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Unhealthy competition remains on medicine market
Unhealthy competition prevails in Vietnam’s medicine market as distributors and producers shake hands and fix prices. Thus, medicine prices are unsustainable, according to a recent report on competition in the country’s drug distribution system conducted by the Vietnam Competition Administration Department, or VCAD.
Bach Van Mung, who is head of the department and responsible for the report, said that the local medicine market depended on imported drugs and a huge market share was held in the hands of foreign enterprises.
The report says that Vietnam has 800 enterprises in the medicine industry, 439 of which are foreign companies including 20 major international pharmaceutical companies. The foreign companies dominate the market with a huge supply chain and annual turnover from VND100 to VND1,000 billion each because they mainly supply specialized medicine at high cost.
The report cited 100% foreign invested companies Diethelm Vietnam, Mega Lifesciences Vietnam and Zuellig Pharma Vietnam are dominating the specialized medicine segment.
Mung said collusion was obvious among local medicine exporters, foreign representative offices, local drug manufactures and intermediaries.
According to the report, foreign companies say medicine prices are declared to the National Drug Administration and the National Customs Department before the drugs are imported into Vietnam. Wholesale and retail prices are decided by Vietnam’s importers and distributors.
However, the Vietnam Competition Administration Department interviewed local importers and distributors who said that prices are decided by foreign companies.
Pham Khanh Phong Lan, deputy director of HCMC’s Health Department, confirmed with the Daily that intermediaries, representative offices and foreign companies are negotiating prices and that foreign pharmaceutical companies also decide wholesale and retail prices and sometimes hike prices by 300%.
To deal with the situation, VCAD warned that the Vietnam Medicine Law is insufficient.
“Regulation is needed to control these acts and calm the market down and offer reasonable prices for local consumers,” Lan said.
The National Drug Administration reported that annual expenditure for medicine per capita is US$18.9, a 45.5% increase compared to 2007.
The administration also said that Vietnam would see more and more foreign companies enter the market because under the country’s WTO commitment foreign pharmacists and their branches in Vietnam have the right to import medicine. Additionally, the import tax on vitamins and antibiotics is down from 3-7%.
The administration forecasts that the industry will see mergers and acquisitions among local pharmaceutical companies within the next three years to compete with the foreign wave.
VietNamNet, SGT
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