Vietnam's Pharmaceutical Market Soars To $7 Billion, A New Healthcare Era Begins

Vietnam's pharmaceutical market, valued at $7 billion, grapples with challenges such as inadequate infrastructure and limited financial capacity, industry insiders report. Over the past decade, the sector has shown impressive growth, with a compound annual growth rate of 7.3%.

The Drug Administration of Vietnam under the Ministry of Health revealed that the current market stands at about $7 billion, with per capita drug consumption averaging $70—a tenfold increase since 2000, according to Le Van Truyen, Chairman of the Ministry's Advisory Council for the Issuance of the Certificate of Registration of Drugs-Medicinal Ingredients, during a seminar in Hanoi on Wednesday.

Vietnam ranks among the nations with the highest market value and fastest-growing pharmaceutical industry globally. The market value climbed from $2.7 billion in 2015 to $5.1 billion in 2018, and $6.1 billion in 2020. According to the World Health Organization (WHO) classification, Vietnam's pharmaceutical industry is at level 3, indicating a domestic industry capable of producing generic drugs and exporting some pharmaceuticals.

Truyen said, "However, Vietnam's pharmaceutical industry is facing many challenges and difficulties as the country increasingly integrates into the global economy. Vietnam currently has only 17 out of 250 factories meeting the Advanced Good Manufacturing Practice (GMP), a WHO system for ensuring that products are consistently produced and controlled according to quality standards and more than 200 meet the GMP standards.

He further said, “Vietnam also lacks centralized pharmaceutical-industrial zones with an ecosystem that includes: research and development centers, bioavailability-bioequivalence testing facilities, clinical trial facilities, testing facilities, pharmaceutical production plants, packaging manufacturing plants, and related service centers specifically for the pharmaceutical industry. In terms of financial capacity, most domestic pharmaceutical companies are small-scale with low revenues, and there are no large-scale national pharmaceutical corporations.”

Financial constraints are hindering new investments, and digital transformation remains a daunting challenge for Vietnamese pharmaceutical companies amid the ongoing 4.0 industrial revolution. At a recent seminar, Vo Thi Tuan Anh, chairwoman of Hanoi-based Newtechco Group, which specializes in drug production, pharmaceutical chemicals, and medicinal materials, highlighted the notable progress in the healthcare sector, emphasizing proactive efforts in securing pharmaceutical supplies and equipment.

Nonetheless, rising market demand and the constant threat of epidemics pose risks to supply chain stability. Additionally, escalating transportation and supply costs are expected to create shortages in pharmaceutical and medical equipment, driving up prices and significantly impacting medical services. In response to these challenges, Truyen advocated for robust investment policies in infrastructure and enhancements in the production capacity of existing pharmaceutical factories.

Furthermore, he emphasized the need for preferential policies to support pharmaceutical companies in establishing new factories, particularly for the production of biological and biosimilar drugs. Vietnam's pharmaceutical industry is regarded as a pivotal sector that demands focused resources for substantial growth. By 2030, Vietnam aspires to become a leading pharmaceutical manufacturing hub in the region, targeting $1 billion in domestically produced drug exports.