Pharmaceutical market abuzz with activity

The recent extraordinary general shareholders’ meeting of Medipharco JSC (MTP) have approved the plan to merge with the joint venture Medipharco Tenamyd BR SRL (MTBR) in an attempt to restructure the company’s operations, augment the two companies’ existing brands, and ensure unity in corporate governance.

The merger will take place via the stock swap method. Accordingly, MTP will issue additional shares to swap for MTBR stock from other shareholders at a 1:1 ratio. After the merger, Medipharco will inherit all of MTBR’s existing business lines.

At the same time, Imexpharm JSC (IMP) is divesting from S.Pharm, while simultaneously buying into Agimexpharm (AGP).

Accordingly, IMP will transfer its entire 1.25 million shares at S.Pharm to one individual at the face value of VND10,000 (US$0.43) apiece and spend about VND10.6 billion (US$460,870) on buying nearly 1.06 million shares of AGP.

IMP holds around 3.2 million AGP shares. The company’s intended purchase of AGP stock comes in the wake of the latter’s plan to issue additional stocks to existing shareholders at a 3:1 ratio.

In another case, Nguyen Kim Investment and Development JSC (Nguyen Kim Holdings) is set to purchase more than 2.1 million shares, equal to 27.14% stake, in Lam Dong Pharmaceutical JSC (Ladophar) at an estimated price of VND23,500 (US$1.02) apiece.

Nguyen Kim Holdings already holds 24% of Ladophar. After the deal, the company’s ownership in Ladophar will surpass 51%, turning the latter into its subsidiary.

The transaction is expected to take place between November 30 and December 30, 2018. After the acquisition, Nguyen Kim will develop the core business lines of the pharmaceutical company, including oriental medicine production, commercial medicines, medical equipment, and importing drugs.

The pharmaceuticals market sees robust appetite for M&A deal-making, as evidenced by Vingroup’s recent move of inaugurating a chain of 11 drugstores under the VinFa brand across Hanoi.

In April 2018, the leading private conglomerate had launched the project to establish the VinFa drug research and production centre in Gia Binh district in the northern province of Bac Ninh.

Before Vingroup, Mobile World Group and FPT Retail jumped into the distribution of drugs, with the former investing in the Phuc An Khang drug chain and the latter in Long Chau Pharmacy.

The pharmaceutical market also anticipates several incoming investors as the State Capital Investment Corporation (SCIC) plans to divest from a raft of businesses in the industry, such as Hau Giang Pharmaceutical JSC (DHG), Traphaco (TRA), and Domesco by 2020.

According to Business Monitor International (BMI) data, the revenue of the Vietnamese pharmaceutical market was US$5.2 billion last year and is forecast to reach US$7.7 billion in 2021.

The demand for pharmaceutical products in Vietnam has expanded rapidly due to high economic growth, rising per capita incomes, and the growing population.

Per capita spending on drugs increased from US$9.85 in 2005 to US$22.25 in 2010 and US$37.97 in 2015, and is expected to reach US$85 in 2020 and US$163 in 2025.

The average annual growth of drug expenses was 14.6% in 2010-2015 and is expected to maintain an annual growth of at least 14% until 2025.