A Peek into the Vietnamese Healthcare Market

The Vietnamese healthcare market has become quite competitive since it was officially opened up to commercialization over a decade ago. These high levels of competition run across various niches, especially among international competitors which are dominant in the areas of innovative pharmaceuticals and complex medical devices.

What’s the market environment like?

Many international firms make a strategy out of registering as many products as possible (as quickly as possible), and working with established local distributors.

Vietnam is highly dependent on foreign products in the area of medical devices and pharmaceuticals, and both patients and physicians prefer band names in both these categories. These factors make Vietnam and attractive market for international market leaders (e.g. GE, Philips, Siemens etc.).

In recent years, the market has been influenced by slower growth rates as well as a variety of structural and financial reforms. These factors have resulted in many international companies putting more effort into developing strategic positioning for the mid to long term.

Examples of such strategies include:

  • Market creation via KOL recruitment
  • Geographic market expansion
  • Government-to-government lobbying
  • Acquisition of key portfolio groups
  • Investment into the IT infrastructure of high-potential sales channels

In terms of high-tech medical devices and pharmaceuticals, there is a relative saturation in urban markets, which has driven both med-tech and pharmaceutical providers to more provincial areas in search of new business opportunities. Areas of special interest in such cases include chain pharmacies and private hospitals.

Who makes up the market?

The main types of competitors in the Vietnamese healthcare market are:

Recent Market Entrants
These companies tend to focus on developing short-term pricing models, and hire experienced sales people at competitive salaries. Additional areas of focus include establishing a competitive product portfolio, however, recent changes in the Vietnamese tendering process have made market entry more difficult.

More Established Competitors
These companies have been in the market longer and have a set price index, which they make an effort to maintain.  Most have at least one or two direct competitors in each of their major products, and they therefore tend to focus on innovation and registering new products as a way to remain competitive.

In terms of client relations, companies in this category tend to be involved in physician and pharmacy education programs as a way to develop new product markets.

Established Companies (Market Leaders)
Companies in this category have already established themselves as dominant players and are far advanced in terms of positioning. Many are taking the next step, which is to establish manufacturing facilities. The advantages of taking such steps include: Less dependence on distributers, less logistics issues and higher levels of control over their own brands.

How are business relationships built in this market?

As is the case in many developing countries, successful sales relationships are still remarkably dependent on personal interaction. As a result, the recruitment of established, competent and experienced sales staff is imperative. This is especially the case for new market entrants.

Additionally, different approaches are needed depending on the type of business environment to be navigated.

The following categories are the most significant in this market:

Private Hospitals
In the case of private hospitals the environment is still quite small and in most cases there is a requirement to participate in a tender process. In many cases, establishing a business relationship with the purchasing officer in the pharmacy department is quite imperative in making a successful business deal.

Retail Pharmacies
Pharmacy owners and physicians in public hospitals often have long standing and substantial business relationships. New market entrants can often be strategic in using one as a bridge to do business with the other.  Advantages can also be had by putting effort in to finding out about key pharmacy stakeholders as well as their growth and investment plans.

Wholesalers
Wholesalers tend to work with firms that are either in the development stage or new entrants to the market. They tend to be especially effective in helping these companies reach fourth quarter sales targets.

Medical Device Shops
As a sales channel, medical device shops are set to undergo a series of changes due to recent regulatory developments. Additionally, due to the extremely competitive dynamics in this sector, the market has begun to consolidate itself, with weaker players going out of business and only the stronger more established businesses surviving.

As a result, cooperation efforts have started to take place and large establishments have started to form; prompted by the recognition that survival in the market is easier through collaborative efforts.

What are some of the future market trends?

Due the extremely competitive market environment for both medical devices and pharmaceuticals, companies have begun to look for other ways to maintain sustainable growth, such as:

  • Tender process reclassification
  • Creation of markets through physician and patient education programs
  • Acquisition of key portfolio groups
  • Management training for valued sales channel partners
  • Direct government lobbying

The Vietnamese healthcare market will continue to evolve through increased regulation and higher demand. Projections are showing that it will remain one of the most attractive markets in its region during the next few years.

 

For further quantitative information on the Vietnamese healthcare system and the macroeconomic climate, please look into our Business intelligence platform or order the TforG Deep Dive report for Vietnam containing volumes of 620 surgical procedures in 13 specialisms.