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'Vietnam a huge business opportunity for India'

Mumbai, Oct 13 (IANS) Inviting Indian business and technical expertise in various sectors, Vietnamese President Truong Tan Sang Thursday said the demand for material and machinery is high in his country and that there is a huge potential for Indian businesses in Southeast Asia's fastest growing economy. Truong invited Indian expertise in sectors like healthcare, oil and gas, manufacturing, agroindustry, pharmaceuticals, automotive, IT, shipping and ports, electrical consumer appliances, education and road infrastructure. 'The demand for material and machinery is very high with a huge export potential for you. Indian businesses need to learn more about the situation in Vietnam so they can profit from it,' he said while speaking at a business forum. Organised by the Confederation of Indian Industry (CII), the Vietnam-India Business Forum was attended by captains of industry of both the nations who gathered to discuss mutually beneficial business partnerships. 'Beginning 2010, Vietnam has implemented a 10-year-long modernization policy which has thrown open the need for products and services worth hundreds of millions of dollars. India with a long-standing expertise in almost every one of those field, can take advantage of the same,' Truong said. At the same time, he also stressed on the urgent need for information exchange between the two countries. Stressing on Vietnam's emphasis on development that led to business friendly policies like a reduction of corporate tax, greater freedom to private enterprise, emphasis on exports, production of consumer goods and encouragement to foreign investments, the president called upon Indian companies to avail the preferential policies of his government to promote investment in his country. Farhad Forbes, past chairman, CII (Western Region) and Director Forbes Marshall, put the IndiaVietnamese business ties into statistical perspective. 'Bilateral trade with Vietnam stands at close to $4 billion, ten times more than what it was in 2000. Vietnam's exports to India crossed $1 billion in 2010-11, a jump of 92 percent over the previous year and India's exports to Vietnam also increased to $2.6 billion,' he said. Forbes also said that he expected bilateral trade between the two countries to cross $7 billion by 2015.

Vietnamese Deputy Prime Minister Nguyen Xuan Phuc, in his keynote address, said that his nation's image in the international community has changed drastically in recent times. 'Vietnam and India have a time honoured tradition of friendship. The two nations trust each other. And though India is one of the top 10 business partners of Vietnam, bilateral business is much below potential. The need is thus for strategic partnership and economic relations will receive the highest attention from us,' Nguyen said. Later, Truong called on Maharashtra Governor K. Sankaranarayanan and reiterated that Vietnam and India have always had a warm and friendly relationship and that the two countries have emerged as the fastest growing economies. Mentioning that he had undertaken the visit to India to strengthen the tradition of friendship and to enhance strategic co-operation, the president said he wanted to take the relationship to new heights. Welcoming the Vietnamese president to Maharashtra, the governor expressed the hope that Truong's visit to India will further strengthen multi-lateral relationship between the two countries. He also expressed the desire to encourage cooperation in the field of higher education between India and Vietnam. Undeterred by Beijing's objections, India and Vietnam Wednesday sealed in New Delhi an accord for oil exploration in the South China Sea and signed half a dozen pacts, including an extradition treaty, to expand their strategic partnership. India and Vietnam also launched a security dialogue and set a bilateral trade target of $7 billion to add more economic heft to their growing relationship. In a subtle message aimed at Beijing, whose relations with Hanoi are under strain over a host of issues, Prime Minister Manmohan Singh called India's strategic partnership with Vietnam 'a factor of peace, stability and development' in the Asia-Pacific region. However, he added that the relationship stood 'on its own merits'. In an important step, state-run Oil and Natural Gas Corp's overseas investment arm OVL signed a three-year agreement with PetroVietnam for developing long-term cooperation in the oil sector in the presence of Manmohan Singh and Truong. The pact covers new investments and strengthening presence from drilling-to-dispensing in Vietnam, India, and other countries, ONGC said in a statement in New Delhi.

