Vietnam turns up its nose to domestic drugs

Consumer predilections for foreign drugs are turning Vietnam away from its own cheap meds

Vietnamese drugs on display at a pharmaceuticals exhibition in Ho Chi Minh City. Vietnam imports more than half of its drugs for domestic use.

Despite lower prices, locally-made pharmaceuticals became even less competitive this year than imported ones. Experts attribute the growing deficit to poor advertising and the domestic drug industry’s limited capacity to produce specialized medicines.

According to the Ministry of Health, locally-made pharmaceuticals accounted for 46 percent of domestic consumption in the first half of this year, compared with 50 percent in 2009.

With 180 plants nationwide, Vietnam continues to import up to 90 percent of material for pharmaceutical production and more than half of its drugs for domestic use.

Although the prices of domestically-made drugs are 60-80 percent cheaper than their imported competitors, they aren’t sold as widely. At a recent meeting, the Deputy Minister of Health, Cao Minh Quang, said consumer preferences for imported products and local producers’ thin investments have made Vietnamese pharmaceuticals less competitive at home.

Local pharmaceutical firms are allowed to put aside 10 percent of their revenues for advertising, while foreign investors can spend as much as 30 percent.

“My two small children are often ill with sore throat, bronchitis and pneumonia,” said Le Thu Trang, 33, from Hanoi. “However, I seldom buy local drugs. Patients recover more quicky on imported medicines.”

Like Trang, many people opt for imported medicines and only turn to local drugs to treat common ailments like cough, flu and headache.

Meanwhile, doctors also prefer prescribing imported medicines. “Doctors at state-owned hospitals and private medical practices never prescribe locally-made drugs for my children even when they have sore throats.”

Doctor Bui Thu Huong from the Central Pediatric Hospital said doctors prescribe drugs regulated by the hospital’s medicine council. “However, the percentage of Vietnamese drugs prescribed by the doctors is not high.”

According to a survey conducted by the Vietnam Social Insurance, the national organization that handles the state’s insurance fund, spending on imported drugs accounts for 60 to 80 percent of pharmaceutical expenditures at national hospitals.

Huong explained that imported drugs are more varied than local ones, and more friendly to child patients. “Many drugs manufactured in Europe and the US are liked by children due to their good flavor.”

Nguyen Thi Hanh, a pharmacist on Truong Dinh Street, said only 30 percent of the hundreds of drugs in her store are locally-made products. Although her shop is located in a low or middle-income neighborhood, imported drugs sell better than domestic ones.

Local health experts say drugs are a special item, which can be used only with a doctor’s prescription. To increase their sale in the domestic market, local pharmaceutical firms should demonstrate that their products, with lower prices, are as good quality as the same imported ones.

The country spent $932 million on importing pharmaceutical products, mainly from the US, France, India and South Korea, in the first nine months of 2010, a year-on-year increase of 17.5 percent, according to the General Statistics Office.

Gedeon Richter keeps eyes on Asia

Hungary-based pharmaceutical company Gedeon Richter may develop a manufacturing base in Asia and Vietnam might be one of the firm’s choice.

Gedeon Richter in Vietnam chief Ritter Tamas made the announcement during the anniversary of 55 years in Vietnam.

“We have had many manufacturing negotiations in the recent years in Asia, but not concluded an agreement yet,” said Tamas.

Currently, the top 20 eastern European manufacturer of generic pharmaceuticals in Research and Markets’ ranking is doing development and research in Europe only and has mostly built its manufacturing facilities there.

Last few years, the firm found good alternatives for investment in the Asian region for its manufacturing. However, the firm have not met any good choice till now.

Tamas said Vietnam was Gedeon Richter’s second largest market in Asia.

Last year, the foreign pharmaceutical company earned some $16 million in local sales in Vietnamand sales in 2010 are expected to jump by 15 per cent.

Hungary’s ambassador to Vietnam Vizi Laszloalso highly appreciated the firm’s relation and cooperation in Vietnam.

Laszlo hoped for more trade and investment cooperation between Vietnam and Hungary in new fields such as energy, information technology, mining, infrastructure development and environment protection.

Bilateral trade turnover between Vietnam and Hungary hit $91 million in 2009 despite the global economy crisis.

“Furthermore, the excess of imports over exports of Hungary to Vietnam have been improved. An increase of 23 per cent in Hungarian exports to Vietnam in the first half of 2010 demonstrated this trend,” said Laszlo.- Thanh nien, VIR

Tags: Vietnam Drug industry