consumer health in vietnam aug 2012

CONSUMER HEALTH IN VIETNAM

Euromonitor International

August 2012

C O N S U M E R H E A L T H I N V I E T N A M P a s s p o r t I

© E u r o m o n i t o r I n t e r n a t i o n a l

LIST OF CONTENTS AND TABLES

Executive Summary ..................................................................................................................... 1

Consumer Health Grows Strongly in 2011 ................................................................................ 1 Dietary Supplements Gain More Acceptance ........................................................................... 1 Competition Increases Between International and Domestic Players ....................................... 1 Chemists/pharmacies Dominate Distribution Sales .................................................................. 1 Positive Outlook on the Horizons .............................................................................................. 1

Key Trends and Developments .................................................................................................... 2

Growth Fuelled by Rising Consumer Purchasing Power .......................................................... 2 Prices Increase Despite Increasingly Stricter Price Control ...................................................... 3 Rising Demand for Vitamins and Dietary Supplements ............................................................ 4 Self-medication Remains A Common Practice ......................................................................... 5 Competition Between International and Domestic Brands Intensifies ....................................... 5

Market Indicators .......................................................................................................................... 6

Table 1 Consumer Expenditure on Health Goods and Medical Services 2006-

2011 ............................................................................................................. 6 Table 2 Life Expectancy at Birth 2006-2011 ............................................................. 7

Market Data .................................................................................................................................. 7

Table 3 Sales of Consumer Health by Category: Value 2006-2011 .......................... 7 Table 4 Sales of Consumer Health by Category: % Value Growth 2006-2011 ......... 7 Table 5 Consumer Health Company Shares 2007-2011 ........................................... 8 Table 6 Consumer Health Brand Shares 2008-2011 ................................................ 9 Table 7 Sales of Consumer Health by Distribution Format: % Analysis 2006-

2011 ........................................................................................................... 10 Table 8 Sales of Consumer Health by Category and Distribution Format: %

Analysis 2011 ............................................................................................. 10 Table 9 Forecast Sales of Consumer Health by Category: Value 2011-2016 ......... 12 Table 10 Forecast Sales of Consumer Health by Category: % Value Growth

2011-2016 .................................................................................................. 12

Appendix .................................................................................................................................... 12

OTC Registration and Classification ....................................................................................... 12 Vitamins and Dietary Supplements Registration and Classification ........................................ 16 Self-medication/self-care and Preventative Medicine ............................................................. 17 Switches ................................................................................................................................. 17

Sources ...................................................................................................................................... 17

Summary 1 Research Sources ...................................................................................... 17

C O N S U M E R H E A L T H I N V I E T N A M P a s s p o r t 1


CONSUMER HEALTH IN VIETNAM

EXECUTIVE SUMMARY

Consumer Health Grows Strongly in 2011

In 2011, the consumer health market continued to record double-digit value growth in

Vietnam. Increasing consumer awareness towards health and wellbeing, rising living standards

and higher attention to beauty and personal appearance contributed to the healthy growth of

vitamins and dietary supplements and weight management products. On the other hand, the

increasingly stressful modern lifestyles and higher level of pollution in Vietnam led to the good

performance of analgesics and cough, cold, and allergy (hay fever) remedies.

Dietary Supplements Gain More Acceptance

Vietnamese consumers are paying more attention to dietary supplements, mainly thanks to

extensive marketing and advertising activities from manufacturers, especially direct sellers like

Aloe Trading or Tiens Vietnam. Moreover, the stricter laws and regulations pertaining to dietary

supplements in the country have created a good foundation for both domestic and international

players to produce good performance within dietary supplements. Combination dietary

supplements remains the biggest category, accounting for 50% of the overall category’s value

sales in 2011.

Competition Increases Between International and Domestic Players

As a result of joining the World Trade Organization (WTO), the Vietnamese government has

allowed foreign pharmaceutical companies to directly import their products. Although foreign

companies are still not yet allowed to distribute their products to end consumers, they can

collaborate with local companies and retailers to distribute their products across the country. In

the meantime, local players continuously improve their production capacity and product quality

to meet local demands for consumer health products. Local players are also more willing to

invest in marketing and advertising activities to establish strong brand names in the market.