Vietnam: Boosting its domestic pharmaceutical industry

Rising presence of health issues such as gastrointestinal problems in the country is creating a huge demand for drugs.

Posted on 27 January 2012 by Yamunah Kandasamy

Vietnam: Boosting its domestic pharmaceutical industry 1 Rising presence of health issues such as gastrointestinal problems in the country is creating a huge demand for drugs. Demographically, 2 Vietnam has a large and young population, estimated to be the eighth largest population in the Asia Pacific region by 2016. 3The elderly population is rising slowly, and will remain as one of the lowest proportions in the Asia Pacific region. 4 Rising drug consumption and government investment make Vietnam an attractive pharmaceutical market. 5There are around 171 pharmaceutical companies in Vietnam, out of which 9.0 percent are owned by foreign investors and 4.0 percent are joint ventures. 6About 28.0 percent of them have the Global Manufacturing Practice (GMP) certification. Local pharmaceutical production was valued at nearly US$920 million and met 48.0 percent of the nation's needs. Imported drugs account for the remaining 52.0 percent. 6 According to Deputy Minister of Health, Cao Minh Quang, improving the domestic pharmaceutical industry would be the health sector's utmost priority in the coming years in order to satisfy 70.0 percent of the nation's demand by 2015. Health ministry statistics show that the value of the nation's total medicine consumption reached almost US$1.9 billion last year. The Ministry of Health forecasts that the size of the Vietnam pharmaceutical market will exceed US$2.0 billion and annual growth will reach between 17-19 percent in 2011. In 2010, about 22.0 percent of the population was affected by gastrointestinal (GI) related problems in Vietnam. Such a high percentage of population suffering from this condition could be due to the fact that people in Vietnam are increasingly leading a busy and stressful lifestyle. With the hectic lifestyle, they have less time for balanced meals and exercise. People use more takeaway food deliveries, and many young urban consumers eat at their desks at work. All of these habits led to more digestion related problems and gradually aggravates to more GI related issues. Alcoholism appears to be another serious cause of increase in gastrointestinal problems in Vietnam. Statistics from the Vietnam Beverage Association shows that 5.0 percent of citizens and 3.0 percent of mountaineers are alcoholics out of total population of 89,571,130 in 2010. According to Dr Pham Thi Thu Ho, VP of The Vietnam Association of Gastroenterology, the Gastrointestinal Department in Vietnam hospitals have been burdened with male patients having trouble with their livers or galls due to overconsumption of alcohol. Types of drug treatments The availability of GI services in Vietnam is relatively high and it is expected to be offered in 86.9 percent of hospitals. Only a small percentage of doctors prefer the endoscopy procedure while the majority prefers to prescribe patients oral medication. Various drugs are available in

Vietnam for GI related problems. Of the drugs in the market, 45.0 percent are generic, 30.0 percent are over-the-counter (OTC), and the remaining 25.0 percent are patented. They are mostly classified into anti-diarrheal, anti-ulcer drugs such as H pylori agents, H2 antagonists, prostaglandins and proton pump inhibitors. Other categories include GI anticholinergics, antispasmodics, GI motility drugs and laxatives. Drugs in GI opportunities and concerns Vietnam's US$1.9 billion medicine consumption market represents a good opportunity for medium to high return market for drug makers. Demand for medicines is supported by a thriving economy, political stability, growing private consumption and health insurance. Despite a low per capita spending, some research suggests that market growth could have a CAGR of 14.6 percent against the governments estimate of 17-19 percent. With 22.0 percent of the population affected by GI related cases in the country, and considering the fact that each person affected by GI may have to receive a dosage of oral drugs at various stages; this would boost the demand for drugs used for treating GI conditions. Since the country is depended on 52.0 percent of imported drugs, the devaluation of its currency (dong) is a major area of concern. The prices of pharmaceuticals are rising again in Vietnam. It costs more for importers to purchase raw materials and finished drugs. This is causing concern for patients that are already dealing with constant inflationary pressures, predominantly affecting essential items. Higher prices are then passed on to wholesalers, retailers and ultimately the end users. Future outlook The Vietnam government will be consolidating and modernizing existing hospital pharmacies in Ho Chi Minh City in the period up to 2020. Each province will also have additional provincial hospitals to ensure that there will be one hospital with a pharmacy. Other plans to develop Vietnams pharmaceuticals includes boosting the manufacturing of essential drugs in order to cut prices, stabilise the market and reduce the countrys dependence on foreign pharmaceutical imports. Other targets include increasing investment in scientific research and technological application and expanding co-operation with foreign pharmaceutical companies for efficient drugs. Foreign enterprises will be allowed to import medicines from abroad. However, they will distribute through Vietnamese distributors. Vietnam has pledged to set import duties at less than 5.0 percent for pharmaceutical products. In addition, drug tariffs are expected to average at 2.5 percent within five years of WTOs accession. Even though Vietnams health care service space is dominated by public sector, there are a significant percentage of people that spend out-ofpocket expenditure on availing treatment. The growing healthcare insurance in the country, combined with private spending provides a conducive environment for both pharmaceutical companies and hospitals to offer more products and services in Vietnam.


