Robust growth trends projected for investment in healthcare

Robust growth trends projected for investment in healthcare. Source: freepik.com

Kim Dental, Vietnam’s largest private dental care platform, has recently raised $24 million in a series B round. The investment was led by ABC World Asia, a private equity fund dedicated to investing across Asia, seeded by Temasek. Proceeds from the round, which saw the participation from existing backer Aura Private Equity, will support Kim Dental in expanding the delivery of affordable and reliable oral health services across Vietnam.

Kim Dental owns and operates a fast-growing network of 19 dental clinics across four cities. The clinics provide dental check-ups and treatments as well as more advanced orthodontics, prosthodontics, oral surgery, and implants. Kim Dental employs 120 dentists and dental surgeons, as well as over 600 clinical and operational staff serving over 23,000 patients per month. Kim Dental also operates a dental laboratory to support its clinic network with in-house production of crowns, dentures, and bridges.

Huynh Minh Viet, CFO of Kim Dental said, “With this successful round, we’re now well-positioned to expand our delivery of international quality dental care to the fast-growing communities across the country, thus improving community access and helping to elevate the standards of oral healthcare in Vietnam, so that we achieve more positive overall healthcare outcomes in our country.”

Meanwhile, SK Group is said to be mulling over an investment in Vietnam’s largest pharmacy retail chain, Pharmacity, with an expected value of up to $90 million, according to Dealstreetasia.

Phamarcity is Vietnam’s largest pharmacy retailer with approximately 500 drugstores. The company has a plan to open its 1,000th store this year.

If the deal is concluded, it would make up SK Group’s second investment in Vietnam’s pharmacy and healthcare market. Last May, SK Investment III, a subsidiary of South Korea’s third-largest conglomerate SK Group, received 12.32 million shares of Imexpharm Corporation, equivalent to 24.9 per cent.

Michael Han, head of SK Group’s Representative Office in Vietnam told VIR, “There are dozens of industries and companies that we are trying to get to know better here, and healthcare happens to be one of them. It does not necessarily mean that an investment is imminent though.”

However, Han remains upbeat about Vietnam’s healthcare and pharmacy market. Historically, this sector’s growth has been backed by people’s growing concerns about the wellbeing of their family members, environmental factors, rising household income, and the high urbanisation rate – which leads to changes in lifestyles and a higher demand in personal healthcare.

“We believe that the robust growth will continue into the foreseeable future. We have seen a similar trend in South Korea over the last 20 years or so. In terms of market size, Vietnam is still at the emerging stage, with estimated total value of $7 billion in 2019, growing at a robust pace of 8 per cent from 2019-2024,” he said.

Meanwhile, a consortium led by Singapore’s state investor GIC Pte. Ltd. has agreed with Vietnam’s largest conglomerate Vingroup to buy a stake in its medical unit, Vinmec, for over $200 million. However, Vingroup will remain the controlling shareholder of the unit after the deal, Vingroup said in statement last December.

Other funds like Vinacapital and Mekong Capital have seen the prospects of the market and decided to cash in on local healthcare and pharmaceuticals. Last August, VinaCapital invested in Thu Cuc International General Hospital by purchasing a 30-per-cent stake for $26.7 million. In 2019, Mekong Capital also financed pharmacy chain Pharmacity out of its Mekong Enterprise Fund III.

Private equity investments in healthcare are on the rise. Nguyen Thi Vinh Ha, head of advisory at Grant Thornton Vietnam, cited the firm’s survey showing that healthcare is among the most attractive industries for investors, with its growth prospects coming from higher healthcare spending per capita.

“However, the shortage of qualified personnel and inadequate healthcare infrastructure results in a huge supply gap, and the increasing ageing speed of the Vietnamese population will further boost the healthcare demand,” Ha added.