company Details ■ ■ GlaxoSmithKline GlaxoSmithKline Vietnam, The Metropolitan, Unit 701 235 Dong Khoi St, District Ho Chi Minh City Address line Postcode Vietnam ■ Tel: +84 3824 8744 © Business Monitor International Page 110 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Demographic Forecast Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is the total population of a country a key variable in consumer demand, but an understanding of the demographic profile is key to understanding issues ranging from future population trends to productivity growth and government spending requirements. The accompanying charts detail Vietnam's population pyramid for 2011, the change in the structure of the population between 2011 and 2050 and the total population between 1990 and 2050, as well as life expectancy. The tables show key datapoints from all of these charts, in addition to important metrics including the dependency ratio and the urban/rural split. Source: World Bank, UN, BMI © Business Monitor International Page 111 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Table: Vietnam's Population By Age Group, 1990-2020 ('000) 1990 1995 2000 2005 2010 2012f 2015f 2020f 67,102 74,008 78,758 83,161 87,848 89,730 92,443 96,355 0-4 years 9,340 9,212 7,002 6,776 7,186 7,186 7,026 6,529 5-9 years 8,685 9,193 9,124 6,921 6,703 6,885 7,143 6,982 10-14 years 7,504 8,604 9,142 9,038 6,844 6,539 6,668 7,104 15-19 years 7,127 7,408 8,535 9,064 8,963 8,161 6,806 6,628 20-24 years 6,492 7,003 7,305 8,420 8,954 9,115 8,892 6,745 25-29 years 5,893 6,361 6,879 7,167 8,284 8,602 8,862 8,803 30-34 years 4,884 5,779 6,250 6,765 7,058 7,475 8,202 8,779 35-39 years 3,965 4,794 5,688 6,163 6,677 6,770 6,991 8,131 40-44 years 2,420 3,884 4,710 5,614 6,086 6,304 6,609 6,925 45-49 years 2,039 2,358 3,802 4,653 5,548 5,761 6,012 6,536 50-54 years 1,933 1,968 2,287 3,739 4,580 4,936 5,449 5,914 55-59 years 1,946 1,843 1,887 2,201 3,617 4,001 4,446 5,305 60-64 years 1,544 1,822 1,737 1,767 2,076 2,573 3,455 4,268 65-69 years 1,283 1,391 1,659 1,582 1,621 1,649 1,927 3,233 70-74 years 919 1,084 1,194 1,439 1,389 1,384 1,438 1,729 1,127 1,305 1,559 1,852 2,264 2,388 2,516 2,743 Total 75+ years f = BMI forecast. Source: World Bank, UN, BMI © Business Monitor International Page 112 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Table: Vietnam's Population By Age Group, 1990-2020 (% of total) 1990 1995 2000 2005 2010 2012 2015f 2020f 0-4 years 13.92 12.45 8.89 8.15 8.18 8.01 7.60 6.78 5-9 years 12.94 12.42 11.58 8.32 7.63 7.67 7.73 7.25 10-14 years 11.18 11.63 11.61 10.87 7.79 7.29 7.21 7.37 15-19 years 10.62 10.01 10.84 10.90 10.20 9.10 7.36 6.88 20-24 years 9.68 9.46 9.27 10.13 10.19 10.16 9.62 7.00 25-29 years 8.78 8.60 8.73 8.62 9.43 9.59 9.59 9.14 30-34 years 7.28 7.81 7.94 8.14 8.03 8.33 8.87 9.11 35-39 years 5.91 6.48 7.22 7.41 7.60 7.55 7.56 8.44 40-44 years 3.61 5.25 5.98 6.75 6.93 7.03 7.15 7.19 45-49 years 3.04 3.19 4.83 5.59 6.32 6.42 6.50 6.78 50-54 years 2.88 2.66 2.90 4.50 5.21 5.50 5.89 6.14 55-59 years 2.90 2.49 2.40 2.65 4.12 4.46 4.81 5.51 60-64 years 2.30 2.46 2.21 2.12 2.36 2.87 3.74 4.43 65-69 years 1.91 1.88 2.11 1.90 1.85 1.84 2.08 3.36 70-74 years 1.37 1.46 1.52 1.73 1.58 1.54 1.56 1.79 75+ years 1.68 1.76 1.98 2.23 2.58 2.66 2.72 2.85 f = BMI forecast. Source: World Bank, UN, BMI © Business Monitor International Page 113 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Table: Vietnam's Key Population Ratios, 1990-2020 Dependent ratio, % of total working age Dependent population, total, '000 Active population, % of total Active population, total, '000 Youth population, % of total working age Youth population, total, '000 1990 1995 2000 2005 2010 2012 2015f 2020f 75.5 71.2 60.5 49.7 42.1 40.9 40.6 41.6 28,859 30,790 29,679 27,609 26,006 26,031 26,717 28,321 57.0 58.4 62.3 66.8 70.4 71.0 71.1 70.6 38,243 43,218 49,079 55,552 61,842 63,699 65,725 68,034 66.8 62.5 51.5 40.9 33.5 32.4 31.7 30.3 25,529 27,009 25,268 22,735 20,732 20,610 20,837 20,615 8.7 8.7 9.0 8.8 8.5 8.5 8.9 11.3 3,330 3,780 4,411 4,874 5,274 5,421 5,881 7,706 Pensionable population, % of total working age Pensionable population, '000 f = BMI forecast; 0>15 plus 65+, as % of total working age population; 0>15 plus 65+; 15-64, as % of total population; 15-64; 0>15, % of total working age population; 0>15; 65+, % of total working age population; 65+. Source: World Bank, UN, BMI Table: Vietnam's Rural And Urban Population, 1990-2020 1990 1995 2000 2005 2010 2012 2015f 2020f Urban population, % of total 20.3 22.2 24.3 26.4 28.7 29.7 31.2 33.9 Rural population, % of total 79.7 77.8 75.7 73.6 71.3 70.3 68.8 66.1 Urban population, '000 13,438.6 16,201.6 18,865.4 21,940.1 25,212.5 26,649.9 28,842.1 32,664.4 Rural population, '000 52,761.4 56,778.4 58,770.0 61,166.2 62,635.9 63,080.4 63,600.5 63,690.7 f = BMI forecast. Source: World Bank, UN, BMI © Business Monitor International Page 114 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Glossary ■ Pharmaceuticals, medicines, drugs: synonym terms used interchangeably. ■ Pharmaceutical market/sales: the sum of revenues generated by