Market profile Doing business

Visiting Austrade assistance

Health and medical to Vietnam

(Last updated: 8 Jul 2011)

Trends and opportunities The market

Vietnams healthcare system remains largely underdeveloped and both the number and quality of hospitals, clinics, and doctors have not kept pace with Vietnamese societys needs or expectations.

Current challenges Challenges in Vietnams healthcare sector include:

Most Vietnamese seek initial and rudimentary medical treatment at public hospitals clogging an already overcrowded system High child mortality and other national health issues HIV/Aids, Hepatitis B & C infections, liver cirrhosis, lung disease and asthma are all on the rise High incidence of deaths related to road accidents Overcrowded facilities (particularly in pediatric wards) Outdated medical equipment Low salaries for healthcare professionals Insufficient government subsidy

The Vietnamese Government provides funding to the countrys healthcare system, however funding is comparatively low by ASEAN standards, with per capita spending on health in Vietnam below that of other ASEAN countries such as Malaysia, Indonesia and the Philippines. Overcrowding in Vietnamese hospitals is a significant issue with it not being uncommon in some poorer state-run hospitals for two or three patients to share one bed. Most of the best health workers are concentrated in the larger hospitals in Ho Chi Minh City and Hanoi. Healthcare units in these large urban areas are better equipped and have more modern equipment to provide health treatment that health centres in other provinces do not have. Given this disparity, Vietnamese from rural provinces will often seek treatment in these larger urban hospitals, compounding the problem of overcrowding. Vietnams pharmacies are severely unregulated and underdeveloped. There is an under supply of pharmacists in Vietnam and an oversupply of ill-regulated pharmacies, meaning patients are often given sub-standard over-the-counter (OTC) health advice. Almost all drugs are available without prescription and counterfeit drugs are not uncommon in some pharmacies. Given most antibiotics are available without prescription; a worrying trend is the increasing antibiotic resistance many Vietnamese are developing (recent tests show 70 per cent of the bacteria carried by urban Vietnamese are resistant to penicillin). Most Vietnamese have health insurance which is compulsorily contributed to by a small levy from both the employee and employer and the health insurance market is dominated by a state-

owned company, Bao Viet Insurance Corporation. Given the lack of competition in health insurance, the scheme is viewed as inadequate and ineffective in terms of meeting the health needs of a modern Vietnamese society and most health and hospital expenses still have to be met out of pocket. However, healthcare consumption is expected to increase as Vietnam gradually implements a universal healthcare system. Currently, 34 million Vietnamese are enrolled in a compulsory government health insurance plan. The government plans to expand the system so that it covers 100 per cent of the population by 2014.