Hence, the consumer health market in Vietnam witnessed more intense competition between

international and domestic players in 2011.

Chemists/pharmacies Dominate Distribution Sales

Chemists/pharmacies and direct selling play an important role in distribution channels within

the consumer health market. Chemists/pharmacies is the popular channel for distributing the

majority of consumer health products. These outlets are typically operated by small companies,

and can be found on every street corner across the country. On the other hand, direct selling is

used mostly for dietary supplements. Besides, supermarkets/hypermarkets and

parapharmacies/drugstores also had considerable sales during the review period.

Positive Outlook on the Horizons

Vietnam’s population is expected to increase to 91 million by 2016. The majority of the

population is young and of working age. This demographic will help to fuel demand for

consumer health products over the forecast period. Furthermore, rising household incomes and

increasing health awareness will also boost growth of the consumer health market in Vietnam.

Nevertheless, the growth will be more stable compared to that of the review period. Per capita



expenditure on consumer healthcare products will increase, and consumer will have various

choices in term of products, brands and prices.

KEY TRENDS AND DEVELOPMENTS

Growth Fuelled by Rising Consumer Purchasing Power

In 2011, the Vietnamese economy encountered some negative economic factors, such as

high inflation and the devaluation of the Vietnamese dong. However, the Vietnamese

government exploited various financial tools to control the inflation rate and the value of the

dong. Hence, the economy is set to maintain healthy GDP growth at 6%. In addition, on 1

October 2011, the Ministry of Labour, Invalids and Social Affairs officially increased the

minimum wage of workers. As a result, the living standard of Vietnamese consumers –

especially in big cities and urban areas – is rising and they tend to pay more attention to their

quality of life.

Current impact

More and more consumers are showing higher interest in their health and own wellbeing as

well as beauty and personal appearance as a result of rising living standards and wages.

Hence, consumers are more willing to spend more on consumer healthcare products to take

good care of their health and appearance. This is different from the past, for example when

consumers seemed to ignore mild symptoms unless their illness became more serious.

In 2011, the consumer health market grew by 22% in term of retail value sales thanks to

increasing demand for consumer health products in the country. Paediatric acetaminophen and

combination dietary supplements enjoyed particularly strong retail value growth. Acetaminophen

is typically used to treat common illnesses such as headache, flu or backache whilst

combination dietary supplements are used to increase general health and wellbeing.

Outlook

Over the forecast period, the Vietnamese economy is expected to produce better

performance as government offices show their strong determination in controlling inflation rate

and stabilising macroeconomics to improve the life quality of Vietnamese citizens. The living

standard and the average disposable household income are gradually increasing in line with the

positive economy outlook. For example, according to its economy and society development

plan, the annual income of people residing in Hanoi will reach US$7,100- US$7,500 per capita

in 2020 and US$17,000 per capita in 2030.

Future impact

Towards the end of the forecast period, aside from increasing disposable household income,

demand for consumer health will also be boosted by rising consumer awareness towards health

and beauty in the country. As a result, volume and value sales of consumer healthcare products

are projected to increase in line with rising consumer purchasing power and health awareness.

More specifically, consumer health products are set to record a constant value CAGR of 9%

over the 2011-2016 forecast period.

The average unit price of consumer healthcare products is likely to become more affordable

and the range of available products will widen over the forecast period. Lower-income

consumers have a tendency to purchase domestic brands due to their cheap price. On the other

hand, a large number of higher-income Vietnamese consumers still prefer to choose

international brands as they believe higher product price means higher quality.



Prices Increase Despite Increasingly Stricter Price Control

In 2011, the Ministry of Health continues to increase its price controls relating to consumer

health products. For example, on 19 April 2011, the ministry issued Circular No 15/2011/TT-BYT

to require a retail pharmacy in a hospital to post drug prices pursuant to regulations and such

pharmacies may not sell drugs at prices higher than those posted. The retail price, including

invoiced purchase price and retail mark-up, must not be higher than those of drugs in the same

category on the market. In addition, government offices also organised seminars to discuss with

manufacturers ways to find solutions for price control within consumer health products.

