Top pharma groups bet on high growth

Last year many pharma firms in Vietnam found it hard to operate at full capacity, photo Le Toan

In late November, the first batch of Acid Ursodeoxycholic 300mg, a new product utilising tech transfer between Traphaco JSC and a South Korean partner, was made available for shipment to the company’s branches nationwide. This marks a change in the drugmaker’s business strategy.

Last year marked a transition in Traphaco’s leadership when Chung Ji Kwang, who represents a group of major South Korean shareholders, became chairman of the board for the 2021-2025 term. With that, Traphaco’s business strategy has been changed towards focusing on tech transfer and cooperation with Daewoong - one of the leading manufacturers and distributors of prescription drugs in South Korea, as well as other South Korean pharma firms to diversify its portfolio of products.

The leadership enables the drugmaker to expand to the western medicine segment while retaining the position as a market leader in the eastern segment with the two key products of Boganic and Cebraton, which respectively rank second and sixth in the over-the-counter (OTC) channel in Vietnam in terms of revenue.

Traphaco, the country’s second-largest publicly traded drugmaker, made consolidated revenue of VND2.2 trillion ($95.65 million) and consolidated after-tax profit of VND265 billion ($11.52 million) in 2021, up 15 and 25 per cent on-year, respectively. The firm boasts three major shareholders – State Capital Investment Corporation (35.67 per cent), Magbi Fund Ltd. (24.99 per cent), and Super Delta Pte., Ltd (15.12 per cent).

Elsewhere, DHG Pharmaceutical JSC, Vietnam’s biggest publicly traded drugmaker, has been focusing on new products with quick adaption in management, with digitalisation being a prime focus.

General director Masashi Nakaura said, “Ensuring enough supply of ingredients, stability of the supply chain and transformation, and stabilising production capacity have been the three biggest issues during the pandemic, but issues which DHG has steadily overcome.”

While yet to announce 2021 business results in full, DHG is one of few pharma firms reporting growth in the OTC channel during the year. According to the company, it expanded its distribution network from 28,000 agents to 30,000. Meanwhile, in the hospital channel, the drugmaker made a breakthrough with over 100 new products from two production assemblies meeting Japan-GMP standards, thus assisting revenue growth.

However, 2021 was not a rosy year for all. Despite changes in the business strategy focusing on new products, Imexpharm IMP, Vietnam’s fourth-biggest publicly traded drugmaker, failed to obtain its yearly targets. Net revenues fell 7.5 per cent on-year, while pre-tax profits decreased 6.5 per cent on-year.

Travel restrictions and social distancing have significantly dented sales of Imexpharm’s hospital channel by 12.7 per cent on-year, while the OTC channel fell 0.9 per cent on-year.

Last year many pharma firms in Vietnam found it hard to operate at full capacity. According to a recent survey on the impacts of the pandemic on pharma businesses in 2021 by Vietnam Report, 57.14 per cent said that the situation was worse than the previous year, while only 7.14 per cent said the situation was better.

Pharma firms also suffered interruptions in the global supply chain, resulting in a hike in raw ingredients. Stay-at-work policies also increased product prices, thus affecting their profit margins.

Traphaco targets to achieve consolidated revenue of VND2.35 trillion ($102.17 million) and a consolidated profit of VND286 billion ($12.4 million) this year. The company will focus on further developing western medicines, intensifying cooperation and technology transfer with partners as well as boosting IT application.

With its 2021 momentum, DHG aims to make net revenue of VND4.22 trillion ($183.47 million) and pre-tax profit of VND853 billion ($37 million) in 2022, up 6 and 4 per cent respectively, compared to the targets set for 2021.

Having Japan’s Taisho as the main foreign shareholder with 51.01 per cent, DHG will continue to focus on new products for two other production assemblies this year, focusing on cardiovascular disease and diabetes, while promoting e-commerce channels in addition.

Pinning high hopes on 2022, Imexpharm will look to focus on seeking EU-GMP standards for its IMP4 factory, along with intensifying the digitalisation of business and production activities.

According to a Vietnam Report survey, 62.5 per cent of experts and businesses said that the industry’s growth 2022 will be better; about 12.5 per cent believe in its strong growth; and only 6.25 per cent said it will be worse. This year, the price of raw ingredients is forecast to keep rising due to continuing pandemic impacts.

Therefore, businesses need to have an appropriate inventory strategy to deal with any fluctuations to achieve the set targets, Vietnam Report said.