How is medicine distributed in Vietnam?

The value of the medicine market in Vietnam was over $4 billion in 2015, while revenue is expected reach $10 billion by 2020.




Nguyen Minh Hoang, a Grab taxi driver, felt dizzy and drove the car to a drugstore, got the medicine, paid and left. Hoang, like the majority of Vietnamese, when feeling sick, usually go to drugstores and buy medicine to treat themselves.

This Vietnamese habit, plus the high population, make the country an attractive market for pharmaceutical companies and distribution chains.

According to BMI, Vietnam’s pharmacy industry has been seeing two-digit growth rates in recent years.

In 2016, the industry had a growth rate of 10.2 percent. If considering the industry’s scale, its value exceeded the $4 billion threshold in 2015.

IMS Health predicted that Vietnam’s medicine revenue would increase to $10 billion by 2020, though current spending on medicine is still modest, at $41 per head per annum, lower than Malaysia’s $54, Thailand’s $64 and Singapore $138.

BMI estimates that Vietnam’s medicine consumption will reach $7.27 billion by 2019, which means annual13.4 percent growth rate.

In the immediate time, the opportunities for drug retailing are only reserved for domestic companies.

Under WTO commitments, foreign manufacturers and distributors can bring medicine to Vietnam, but they are not allowed to retail medicine products.

However, the drug retail market is bustling with the presence of tens of thousands of traditional drugstores throughout the country run by pharmacists, and modern drugstore chains, such as Phano, My Chau, Eco, Pharmacity, Vistar and Phuc An Khang.

Analysts commented that traditional drugstores hold an advantage over modern chains because they are present everywhere in large cities and rural areas.

As this model has been present for a long time, it has become familiar to the majority of people.

Meanwhile, regarding the investment rate, the cost to open a traditional drugstore is just equal to half or two-thirds of the cost to open a modern one. This is because investors may ignore the requirements on minimum areas, equipment, medicine preservation conditions and technology application to record transactions.

An expert affirmed that no traditional drugstore strictly follows all the requirements set by the Ministry of Health. In some cases, the stores sell medicine with no clear origin and expired products. This allows them to make big profits.

However, MOH has vowed to clear the drugstores which cannot satisfy GPP standards. This will be an opportunity for modern drugstores to boom.

Kim Chi / vietnamnet