Furthermore, the Inspection Department of the Ministry of Health increased its regular price

checks on most manufacturers and even chemist/pharmacies in 2011. These examples serve to

illustrate the government’s determined effort to control medicine prices in Vietnam.

Current impact

In 2011, Vietnam saw increasing price levels in almost all commodities. In addition, the

government offices proposed a plan to increase the price of water and electricity bills as well as

fuel prices. As such, these economic factors contributed significantly to increase manufacturing

costs.

Besides, the large percentage of consumer health products were imported from overseas and

even domestic manufacturers heavily depended on imported materials. Hence, there is strong

correlation between the exchange rate and price of consumer health products. The depreciation

of the Vietnamese dong to the US dollar also contributed to the increasing price of consumer

health products in 2010.

As a consequence, the unit price of consumer health was increasing considerably towards the

end of review period in spite of stricter price controls from government. However, increasing

price appeared not to have a serious effect on consumption of consumer health products as the

key purchasers are middle- and high-income consumers. Moreover, low-income consumers can

buy domestic brands, which only saw slight price increases in 2011.

Outlook

The Ministry of Health is expected to exercise a stricter price control policy in the consumer

health market to ensure that consumers at all income levels can acquire necessary consumer

health products such as analgesics or cough, cold and allergy remedies when needed.

Government will increase the frequency of their inspections of manufacturers and even

chemists/pharmacies to reduce cases whereby consumers purchased consumer health

products at a much higher price than the regulated price in the market. Over the forecast period,

the Ministry of Health will issue more detailed regulations and documents to instruct government

offices to use various price control measures so that those offices will be more effective in

governing the price of consumer health products.

Future impact

As a result, the unit price of consumer health products is projected to be fairly stable in

conjunction with the efforts of the government in controlling prices in the country. Nevertheless,

prices can be increased marginally in line with the high inflation rate over the forecast period.

However, consumers should be able to afford any such price increase due to the fact that the

standard of living in Vietnam is continuously rising.

The stricter price policy indirectly creates more intense competition between international and

domestic manufacturers. The high price of international brands is somewhat due to their high

commission to retailers. International manufacturers might not be able to push up their price to

offset their high commission. Hence, they have to decrease the commission paid to retailers. It



is likely to create an equal opportunity for both domestic and international manufacturers to sell

their products via retail outlets.

Rising Demand for Vitamins and Dietary Supplements

With the improvement in living standards and disposable household income, more and more

Vietnamese consumers are able to act on concerns about their wellbeing and personal

appearance. Vitamins and dietary supplements have gained more consumer attention and

acceptance as such products are perceived to be able to satisfy specific health needs. Some

consumers choose vitamins and dietary supplements to help their skin to be fair and white.

Some consumers buy such products to enhance their immune system. More importantly, the

leading players in vitamins and dietary supplements such as Aloe Trading Co and Traphaco

constantly launched various advertisements and promotions to increase consumer awareness

of vitamins and dietary supplements in the country during the review period.

Current impact

In 2011, vitamins and dietary supplements registered the best performance amongst

consumer health products with 26% current value growth. Most vitamins and dietary

supplements categories enjoyed double-digit retail value growth. Combination dietary

supplements, ginkgo biloba and co-enzyme Q10 are some categories that recorded the highest

growth at 32%, 25% and 25%, respectively.

Although combination dietary supplements is the biggest vitamins and dietary supplements

category, accounting for 50% of total retail value sales of vitamins and dietary supplements in

2011, this category also continued to register strong growth over the review period. Its popularity

is due to the fact that consumers perceive such products to offer more value in comparison to

single-ingredient products. Ginkgo biloba is also popular amongst Vietnamese consumers

thanks to its brain-supporting function. Co-enzyme Q10 is famous for maintaining a healthy

cardiovascular system as well enhancing the immune system.

Outlook

The Vietnamese economy is set to have a positive outlook as the Vietnamese government

shows its strong determination to stabilise high inflation rate as well as to implement some

plausible social and economic development plans over the forecast period. Vietnam will see an

increasing trend of health and beauty awareness as a result of higher living standards and

average household income. Hence, demand for vitamins and dietary supplements will continue

to increase – especially in big cities and urban areas such as Ho Chi Minh City and Hanoi.

