Innovating Vietnam's pharmaceutical sector

April 21, 2022 | 14:33
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Traphaco JSC not only posted positive business results in 2021 but also registered an impressive momentum in the first quarter with an expected after-tax profit of $3.6 million, an increase of 50 per cent compared to the previous year. The pharmaceutical firm also makes shareholders and investors highly appreciate its progress in innovation and creativity, especially its corporate restructuring strategy.

Traphaco continues to reinforce its leading position. The governance model of the company assists the less developing segments. Traphaco has been paying more attention to developing the non-pharmaceutical segment, creating more room for development in the future.

Its dual strategy focuses on developing oriental medicine and non-traditional medicine, making significant changes in its value chain. It will take advantage of its traditional medicine to produce non-traditional products.

Nguyen Anh Tuan, vice president of Traphaco said, the restructuring process requires employees to have management qualifications, a business understanding, a long-term vision, and insights into the governance model. They will implement shareholder-approved initiatives as well as change the model without disrupting corporate culture values, allowing them to meet strategic goals swiftly.

After realising the crucial need to make changes, Traphaco has stepped up its game. The company established two research and development (R&D) departments for oriental medicine and non-traditional medicine and heavily invested in them. Meanwhile, the sales and marketing department has a wide coverage to contribute ideas to the R&D departments, promoting the development of new products.

“The company has set a new record in developing new products in the first quarter of 2022. It has rolled out seven new products to meet the healthcare needs of customers, including Formenton Premium, Trathiol, Methorphan Bee throat spray, and T-B salt," said Dao Thuy Ha, deputy director of sales and marketing at Traphaco.

Innovating Vietnam's pharmaceutical sector

In addition to new pharma products, Traphaco continued to refresh its portfolio of oriental medicine products. In particular, the Cordyceps Traphaco capsule has been well received by customers.

Speaking to shareholders at the annual general meeting (AGM), Chung Ji Kwang, chairman of Traphaco's board of directors stated, "Traphaco continues to be the market innovator of Vietnam’s pharmaceutical industry."

Traphaco's chairman said that the company continues to restructure in 2022, focusing on the non-traditional medicine segment. The pharmaceutical firm also invests in the upgrade of production lines, expands the product portfolio through R&D activities as well as strengthens technology transfer.

“Traphaco will formulate a plan to find successive leaders for the current board, transfer the power to the new leadership generation, and drive innovation among young and talented employees”, said Kwang.

Innovating Vietnam's pharmaceutical sector

Promoting the non-traditional medicine segment

Traphaco is focusing on the non-traditional medicine segment as a driving force for the company’s growth. In 2021, the company received technology from Korea Daewoong Pharmaceutical Group, one of South Korea's top three pharmaceutical firms with an annual turnover of over $1 billion.

Daewoong has a diverse portfolio of innovative pharmaceuticals, biological drugs, and stem cell technology, with eight factories and five modern research centres. Daewoong has been a shareholder of Traphaco since 2018. The South Korean firm is committed to becoming a strategic partner and collaborating with Traphaco on a broad scale.

Innovating Vietnam's pharmaceutical sector

According to the plan, Traphaco receives 70 products from Deawoong in 2021-2025 in cardiovascular, diabetes, and digestive medicine. Traphaco expects that the company will start to record revenues from the cooperation with Daewoong from 2022 onwards.

"Aside from the 70 specialised items for treating diseases with high demand in Vietnam, the group will broaden the list of cosmetics and functional foods in the third and fourth stages of the transfer," a Daewoong spokesperson said at the 2022 shareholder meeting. Daewoong's long-term goal is to transfer high-tech items to bring added value.

Despite the difficult goals, Traphaco is prepared to meet them. According to the analysis of Dao Thuy Ha for shareholders, Traphaco not only bids on drugs in hospitals but also has the potential to sell these products through a system of clinics prescribed by doctors. Medicines with a good therapeutic impact, reasonable pricing, and well-known brands will be the first option for patients.

Traphaco set a goal of manufacturing and processing at least 100 new goods within the next five years, generating a revenue of $25 million.

The pharma firm focuses on manufacturing modern medicines and promoting its products in hospitals and clinics through the prescription channel by doctors. Traphaco will transform its internal management system, encouraging the spirit of innovation among employees with worthy rewards and evaluation. Traphaco's leaders believe that the company can fulfil its strategy to achieve compound revenue growth of 13.3 per cent and before-tax profit growth of 15 per cent over the next five years.

In a report released on April 7, SSI Securities gave Traphaco a very positive review after attending the AGM in 2022. As a result, Traphaco will be able to achieve double-digit revenue growth in 2022, with a rising number of R&D and transferred products over time.

Since August, the stock price of Traphaco (TRA) has climbed by 28 per cent. SSI boosts its one-year target price for TRA to VND124,400 ($5.4) apiece, implying a potential upside of 24 per cent over the April 6 closing price.

Traphaco's current strong growth rate has created enormous confidence and optimism among shareholders and investors about the company's future.

By Thanh Van

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