Local drug firms captivate foreign clients with profits

2016 was a profitable year for Vietnam’s biggest pharmaceutical firms, making the lucrative industry more appealing for international groups.

Traphaco (TRA), of which Mekong Capital and Vietnam Holding Ltd. are major foreign shareholders, made a consolidated profit of VND212 billion (US$9.63 million) last year, up 17% on-year.

In the 2012-2016 period, the second biggest publicly traded drug maker in Vietnam reported an annual growth in profit of 16.3% on average, making it one of the most profitable drug-makers in the local market.

TRA did well last year with a consolidated revenue of VND2 trillion (US$90.9 million), a slight increase from 2015, of which revenue from production and sole distribution rose 12% on-year, making those the core business lines of TRA – contributing to over 70% of revenue and 90% of profit. Remarkably, TRA’s revenue from the over-the-counter (OTC) market ascended 18% to nearly VND1.3 trillion (US$59 million).

Vietnam’s biggest publicly traded drug maker, Hau Giang Pharmaceutical JSC (DHG), made a consolidated pre-tax profit of VND756.65 billion (US$34.4 million) in 2016, up 20.29% on year, while its consolidated net revenue climbed 5% to VND3.78 trillion (US$171.8 million) in 2016.

Major shareholders of DHG are Japan’s Taisho Pharmaceutical Co., Ltd., which is now the biggest foreign shareholder with 24.5%, and FTIF – Templeton Frontier Markets Fund – which owns 12.95%.

DHG explained in its 2016 financial statements that improvements in sales thanks to the efficient promotion of key products increased its revenue in the fourth quarter by 2.21% and pre-tax profit by 28.3%.

In addition, the firm gets corporation income tax (CIT) incentives for its new drug manufacturing and packaging plant, with a total CIT allowance of VND48.48 billion (US$2.2 million) in the fourth quarter, up from VND18.53 billion (US$842,270) in 2015.

2016 was also a successful year for Vietnam’s third-largest domestic drug maker Domesco (DMC), of which CFR International SPA, a subsidiary of the US-based Abbott Laboratories, is the largest foreign shareholder – owning 51.7%.

The firm saw net profit and revenue rise 18.04% and 4.5% to VND168.5 billion (US$7.66 million) and VND1.29 trillion (US$58.6 million), respectively.

Buoyed by their 2016 profits, these drug markers have higher business targets for 2017.

TRA plans to operate its new plant in 2017 and aims to increase its market capitalisation to VND10 trillion (US$454.54 million) by 2020, while DHG aims to increase its net revenue by 15% per year on average to reach over US$300 million by 2020.

“We will boost co-operation with foreign partners, including those from the US and the Republic of Korea, to expand our distribution network and become Vietnam’s biggest generic drug maker, accounting for the highest market share in terms of locally-made drugs,” a DHG official told VIR.

According to a report released in early December 2016 by Quintiles IMS Institute, “Outlook for Global Medicines through 2021”, Vietnam’s average pharmaceutical spending  per capita in 2021 is projected to be US$55-60 annually,  higher than the other seven emerging economies listed, including the Philippines, India, and Indonesia.

Jan Rask Christensen, senior director of Pharma Group – a Sector Committee under EuroCham – told VIR that “Vietnam remains an attractive market for our 22 global members. The country seems to be well on its way to becoming a regional hub for innovative pharmaceutical manufacturing in the not-too-distant future.”

With the positive forecast, foreign investors are now awaiting the removal of foreign ownership limits (FOL) among leading pharmaceutical firms to expand operations in the local pharmaceutical market.

“Lifting the foreign ownership cap in the pharmaceutical industry would send another positive signal to foreign investors. A clear path in converting partnerships into majority ownership would convince companies to invest more heavily in Vietnam,” said Pharma Group.           

Until now, with no move to scrap FOL from TRA, DHG, and Imexpharm (IMP), DMC remains the only Vietnamese pharmaceutical firm to remove FOL.

Mời quý độc giả theo dõi VOV.VN trên

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