Industry players will have more interest in developing and participating in this potential market to

leverage rising consumer demand for vitamins and dietary supplements.

Future impact

Vitamins and dietary supplements is projected to record a high constant value CAGR of 10%

over the forecast period in conjunction with increasing demand for vitamins and dietary

supplements. International manufacturers are likely to introduce new product launches which

are not widely available in 2011 such as glucosamine, evening primrose oil, Echinacea, omega

3-6-9 and probiotic supplements in response to the more sophisticated demand from

consumers. Local manufacturers are likely to concentrate on diversifying their product portfolio

in vitamins and dietary supplements – particularly multivitamins and combination dietary

supplements – to respond to higher demand from low- and middle-income consumers.



Self-medication Remains A Common Practice

Towards the end of review period, self-medication remained quite common, especially in

suburban and rural areas. Many consumers typically purchased consumer healthcare products

without a doctor’s prescription. They usually look for the advice of pharmacists at

chemists/pharmacies. However, due to the loose control of government, some

chemists/pharmacies only have sales assistants, which are typically not certified pharmacists.

When they have mild symptoms such as cough, flu, stomach ache or headache, consumers try

to treat them on their own by purchasing consumer health products based on advice from

pharmacists and shop assistants at chemists/pharmacies. They only went to see a doctor if their

illness becomes more serious. The reason for the popularity of self-medication in Vietnam is

mainly due to the fact that consumers are not aware of the danger of careless medicine use.

Another reason for the consumer reluctance to go to hospital is the fact that consumers have to

queue and wait in an unpleasant environment as a result of the overloaded capacity of

hospitals.

Current impact

The popular self-medication practice has led to the increasing number of pharmaceutical

companies which recruit sales representative teams of pharmacists and doctors. They are

mostly responsible for introducing and selling their products to retailers and hospitals.

Pharmaceutical companies usually offer retailers high commission rates in order to encourage

them to buy and recommend their brands to Vietnamese consumers.

International players tend to offer more attractive commissions compared to local players.

Hence, the price of foreign brands is much higher than the price of local brands. Despite their

high price, Vietnamese consumers are still willing to buy foreign brands as they consider them

to be of higher quality and more effective than domestic brands.

Outlook

Over the forecast period, the majority of the Vietnamese population continues to practice self-

medication. Nevertheless, thanks to education programmes in the public media as well as

increasing consumer awareness about health, middle- and high-income consumers residing in

big cities such as Ho Chi Minh City are more cautious about using medicines. They are likely to

prefer to go to see private doctors and hospitals instead of self-medication. Moreover, the

government is currently pushing chemists/pharmacies to comply with Good Storage Practice

(GSP) guidelines. Vietnamese consumers can access certified pharmacists who are less likely

to be swayed by the marketing of pharmaceutical companies.

Future impact

With the popularity of self-medication, international manufacturers will continue to leverage

their strong financial ability to expand their market coverage by paying high commissions to

retailers and investing in research and development activities. In the meantime, local players will

take advantage of economy of scale to maintain low prices as much as possible to target low-

income consumers in suburban and rural areas. Moreover, local players are likely to put their

efforts into building more professional sales teams who can introduce detailed product

information and build good relationships with retailers, particularly chemists/pharmacies.

Competition Between International and Domestic Brands Intensifies

Since Vietnam joined the WTO, Vietnam is obliged to allow foreign companies to operate

within the country. Foreign pharmaceutical companies are allowed to open branches in Vietnam

and can import products directly into the country. More importantly, Vietnamese government has



issued laws and regulations that create better conditions for foreign players to operate in

Vietnam. For example, the Vietnamese government had to reduce the tax levied on certain

imported products to 5%. This tax must be further reduced to 2.5% by 2014. As a result, the

consumer health market continues to witness more intense competition between international

and domestic brands due to the further expansion of foreign companies in the country.

Current impact

International manufacturers continue to leverage their established experience and strong

financial ability to maintain their dominant position in consumer health. For example,

international players have increased their level of advertisements and marketing campaigns to

build good reputations for their brands as well as to enhance consumer brand awareness. Many

international players constantly introduce new product developments in response to the more

sophisticated demand from middle- and high-income consumers.

