Vietnam accelerates high-tech pharmaceutical race

Vietnam accelerates high-tech pharmaceutical race

After a strong 2023, pharmaceutical-sector growth slowed last year due to challenges such as fluctuating raw material prices, weakened purchasing power, and heightened competition, especially in the first half. However, pharmaceutical stocks have rebounded strongly so far this year, indicating a promising outlook.

Pharmaceutical stocks saw notable gains on February 11, with Imexpharm Pharmaceutical JSC (IMP) hitting a peak of VND49,650 ($1.95) per share. Over the preceding 12 months, IMP’s stock had surged more than 67 per cent, with an average daily trading volume exceeding 100,000 shares.

The rise in pharmaceutical stocks has been predominantly driven by merger and acquisition activities with international pharmaceutical corporations. Investors are closely watching IMP, anticipating potential shifts in its major shareholder structure.

A medicine packaging facility at IMP’s EU-GMP factory

Vietnam’s pharmaceutical sector stands to gain from new bidding policies this year that favour domestic companies that meet EU-GMP standards. The Ministry of Health has issued Circulars 03/2024 and 07/2024, stipulating that if at least three domestic manufacturers of Group 1 and Group 2 drugs meet EU-GMP or equivalent standards and fulfill certain criteria, including quality, pricing, and supply, imported drugs will not be eligible for bidding.

According to last year's third quarter report by market research organisation IQVIA, high-tech, high-value pharmaceutical products, particularly vaccines, are driving market growth. The report indicates a compound annual growth rate of 10.4 per cent per year from 2022 to 2024, with on-year growth of 9 per cent. The report further highlights that domestic pharmaceuticals account for 42 per cent of the market, while imports still dominate with 58 per cent.

This scenario presents a significant opportunity for local companies to enhance production capabilities, invest in technology, and elevate quality to international standards. By doing so, they can compete effectively with imports and strengthen their position in Group 1 and Group 2 bidding, gradually replacing foreign medicines in the market.

Workers at an IMP factory

Optimising research and development

Among listed companies, Imexpharm leads with three EU-GMP-certified factory clusters and 12 EU-GMP-certified production lines. Its deep investment in research and development (R&D) and high-tech pharmaceuticals has driven its sustained growth, outperforming many other major players. According to its 2024 financial report, Imexpharm remains the leader in the antibiotic market and ranks among the top three in hospital bidding channels.

Investment in technology and R&D has empowered the pharmaceutical industry to innovate and develop new products that cater to demographic shifts, evolving disease trends, and long-term growth. Fitch Solutions projects that Vietnam’s pharmaceutical market will reach $16.1 billion by 2026, driven by rising pharmaceutical spending per person as income levels improve and public health awareness increases.

Despite the growth prospects, pharmaceutical companies continue to face significant challenges. The revised Pharmaceutical Law has intensified competition with multiple registration numbers for a single active ingredient. Product life cycles in the market are short, while R&D investments remain substantial. As a result, innovation remains a key pillar of IMP's strategy for sustaining growth through high-tech pharmaceutical products.

In 2024, the company launched 24 new products and 98 ongoing R&D projects. The company has also expanded its European market presence with 28 marketing authorisations covering 11 products, strengthening its foundation for global expansion. IMP is making a strategic shift towards high-value products this year, particularly injectables and dispersible tablets, aligning with global pharmaceutical industry trends.

A part of the manufacturing system at an IMP EU-GMP factory

IMP reported net revenue of VND2,205 billion ($86.5 million) last year, marking a 10.6 per cent increase from 2023. This was driven by a strong expansion in the ethical drugs channel, and a broader injectable drug portfolio. Additionally, persistent sales efforts in the over-the-counter channel helped the company maintain stability despite stagnant retail market growth among domestic companies.

Speaking about the company’s 2025 objectives, Tran Thi Dao, general director of IMP, said, "Imexpharm will continue investing in R&D and leveraging EU-GMP capabilities. We also commit to advancing special formulation technologies, developing bio-equivalent products, and beginning construction of the Cat Khanh Pharmaceutical Complex. With these initiatives, we aim to meet market demand, elevate our position in the high-value pharmaceutical segment, and secure a competitive advantage in bidding processes."

VIR