After the successful ventures in the western markets of USA and EU, Indian pharma industry and the policy-makers alike are now keen on exploring the untapped potentials of the neighbouring markets of South East Asian regions like Cambodia, Vietnam, Philippines, Malaysia and Indonesia.
Particularly, countries like Cambodia, Vietnam and Philippines are keen on importing low cost high quality medicines from India. Malaysia and Indonesia are inviting Indian investors to set up generic medicines manufacturing facilities in their countries. While on the one hand this would help Indian manufacturers to spread their wings globally, on the other the people of those countries would be greatly benefited by this.
Indian focus on Vietnam
In order to tap the generic medicines market of Vietnam, India is focusing on improving ties with Vietnam and has been working closely with the authorities to resolve all the regulatory and trade issues with that country. As part of this exercise, the pharmaceutical promotion council of India (Pharmexcil) has led a business delegation to Vietnam to explore the export prospects of generic drugs to that country. To promote Indian pharma exports to Vietnam, Pharmexcil has roped in about 40 Indian pharma companies to take part in ‘Indian Pharma Expo’ held in Ho Chi Minh City from March 19 and 20.
According to a recent economic forecast, the pharma industry in Vietnam is poised to witness a positive growth in the coming five years. The country is likely to have an increase of about $5 billion in value over the next few years and would reach a net worth of $8 billion by 2020. Over all the pharma industry in Vietnam is expected to grow at a CAGR of 15.4 per cent, it said.
Vietnam presently is concentrating on improving the local formulations industry. Indian industry can take advantage of this opportunity and can enhance their engagement in the pharma segment of this country, opine industry experts.
As India is a leading player in generics, exporters can engage with the local companies through joint ventures and various other modes of partnership which will benefit both sides. “Not just Vietnam, our pharma exporters and entrepreneurs with a strong support from API industry back in India can even access markets of Laos, Cambodia and Myanmar and can spread their network in the entire South-East Asian region and build strong business ties with them which in turn would help in enhancing our exports growth,” opined Dr. P.V. Appaji, Director General of Pharmexcil.
The generic market in Vietnam is growing at a scorching pace. While in 2012 the total pharmaceutical market in the country was of $ 2.84 billion, in 2013 it had a growth of about 18 per cent and reached to a total of $3.34 billion. Of this, 50 per cent amounting to about $1.70 billion constituted the generics market for the same period.
As per market reports,90 per cent of API requirement and 50 per cent of formulations requirement of Vietnam are imported. India alone exports about $ 212 million to Vietnam contributing about 17 per cent in APIs and 10 per cent in formulations of total imports of Vietnam.
Hence the Pharmexcil along with Ministry of Commerce, with the support of Indian Embassy in Vietnam wants the Indian exporters to take advantage of the situation in the country and build a strong network with the local Vietnamese industry.
Regulatory issues
Even as Vietnam presents many opportunities for Indian generic exports there are many regulatory and trade issues hindering the growth of trade between the two countries. In order to resolve the existing regulatory issues with the Vietnamese drug regulatory agency, Pharmexcil had organized meetings with the officials from Drug Administration of Vietnam (DAV).
Through such meetings, the council is expecting to sort out the challenges faced by the Indian traders while exporting to Vietnam and insist on the delisting of the red listed companies by the DAV from its website.
In the recent past, some of the Indian companies exporting to Vietnam had been red listed by the DAV over quality issues. Pharmexcil strongly feels that this has been done without giving an opportunity to the member companies to present their stand on the facts. Interestingly, the government of India is already working closely with the Vietnamese government to resolve these issues.
Experts are of the view that there should be a number of confidence- building programmes among the regulatory agencies on both sides, so as to remove the bottlenecks. “We have got a favourable response from the Vietnamese counterpart to address this issue which is a growing concern among many exporters. Getting things clarified and removing the names of the companies from the red list is our top most priority at the moment, so that normal business can be resumed and exports do not get hampered due to such misunderstandings,” said Dr Appaji.
Growth potential of Vietnam
Having understood the great growth potential Vietnam holds, India is keen to partner with the Vietnamese government to tap the market. As the Vietnamese government is looking to achieve universal health coverage by 2015, Indian pharma industry can play a key role in supplying affordable medicines and help Vietnam achieve its goal.
At present 30 per cent of the country’s population still has no form of public health insurance. Additionally, private health expenditures remain high at 57 per cent of the country’s total health spending. Another key factor driving growth in this market is the increasing life expectancy of people in Vietnam.
However, poor regulatory standards in healthcare could pose a challenge to the growth of this market. For example, it takes 180 days to submit an application to register a new drug to the Drug Administration of Vietnam. Although this process is much quicker than in the US and UK, it is in line with other countries in South East Asia.
Vietnam pharma market
There are about 171 pharmaceutical companies operating in Vietnam of which nine per cent are foreign invested enterprises (FIEs) and four per cent are joint ventures (JVs). Around 28 per cent of these companies have the Global Manufacturing Practice (GMP) certification.
Statistics from Vietnam’s Health Ministry show that the value of the country’s total medicine consumption was more than $2.43 billion in 2011, of which only US$1.14 billion came from domestic medicine. The average drug expense per capita was $27.6 in 2011. This is projected to rise to $40.8 by 2016.
Currently, the country is affected by the scarcity of low-priced generic drugs. This is caused in part by the belief of many Vietnamese doctors that patent-protected branded drugs are more effective. As a result, foreign pharmaceutical companies dominate the market and maintain a revenue premium.