On the other hand, domestic companies have increased their production in a bid to meet

rising demand for consumer health products. Aside from producing more products, domestic

companies appear to be more willing to spend on packaging design and building strong brand

name as they have started to realise the significance of advertising and marketing activities to

help them to compete with international manufacturers.

Outlook

The Ministry of Health is implementing a pharmaceutical industry development plan over the

forecast period. The pharmaceutical industry requires manufacturers, drugstores, and other

distribution channels to operate in line with five criteria set by the World Health Organisation

(WHO): GMP (Good Manufacturing Practice), GLP (Good Laboratory Practice), GSP (Good

Storage Practice), GPP (Good Pharmacy Practice), and GDP (Good Distribution Practice). As a

result, domestic players are required to meet the above-mentioned standards to stay

competitive. Hence, the competition in the health consumer market continues to be more and

more intense as both domestic and international players have a good foundation from which to

develop over the forecast period.

Future impact

The pressure being put on all pharmaceutical players to become GSP, GPP and GMP

certified appears to be more beneficial for domestic manufacturers because Vietnamese

consumers will be able to have more faith in local product quality. Furthermore, it is reported

that there is a high chance for some domestic players to cooperate together in order to increase

their overall competitiveness. More importantly, many domestic players such as Traphaco are

trying to reduce their dependence on imported materials to keep their price unchanged even

when there is a fluctuation of exchange rate. Therefore, domestic manufacturers are able to

enhance their position in the consumer health market.

Despite the stronger presence of domestic players, international players are expected to hold

their dominant position in some consumer health categories thanks to their long-established

experience in other regions. International players exploit their strong ability in research and

development to launch more sophisticated consumer health products and secure their

consumer base in the middle- and high-income segment. In addition, they also collaborate with

retailers and distributors to expand their distribution network to reach untapped markets.

MARKET INDICATORS

Table 1 Consumer Expenditure on Health Goods and Medical Services 2006-2011



VND bn 2006 2007 2008 2009 2010 2011 Pharmaceuticals, 20,290.0 24,556.4 33,469.7 35,068.8 39,718.7 52,897.2 medical appliances/ equipment Outpatient services 14,905.7 17,749.8 23,804.7 24,543.1 27,354.0 36,046.9 Hospital services 11,018.0 12,939.8 17,108.6 17,382.9 19,084.3 24,894.9 Total 46,213.7 55,246.0 74,383.1 76,994.8 86,157.0 113,839.0

Source: Euromonitor International from official statistics, trade associations, trade interviews

Table 2 Life Expectancy at Birth 2006-2011

years 2006 2007 2008 2009 2010 2011 Males 72.1 72.3 72.5 72.7 72.9 73.1 Females 75.9 76.1 76.4 76.6 76.9 77.1

Source: Euromonitor International from official statistics

MARKET DATA

Table 3 Sales of Consumer Health by Category: Value 2006-2011

VND billion 2006 2007 2008 2009 2010 2011 OTC 1,663.0 1,838.1 2,028.5 2,256.0 2,536.4 3,019.2 Sports Nutrition - - - - - - Vitamins and Dietary 1,620.8 1,936.1 2,430.2 3,089.6 3,834.2 4,810.4 Supplements Weight Management 272.1 300.0 328.7 361.3 398.4 448.7 Herbal/Traditional 894.6 1,128.0 1,530.8 1,998.6 2,595.6 3,332.8 Products Allergy Care 109.7 113.3 116.4 120.7 126.2 144.0 Paediatric Consumer 139.7 158.5 179.5 206.0 238.6 291.4 Health Consumer Health 3,555.8 4,074.2 4,787.4 5,706.8 6,769.0 8,278.3

Source: Euromonitor International from official statistics, trade associations, trade press, company research, store checks, trade interviews, trade sources

Note: Sum of categories is greater than the market size because allergy care is a duplicate of categories found in cough, cold and allergy remedies, medicated skin care and eye care; paediatric consumer health is an aggregate of paediatric categories in OTC and vitamins and dietary supplements; and herbal/traditional products is an aggregate of herbal/traditional categories in OTC and vitamins and dietary supplements, except herbal/traditional medicinal teas and herbal/traditional smoking cessation aids.