Vietnams underdeveloped health sector and Vietnams demand for expertise as well as its favorable demographics and high growth rates, provide significant opportunities in various health sub-sectors for Australian exporters in health expertise, goods and services. Pharmaceuticals and nutritionals Vietnams pharmaceutical market has increased significantly and will continue to increase in the next few years. Despite this strong growth, the market size is still relatively small when compared to other ASEAN countries, largely due to the low per capita spend on pharmaceuticals each year (only around US$17 per person). Vietnams population of over 88 million should have a larger pharmaceutical market size, however has uniquely young demographics as a result of the Vietnam War. Nutritionals continued to see strong growth in current value terms, driven primarily by vitamins and dietary supplements as well as slimming products. Although growth was still some way short of the pre-millennial rates posted by nutritionals, particularly in vitamins and dietary supplements, it was still ahead of projections thanks to increasing consumer product awareness, improving living standards and rising health consciousness among the local population. There is still great potential in Vietnam and industry players will need to try and continue raising consumer awareness not only of the existence of these products, but also of the benefits that they offer. Tapping into the global health and wellness trend, where relevant, will also be a good way of promoting many of the products available in the nutritionals market. All areas of herbal/traditional products recorded increasing sales in the last two years, with herbal digestive remedies and herbal child-specific dietary supplements doing particularly well. Medical device Vietnams medical device market is estimated to be growing at a rate of about 10.3 per cent annually. This high growth makes the country an excellent prospect for long-term business. Compared with Japan and China, Vietnams regulatory system is less cumbersome to manufacturers in terms of the documents required, costs, and time frames. However, expertise is still required to navigate it successfully. There are four main classes of medical device purchasers. The largest is government-funded hospitals, which counts for 70 per cent of the market. Foreign-owned hospitals and clinics are also a significant destination; however, these entities usually purchase supplies from their sponsoring country. Local private hospitals will exhibit the strongest growth, while research and educational institutions will also account for some demand. Most government hospitals purchase medical devices though bidding, which is organised on a provincial or national level by the MOH, (government hospitals can directly buy medical devices by themselves if the amount is not exceed the limit of US$5,700) while private hospitals or clinics directly purchase those from local distributors. Foreign companies are not allowed to

submit a tender it can only be done via a local partner who will liaise with the organiser to submit the required documentation.

Competitive environment
The Vietnamese Government has a commitment to rapidly develop the health sector and improve the standard of its healthcare facilities. The government health system has already forged foreign partnerships with countries such as US, Belgium and Indonesia for assistance in improving health infrastructure, training and for research exchange and transfer. The government encourages private sector participation in the healthcare system, with French and US companies the dominant foreign players in the market. There are a growing number of international hospitals and clinics in the major urban centres such as the Franco-Vietnam Hospital in Ho Chi Minh City. Demand for better healthcare services from an increasingly wealthier Vietnamese population is driving this foreign health investment. Despite the increasing presence of international standard hospitals in Vietnams large urban cities, each year over 30,000 Vietnamese travel abroad to destinations such as China, Thailand and Singapore for superior medical treatment demonstrating that current health supply is not meeting demand.

Tariffs, regulations and customs

Depending on the actual product, the import tariff could vary from 5-15 per cent (pharmaceuticals); 25 to 40 per cent (supplements) and 0-5 per cent for medical device. The VAT imposed from 5-10 per cent as normal rate. There is currently no legislation relating to vitamins or dietary supplements in Vietnam. These products must therefore follow the regulations covering pharmaceuticals in the country. The MOH only allows imported pharmaceuticals to be put on the domestic market after registration. It takes around eight months for registering a pharmaceutical/supplement product. Required documentary for pharmaceutical/supplement product:

Free sales certificate GMP Authorised letter Certificate of analysis Samples

As regulated by MOH, it takes 15 working days of receiving legal dossier but in fact, an import licence for medical device takes from six months or longer for registration depending on particular product. The dossier required for an import license is:

