Vietnamese people spend billions of dollars importing drugs every year.

Production capacity is only at normal levels, forcing nearly 55% of domestic pharmaceutical demand to be met by imports.

According to a report by the Vietnam Industry Research and Consulting Joint Stock Company (VIRAC), Vietnam’s pharmaceutical imports have been on a strong upward trend in recent years. In 2016, the estimated value of pharmaceutical imports was about 2.5 billion USD, an increase of 10% compared to the previous year.

With a fast-growing economy, rising incomes make consumers spend more on living and health-related expenses. This is also reinforced by the fact that Vietnam's per capita spending on this item is relatively low compared to many other countries, about 30-40 USD per person per year, compared to 96 USD in developing countries and 186 USD in the world.

However, with current conditions, Vietnam is only ranked in group 3 on the world pharmaceutical map, belonging to the group of 17 countries with developing pharmaceutical industries (pharmerging countries). The reason comes from the lack of potential to self-invent new drugs and only a few businesses have technology to access high EU standards - GMP or PIC/S.

From this situation, nearly 55% of domestic pharmaceutical demand must be met by imported sources, including a large amount of patented drugs, which are expensive because they cannot be produced domestically.In 2016, Vietnam imported about 2.5 billion USD worth of pharmaceuticals, of which the imported pharmaceutical products, mainly from 3 countries France, Germany and the US, accounted for nearly 200 million USD.

Hundreds of millions of dollars worth of pharmaceuticals are imported into Vietnam every year.

From here, the main import sources are clearly divided by product segment, in which the European region (France, Germany, UK, Switzerland) and the US are mainly for branded pharmaceutical products, while India and China are for low-cost pharmaceutical products.

With more than 13,000 hospitals, clinics, and medical stations, consumption through this channel helps ensure sales for suppliers. A report by Maybank Kim Eng Securities Company (MBKE) also said that more than 70% of the country's total drug expenditure (about 3 billion USD) is contributed through this channel.

However, the regulation on selecting winning drugs starting with Circular 01 (effective June 1, 2012) of the Ministry of Health according to the priority criterion of "low price" makes the already competitive ETC channel even more fierce. At the same time, it also creates many inadequacies and distortions in the management of drug quality and drug bidding. Many large enterprises in this market have been knocked out by unknown competitors after less than a year of application.

"Circular 01/2012, when applied, received many complaints about the situation of drugs winning bids having cheap prices but very poor quality," wrote a report by Rong Viet Securities Company.

However, after Circular 01 of the Ministry of Health in 2012 was issued, Imexpharm fell into crisis, unable to survive in the ETC channel.

Imexpharm's ETC revenue fell from nearly 60% of total revenue in 2012 to a bottom of 13.4% three years later. Although it increased again in 2016, the proportion was still less than one-third of the previous period.

According to Rong Viet Securities Company (VDSC), the preferential price regulation when exceeding 70 technical criteria points of Circular 01/2012 has made Imexpharm's products less competitive than its competitors.Because of this, the revenue from the hospital bidding channel of this unit decreased sharply, even though the company's core products are antibiotics - which are the products that play a major role in prescriptions.

Although hope is returning to this pharmaceutical manufacturing enterprise when the revised regulations on drug bidding (Circular 36/2013, Circular 31/2014 and Circular 11/2016) create a more balanced state between price and quality. However, to restore the position in the ETC market for Imexpharm is not a simple matter.

According to VNE