Vietnam's biggest drug maker DHG to scrap FOL in early 2018

DHG will become Vietnam's second pharmaceutical to do away with the FOL

DHG's extraordinary annual general shareholders’ meeting held in late July approved the removal of the FOL. Shareholders also agreed to add real estate, travel agency services, and self-produced pharmaceutical business to its business lines from early 2018.

DHG now has Taisho Pharmaceutical Holdings, one of the five biggest pharma firms in Japan, as a big foreign shareholder with 24.5 per cent, followed by FTIF Templeton Frontier Markets Fund. State Capital Investment Corporation (SCIC) is the biggest stakeholder with 43.3 per cent.

In a recent interview with VIR, DHG said that the firm will focus on its advantages in sales systems and storage systems, meeting good distribution practice standards to expand the distribution of products to multinational corporations (MNCs), while co-operating with them in production stages.

The firm plans to partner with leading companies from the US and South Korea over the next few years, hoping to attain an average growth of 15 per cent in its net revenue annually—hitting $300 million by 2020—and become Vietnam's biggest generic drug maker.

On July 29, DHG announced increasing its chartered capital to VND1.307 trillion ($59.4 million) by issuing more than 130.74 million shares.

DHG will be the second Vietnamese pharma firm to remove the FOL, following the third biggest listed domestic drug maker Domesco (DMC).

Last September, DMC became a pioneer in the industry when it decided to remove its FOL. At the time, other pharma firms, including DHG, were gripped by fear of being acquired.

Foreign pharma groups see the FOL removal as a positive signal. A clear path in converting partnerships into majority ownership would provide companies with much stronger grounds to convince their global headquarters to invest in Vietnam.

Right after DMC scrapped its FOL, US-based Abbott Laboratories increased its stake in DMC to 51.7 per cent, boosting its footprint in the local pharma market.

Taisho has already shown interest in raising its ownership in DHG, which has a nationwide network of 12 distribution affiliates and 24 branches.

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