Original catalogue Instruction manual and technical guide, including specifications (originals and Vietnamese translations) Manufacturers quality certificate: either ISO 13485 or ISO 9001 certification or FDA/CE approval of the device manufacturing site Free Sale Certificate from country of origin Quality declaration letter

The MOH sets out stipulations for the packaging and labelling of medical products. These state that all drugs in Vietnam have to show clear instructions on their name and use, sideeffects, dosage, storage conditions and expiration date. These must be printed in Vietnamese on

the insert inside the package. The company license number, product batch number, import agent and expiration date must be printed on the outside or primary packaging. The monitoring of packaging and labelling is carried out by the Drug Administration Department of Vietnam (DAV), which is also responsible for granting and removing licenses for all medicines in Vietnam. The Ministry of Finance is responsible for price control of medical products. The Ministry of Culture and Information is responsible for the monitoring of medical product advertising. For the majority of OTC products advertising to consumers is only allowed through media such as advertisements in magazines and newspapers or leaflets.

Marketing your products and services Market entry

Vietnam is a suitable market for companies looking for business cooperation opportunities in the following forms:

Establishing foreign-owned (100 per cent FDI) hospitals, clinics or centres Setting up joint-ventures in medical training, technology transfer or medical device manufacturing with local companies, medical centres or medical universities Staff/program exchanges with local hospitals and medical universities Direct product export including in cosmetics, pharmaceuticals and medical equipment

Key challenges for exporters in the health sector include low (but increasing) consumer purchasing power, lack of health education and consumer awareness and the bureaucratic nature of Vietnams health system. The leading players in pharmaceutical/nutrition Plusssz Vitamin Kft, United Pharma, UPSA and Boehringer Ingelheim, UKs GlaxoSmithKline are all foreign companies. However, there are local firms operating in this market in Vietnam, with one of their key competitive advantages being their lower prices than the big multinationals. However, when local consumers can afford to buy multinational brands, they usually choose to do so as they feel that they offer a greater guarantee of quality. This is helped by the multinationals greater marketing expertise and bigger budgets for promotion and new product development. Producers of standard OTC healthcare will face more competition from herbal product players with the latter offering lower prices and improved product quality. Consumers will meanwhile benefit from better products becoming available at a cheaper price. More players are expected to invest in herbal/traditional products during the forecast period, particularly domestic players seeking a new niche. A flood of economy entrants is expected from China due to the opening up of trade in the wake of Vietnams WTO entry. Consequently, those domestic players that previously focused on low-priced generics will face strong competition. A shift into herbal/traditional products could therefore provide a lifeline for many players.

Distribution channels
For many consumers, chemists/pharmacies offer their only access to such products, particularly in rural areas, where retailing is generally underdeveloped. There are a huge number of chemists/pharmacies in the country, providing an effective distribution network across all regions. Consumers also value the expert advice on hand from pharmacists, who they trust to recommend the best product.

As the economy develops during the forecast period and living standards improve, distribution patterns are expected to change significantly. Drugstores/pharmacies are notably expected to become increasingly more important by the end of the forecast period. Chains are expected to emerge, with chained drugstores/pharmacies therefore expected to help drive the growth of sales of healthcare products into rural areas during the forecast period. Grocery retailers will also be looking to continue their expansion in Vietnam. Nevertheless, chemists/pharmacies are still expected to continue dominating distribution of products in the nutritionals market.

Links and industry contacts Government, business and trade resources for Vietnam
Department of Vietnam Customs Ministry of Health Official Sources Central Institute for Medical Science Information Trade Associations World Self-Medication Industry Vietnam Pharmaceutical Companies Association

Australian resources
Australian Self Medication Industry Complementary Healthcare Council Therapeutic Goods Administration

Contact details
The Australian Trade Commission Austrade is the Australian Governments trade and investment development agency. Through Austrades network of offices in over 50 countries, we assist Australian companies to succeed in international business, attract productive foreign direct investment into Australia and promote Australia's education sector internationally