More pharmaceutical firms want to remove FOL

Foreign investors’ increased participation is expected to boost the performance of local pharmaceutical firms

Accordingly, the company (PME) will host an extraordinary general shareholders’ meeting on October 19 to seek shareholders’ approval to set its foreign ownership limit (FOL) from the current 49 to 100 per cent.

At the company's general shareholders’ meeting in this May, it was reported that the company's major foreign shareholder, leading German pharmaceutical group STADA Arzneimittel AG, has received fresh capital injections from several investment funds and it might be looking to grow its presence in PME.

STADA currently holds 49 per cent stake in PME, which is the only production unit of the group in Vietnam. Market observers forecast that the move to remove the FOL in PME might be a step towards helping the foreign shareholder to boost its stake in the company at least to the 51 per cent controlling level.

Nearly 30 listed firms were reported to have ramped up their foreign investment cap to 100 per cent.

Japan’s Taisho Pharmaceutical Co., Ltd. last month successfully purchased 9.2 million shares (7.06 per cent) of Duoc Hau Giang Pharmaceutical JSC (ticker DHG).

The acquisition has lifted Taisho’s ownership to 32 per cent, making it the second largest shareholder in DHG. The company’s largest shareholder is the state-owned State Capital Investment Corporation (SCCI), which owns 43.31 per cent stake.

The move came after DHG announced completing the procedures to lift its FOL to 100 per cent, a move that is expected to facilitate the state capital divestment process at DHG.

At Domesco (ticker DMC), right after the company was approved to raise its FOL to 100 per cent in September 2016, its major foreign shareholder CFR International SPA bought nearly two million DMC stocks to raise its ownership to a controlling ratio of 51.7 per cent, cementing its lead on the second largest shareholder SCIC, which holds 34.71 per cent.

Before the transaction, CFR held 45.9 per cent in DMC.

Foreign investors’ participation is expected to boost the performance of local firms. However, more time is needed to assess the actual improvements their engagement could bring to local businesses, other shareholders, and the Vietnamese market.