T NG Quan Ngành

1.
Industry Overview and Competitive Positioning

a. Key growth drivers of the Pharmaceutical Industry (Động lực phát triển)
The pharmaceutical industry is responsible for the research, development, production, and
distribution of medications. It is a massive and growing industry because of its unique and
distinct characteristics.
 Solvent and Inelastic Demand: The demand in the healthcare and medications market is
solvent and inelastic. It is not influenced significantly by unfavorable external factors
such as inflation. According to IMF, in recent years, many countries contend with high
inflation rates and commodity prices due to climate shocks and the pandemic disrupted
food and energy production and distribution. While people put off buying new clothes or
spending on leisure activities, medication falls into the necessary spending. Besides,
according to Forbes, in developed countries, such as Germany, it is mostly the state's or
public insurance companies’ obligation to fund healthcare and pay for prescription drugs
instead of the consumers’. This can ensure the growth of demand in the healthcare and
pharmaceutical Industry.
 Aging Population: according to United Nations in World Social Report 2023, the
number of persons aged 65 years or older worldwide is expected to double over the next
three decades, reaching 1.6 billion in 2050, when older people will account for more than
16 percent of the global population. An aging population requires more demand for the
healthcare sector since old age is associated with more chronic health conditions. This
will mainly benefit producers of specialty products and medicines for chronic conditions
and manufacturers of generic drugs. This is the case for the majority of Europe and North
America, as well as Asia-Pacific, particularly Japan and China.
 Government regulations and policies: There are policies and regulations around the
world that can have a positive impact on the sector´s performance and growth in the
coming years. For example, the EU Commission is proposing to revise the EU’s
pharmaceutical legislation, which includes the strategic importance of API production in
Europe. In some Asian countries, such as India, the government has announced a large
incentive scheme to boost local API production and compete with China. With the
Volume-based Procurement (VBP) policy and the National Reimbursement Drug List
(NRDL), China has overhauled its healthcare system. Global and domestic drug
producers have to compete to sell their products in bulk to public hospitals.
 The increasing in M&A activities: Mergers and acquisitions in the pharmaceutical
industry enable companies to expand their operations, increase their market share, and
gain access to new technologies and products. The total healthcare M&A transaction
value was $250 billion in 2020. In 2021, It increased to $436 billion, i.e. almost 56%
more. And according to White & Case, in 2022, the total value of M&A healthcare deals
was $375.1 billion. Pfizer’s purchase of Seagan at 46B USD on a global scale, while on
the regional front KSA based AJA Pharma signing a MOU with UAE’s Bioventure FX-
LLC to license and supply new pharmaceutical products are a few examples.
 Population growth: The current world population is about 7.7 billion people. It’s
expected to reach 9.7 billion by 2025. Therefore, pharmaceutical companies will have to
provide services for more and more people.
 Longer life expectancy: Globally, life expectancy has improved from 46.5 years in 1950
to 71.7 years in 2022. It leads to the growth in the consumption of healthcare and
pharmaceutical goods.
 Good access to external financing: Since the industry in general has robust equity,
solvency and liquidity. Pharmaceutical producers and biotech businesses across the world
largely enjoy good access to external financing from banks and investors, which helps
to sustain high R&D expenditures.
 Increasing M&A activities: The pharmaceutical industry is characterized by its heavy
dependence on the research and development of new drugs. Hence, recent years
witnessed an increase in the number of M&A activities in the healthcare and
pharmaceutical sectors. Mergers and acquisitions in the pharmaceutical industry enable
companies to expand their operations, and gain access to new technologies and products.
The total healthcare M&A transaction value was $250 billion in 2020. In 2021, It
increased to $436 billion, i.e. almost 56% more. And according to White & Case, in
2022, the total value of M&A healthcare deals was $375.1 billion. Pfizer’s purchase of
Seagan at 46B USD on a global scale, while on the regional front KSA based AJA
Pharma signing a MOU with UAE’s Bioventure FX-LLC to license and supply new
pharmaceutical products are a few examples.
https://www.imf.org/external/pubs/ft/ar/2023/in-focus/cost-of-living-crisis/
file:///C:/Users/HP/Downloads/2023wsr-fullreport.pdf
Global+Pharmaceuticals+Outlook+2023.pdf
https://mnacommunity.com/insights/ma-in-healthcare/
a. Overview of Pharmaceutical Industry in the world:

According to a report titled Global Medicine Use 2023 – Outlook to 2027 by IQVIA
Institue,
 The global pharmaceutical industry is increasing at a compounded annual growth
rate of 6.1% from 2018 to 2022 and is estimated to still be growing but at a lower
CAGR of 3-6% in the upcoming years, reaching 1,9 Trillion in 2027.
 More specifically, as an effect of the Covid pandemic, the spendings on medicine
grew sharply in 2021 but then slow in demand in 2022 as some of the usage was
related to temporary shifts in demand.
 Overall growth trends in upcoming years are expected to moderate after the
disruptions from the pandemic in 2020 through 2022.
 The key drivers of growth through the forecast period include the contribution of
new products, the impact of patent expiries and the growing impact of biosimilars.
 D e v e l
account for the highest percentage of the market share in the sector with
approximately 73,4% of the total global medicine spending in 2022.
 The main growth driver of the world pharmaceutical industry comes from the
group of 22 pharmerging countries, including Vietnam, although it only accounts
for 25% of the total global medicine spending in 2022. The CAGR (Compounded
annual growth rate) of this group in the period 2018 - 2022, is 7,2% per year,
higher than that of Developed countries. (Average consumption output per capita
People in this group only take approximately 1 dose of medication per day,
compared to 4 doses in developed countries -phần này tìm lại thông tin).
 During the same period, it can be seen that orginal brand products account for the
most part of the pharma global market share with a growth rate of 6.6% in
developed countries and 9,2% in Pharmerging countries. The use of non-original
brands, however, made up a smaller part of the market share but had a higher
growth rate of 7.6% in Developed countries and a lower rate of 5 % in
Pharmerging countries
 In the upcoming years, the Pharmerging countries are still expected to be the main
growth driver of the pharmaceutical industry at a CAGR of 5 – 8%. Thus, the
original brands will remain the product type that people spend the most on.
https://www.iqvia.com/-/media/iqvia/pdfs/institute-reports/the-global-use-of-medicines-
2023/iqvia-institute-global-use-of-medicines-2023-report-01-23-forweb.pdf
b. Overview of Pharmetical Industry in Viet Nam

 According to IQVIA institute, Vietnam is listed as one of the 22 pharmerging
markets, which is the group that has the highest CAGR in recent years.
 BMI Research forecasts that the value of Vietnam's pharmaceutical market will
increase to 16.1 billion USD by 2026, with a compound growth rate of up to 11%.
According to research, Vietnamese people are spending more and more on
medicine, on average a person spends about 6.7 USD on medicine, and this
number has increased tenfold by 2021. This is due to an aging population in Viet
Nam, higher spending on healthcare, larger health insurance coverage, and higher
average life expectancy.
 The trend of M&A between domestic and foreign pharmaceutical enterprises is
happening both in the field of production and distribution. The implementation of
M&A contributes to helping Vietnamese businesses have more capital, technology
and high-quality human resources towards higher quality product lines (such as
EU-GMP, PIC, ...). One of the most recent acquisition in Viet Nam is that
Dongwha Pharm, reported by Korean Business, has spent VND720 billion, to
acquire 51 percent of Trung Son Pharma shares, a company running the largest
drugstore chain in the western part of the southern region.
 Many South Korean investors have recently injected big money into pharmacies,
considered a sector with high potential in Vietnam, while American and Japanese
pharmacies have been present here for many years. Currently, most Vietnam’s
leading pharmaceutical companies, such as Hau Giang Pharmacy (DHG),
Domesco (DMC), Traphaco (TRA), Imexpharm (IMP), Pymepharco (PME), have
foreign strategic shareholders. The foreign ownership ratios in some of the
companies are over 51 percent.
 The pharmaceutical industry is receiving attention from the government and
ministries for development. In 2021, the Ministry of Health passed a draft
approving the national strategy for developing Vietnam's pharmaceutical industry
for the period to 2030 and vision to 2045.
https://vietnamnet.vn/en/south-korean-tycoons-compete-with-vietnamese-billionaires-in-
16-billion-market-2177982.html
https://vietnamcredit.com.vn/news/vietnams-pharmaceutical-industry-challenges-and-
opportunities-in-2023_14975
https://hanoitimes.vn/vietnam-pharmaceutical-production-to-become-more-research-
based-industry-fitch-solutions-316560.html
https://cafef.vn/nganh-duoc-2023-va-trien-vong-den-tu-traphaco-
188230517093625931.chn
Competitive positioning (T đang làm bổ sung phần này nhé):

https://www.investopedia.com/articles/markets/051316/industry-handbook-pharma-
industry.asp#:~:text=The%20analysis%20looks%20at%20five,competitive%20rivalry
%20in%20the%20industry.

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1.

Industry Overview and Competitive Positioning

a. Overview of Pharmaceutical Industry in the world:

b. Overview of Pharmetical Industry in Viet Nam

Competitive positioning (T đang làm bổ sung phần này nhé):

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