generic, patented, and over-the-counter (OTC) drugs through hospitals, retail pharmacies and other channels. Unless otherwise stated, market value is reported at final consumer price including mark-ups, taxes, etc. ■ Prescription drugs: patented and generic drugs regulated by legislation that requires a physician's prescription before they can be sold to a patient. ■ Patented drug: an innovative medicine granted intellectual property protection by the patent and trademark office. The patent may encompass a wide range of claims - such as active ingredient, formulation, mode of action, etc. - giving the patent holder the sole right to sell the drug while the patent is in effect. ■ Generic drug: a bioequivalent medicine that contains the same active ingredient as an originator drug. The originator drug is an innovative medicine that no longer has intellectual property protection due to patent expiry. ■ OTC drug: a medicine that does not require a prescription to be sold to patients. Also known as nonprescription medicines. ■ Counterfeit drugs: unregistered and illegal medicines which have not been subject to regulatory assessments to ensure quality, safety, efficacy and manufacturing standards. ■ Similares: non-bioequivalent alternatives to either an originator patented drug or a generic drug. While similares and the originator/generic drug have a common indication, similares not always contain the same active ingredient as an originator and invariably have a different pharmacokinetic and pharmacodynamic profile. Prevalent in select South American countries, similares are legal. BMI does not include their sales in total pharmaceutical market values. ■ Health expenditure: the sum of the funds mobilised by government and private systems for the operation of a healthcare system, according to the World Health Organization (WHO). It includes the purchase of healthcare services and goods by public entities such as ministries and social security institutions; or by private entities such as non-profit institutions, commercial insurances and households acting as complementary funders to the previously cited institutions or unilaterally disbursing health commodities. The revenue base of these entities varies by country and comprises multiple sources. The inclusion of this in BMI forecasts necessitates taking into account the essential attributes of countryspecific health accounting such as comprehensiveness, consistency, standardisation and timeliness. ■ Government health expenditure: the sum of outlays for health maintenance, restoration or enhancement paid by government entities such as a Ministry of Health, other ministries, parastatal organisations and social security agencies, including transfer payments to households to offset medical care costs and extrabudgetary funds to finance healthcare provision. ■ Private health expenditure: the sum of outlays for health by private entities such as commercial or mutual health insurance, households, non-profit institutions serving households, resident corporations and quasi-corporations not controlled by governments - according to the WHO. ■ Medical devices: products used for diagnosis or therapy in patients. Whereas pharmaceuticals achieve their principal action by pharmacological, metabolic or immunological means, medical devices act by physical or mechanical means. Medical devices include a wide range of products, including syringes, thermometers, blood-sugar tests, prosthetic limbs, ultrasound scans and X-ray machines, among others. © Business Monitor International Page 115 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 ■ Burden of Disease Database (BoDD): BMI's disease database incorporates WHO, World Bank, IMF and BMI's own data to create a proprietary dataset. BoDD data are quantified as the sum of disabilityadjusted life years lost to a disease in a particular country. ■ Disability-Adjusted Life Years (DALYs): the sum of the years of life lost (YLL) due to premature mortality in a population and the years lost due to disability (YLD) for incident cases of the health condition. The DALY is a health gap measure that extends the concept of potential years of life lost due to premature death (PYLL) to include equivalent years of 'healthy' life lost in states of less than full health (broadly termed 'disability'). One DALY represents the loss of one year of equivalent full health. © Business Monitor International Page 116 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Methodology Methodology Pharmaceutical sub-sector forecasts are generated using a top down approach from BMI's Drug Expenditure Forecast Model. The semi-automated tool forecasts using historic trends, macroeconomic variables, epidemiological forecasts and analyst input, which are weighted by relevance to each market. The following elements are incorporated into the model: ■ BMI's historic pharmaceutical market data, which have been collected from a range of sources including: ■ Regulatory agencies; ■ Pharmaceutical trade associations; ■ Company press releases and annual reports; ■ Subscription information providers; ■ Local news sources; and ■ Information from market research firms that is in the public domain. Data have been validated by BMI's pharmaceutical and healthcare analysts using a composite approach, which scores data sources by reliability in order to ensure accuracy and consistency of historic data. ■ ■ ■ Five key macroeconomic and demographic variables that have been demonstrated, through regression analysis, to have the greatest influence on the pharmaceutical market. These have been forecasted by BMI's Country Risk analysts using an in-house econometric model. The burden of disease in a country. This is forecasted in DALYs using BMI's Burden of Disease Database, which is based on the WHO's burden of disease projections and incorporates World Bank and IMF data. Subjective input and validation by BMI pharmaceutical and healthcare analysts to take into account key events that have affected the pharmaceutical market in the recent past or that are expected to impact the country's pharmaceutical market over the next five years. These may include policy/reimbursement decisions, new product launches or increased competition from generic drugs. Risk/Reward Ratings Methodology BMI's approach in assessing the risk/reward balance for Pharmaceutical & Healthcare Industry investors globally is fourfold. First, we identify factors (in terms of current industry/country trends and forecast industry/country growth) representing opportunities to would-be investors. Second, we identify country and industry-specific traits which pose or could pose operational risks to would-be investors. Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/trends to avoid subjectivity. Finally, we use BMI's proprietary Country Risk Ratings (CRR), ensuring that only the aspects © Business Monitor International Page 117 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 most relevant to the Pharmaceutical & Healthcare Industry are incorporated. Overall, the system offers an industry-leading, comparative insight into the opportunities and risks for companies across the globe. Ratings Overview Ratings System Conceptually, the ratings system divides into two distinct areas: Rewards: Evaluation of the sector's size and growth potential in each state, as well as broader industry/state characteristics that may inhibit its development. Risks: Evaluation of industry-specific dangers and those emanating from a state's political/economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. Indicators The following indicators have been used. Overall, the ratings use three subjectively measured indicators and 41 separate indicators/datasets. Table: Pharmaceutical Business Environment Indicators Indicator Rationale Rewards Industry Rewards Market expenditure, US$bn Denotes breadth of pharmaceutical market. Large markets score higher than smaller ones Market expenditure per capita, US$ Denotes depth of pharmaceutical market. High value markets score better than low value ones Sector value growth, % y-o-y Denotes sector dynamism. Scores based on annual average growth over five-year forecast period Country Rewards Urban-rural split Urbanisation is used as a proxy for development of medical facilities. Predominantly rural states score lower Pensionable population, % of total Proportion of the population over 65 years of age. States with ageing populations tend to have higher per-capita expenditure Population growth, 2003-2015 Fast-growing states suggest better long-term trend growth for all industries Overall score for Country Structure is also affected by the coverage of the power transmission network across the state Risks Industry Risks Intellectual property (IP) laws © Business Monitor International Markets with fair and enforced IP regulations score higher than those with endemic counterfeiting Page 118 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Pharmaceutical Business Environment Indicators - Continued Indicator Rationale Policy/reimbursements Markets with full and equitable access to modern medicines score higher than those with minimal state support Approvals process High scores awarded to markets with a swift appraisal system. Those that are weighted in favour of local industry or are corrupt score lower Country Risks Economic structure Rating from CRR evaluates the structural balance of the economy, noting issues such as reliance on single sectors for exports/growth, and past economic volatility Policy continuity Rating from CRR evaluates the risk of a sharp change in the broad direction of government policy Bureaucracy Rating from CRR denotes ease of conducting business in the state Legal framework Rating from CRR denotes the strength of legal institutions in each state. Security of investment can be a key risk in some emerging markets Corruption Rating from CRR denotes the risk of additional illegal costs/possibility of opacity in tendering/business operations affecting companies' ability to compete Source:BMI Weighting Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal weight. Consequently, the following weight has been adopted. Table: Weighting Of Components Component Weighting Rewards 60% - Industry Rewards - 75% - Country Rewards - 25% Risks 40% - Industry Risks - 60% - Country Risks - 40% Source: BMI Sources Sources used include national industry associations, government ministries, global health organisations, officially released pharmaceutical company results and international and national news agencies. © Business Monitor International Page 119 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. [...]... Page 15 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Pharmaceutical Sales Indicators, 2009-2017 - Continued 2009 Pharmaceutical sales, % of health expenditure 2010 2011 2012 2013f 2014f 2015f 2016f 2017f 26.63 29.01 30.64 31.60 33.11 35.05 36.99 38.94 40.88 f = BMI forecast Source: BMI, Drug Administration of Vietnam (DAV), Vietnam Ministry of Health, domestic companies, local press Healthcare. .. of Vietnam (DAV), Vietnam Ministry of Health, domestic companies, local press © Business Monitor International Page 29 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Pharma Trade Vietnam is highly reliant on pharmaceutical imports Latest data from UN Commodities Trade Database Pharmaceutical Trade Forecast (UNComtrade) showed that the country imported 2008-2017 VND24,882bn (US$1.3bn) worth of pharmaceuticals. . .Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Business Environment SWOT Analysis Strengths ■ Vietnam has a large, skilled and low-cost workforce, that has made the country attractive to foreign investors ■ Vietnam' s location - its proximity to China and South East Asia, and its good sea links - makes it a good base for foreign companies to export to the rest of Asia, and beyond Weaknesses ■ Vietnam' s... 52.52 53.17 53.84 f = BMI forecast Source: BMI, Drug Administration of Vietnam (DAV), Vietnam Ministry of Health, domestic companies, local press © Business Monitor International Page 26 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 OTC Despite the blurred distinction between prescription and non-prescription products, OTC healthcare has OTC Medicine Market Forecast been achieving relatively robust... skills levels could leave Vietnam a second-rate economy for an indefinite period © Business Monitor International Page 11 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Economic SWOT Analysis Strengths ■ Vietnam has been one of the fastest-growing economies in Asia in recent years, with GDP growth averaging 7.1% annually between 2000 and 2012 ■ The economic boom has lifted many Vietnamese out of poverty,... been touted as potential future customers for Vietnamese-made pharmaceuticals The above strategy is exemplified by Mekophar Chemical Joint-Stock Company Building on an existing distribution relationship, the drugmaker has entered into an agreement with Nigeria's Neros © Business Monitor International Page 30 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Pharmaceuticals to build a manufacturing plant... progress of Vietnam' s healthcare and pharmaceutical industries However, whether such reform can be carried out successfully is a matter for much conjecture given the disorganised state of the sector Nevertheless, Vietnam' s WTO membership since early 2007 is expected to stimulate other similar deals in the region © Business Monitor International Page 34 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Macroeconomic... total sales 23.80 23.43 23.08 22.69 22.33 21.94 21.54 21.14 20.72 f = BMI forecast Source: BMI, Drug Administration of Vietnam (DAV), Vietnam Ministry of Health, domestic companies, local press © Business Monitor International Page 24 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Generics Although the overall generic drug market is sizeable, Generic Drug Market Forecast standing at around VND29,982bn... stance against the counterfeit drug trade, including increased vigilance and enforcement of IP rights © Business Monitor International Page 17 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Table: Healthcare Expenditure Indicators, 2009-2017 2009 2010 2011 2012 2013f 2014f 2015f 2016f 2017f Health expenditure (US$bn) 6.4 7.1 7.9 9.0 10.1 11.4 12.8 14.3 15.9 Health expenditure (US$bn), % chg y-o-y 7.6... the European © Business Monitor International Page 27 Vietnam Pharmaceuticals & Healthcare Report Q2 2013 Self-Medication Industry (AESGP), consumers in Vietnam (at 45% of the total) are among the most likely to take an OTC drug for a minor ailment as soon as symptoms are present Market research also established that it is common for people in Vietnam to ask the advice of unlicensed pharmacists or . Q2 2013 www.businessmonitor.com VIETNAM PHARMACEUTICALS & HEALTHCARE REPORT INCLUDES 10-YEAR FORECASTS TO 2021 ISSN 1748-2305 Published by:Business Monitor International Vietnam Pharmaceuticals. more democratic trade partners. Vietnam Pharmaceuticals & Healthcare Report Q2 2013 © Business Monitor International Page 8 SWOT Vietnam Pharmaceutical and Healthcare Industry SWOT Analysis . World Health Organization guidelines. Vietnam Pharmaceuticals & Healthcare Report Q2 2013 © Business Monitor International Page 9 Vietnam Pharmaceutical and Healthcare Industry SWOT Analysis