Table 4 Sales of Consumer Health by Category: % Value Growth 2006-2011

% current value growth 2010/11 2006-11 CAGR 2006/11 Total OTC 19.0 12.7 81.6 Sports Nutrition - - -



Vitamins and Dietary Supplements 25.5 24.3 196.8 Weight Management 12.6 10.5 64.9 Herbal/Traditional Products 28.4 30.1 272.5 Allergy Care 14.1 5.6 31.3 Paediatric Consumer Health 22.1 15.8 108.6 Consumer Health 22.3 18.4 132.8



Table 5 Consumer Health Company Shares 2007-2011

% retail value rsp Company 2007 2008 2009 2010 2011 Aloe Trading Co Ltd 6.9 6.5 7.1 6.5 7.0 Traphaco Joint Stock Co 5.9 6.6 5.5 4.6 3.8 GlaxoSmithKline Plc 3.4 3.4 3.5 3.6 3.7 Tiens Vietnam Co Ltd - 3.4 3.6 3.6 3.4 UPSA, Laboratoires 3.1 3.3 3.1 3.1 3.1 Tradewind Asia Ltd 3.5 3.2 2.9 2.6 2.6 United Pharma (Vietnam) 3.4 3.1 2.9 2.7 2.6 Inc ICA Biotechnological - 2.2 2.2 2.3 2.4 2.5 Pharmaceutical JSC Sanofi-Synthélabo 3.8 3.4 3.0 2.6 2.4 Vietnam Pharmaceutical Shareholding Co Haugiang Pharmaceutical 1.2 1.5 2.0 2.2 2.3 Joint Stock Co Boehringer Ingelheim 3.4 3.0 2.7 2.4 2.3 Pharma GmbH & Co KG Korea Ginseng Corp 1.2 1.2 1.3 1.4 1.5 International Medical 1.3 1.5 1.5 1.5 1.5 Consulting Co Ltd (IMC) Janssen-Cilag Vietnam 1.0 1.0 0.9 0.9 1.2 Bayer Vietnam Ltd 1.5 1.4 1.2 1.1 1.1 Hisamitsu 0.6 0.7 0.8 0.9 0.9 Pharmaceutical Vietnam Co Ltd Union Pharma 1.3 1.3 1.1 1.0 0.9 SPM JSC 0.8 0.8 0.8 0.8 0.9 Rohto-Mentholatum 1.2 1.1 1.0 0.9 0.9 Vietnam Co Ltd Boots Co Plc, The 1.3 1.2 1.1 1.0 0.9 Novartis Vietnam Ltd 1.0 0.9 0.8 0.8 0.7 Merck & Co Inc - - 0.8 0.7 0.7 Urgo Healthcare 0.8 0.8 0.7 0.7 0.6 Products (Thailand) Ltd National Day 0.7 0.7 0.6 0.6 0.6 Pharmaceutical Joint Stock Co OPC Pharmaceutical JSC 0.5 0.5 0.5 0.6 0.6 Herbapol Lublin SA 0.6 0.6 0.6 0.6 0.5 Rhône-Poulenc Rorer 1.4 1.2 1.0 0.9 0.5 Pfizer Vietnam Co Ltd 0.7 0.6 0.6 0.6 0.5



Hoechst Marion Roussel 0.8 0.7 0.6 0.6 0.5 Sanofi-Aventis Vietnam 0.1 0.0 0.0 0.0 0.4 Co Ltd Schering-Plough Corp 1.0 0.9 - - - Tianshi Group Co Ltd 3.0 - - - - Others 42.4 43.2 45.4 48.4 48.8 Total 100.0 100.0 100.0 100.0 100.0


Table 6 Consumer Health Brand Shares 2008-2011

% retail value rsp Brand Company 2008 2009 2010 2011 Forever Living Aloe Trading Co Ltd 6.5 7.1 6.5 7.0 Tiens Tiens Vietnam Co Ltd 3.4 3.6 3.6 3.4 Panadol GlaxoSmithKline Plc 1.9 2.2 2.5 2.7 Plusssz Tradewind Asia Ltd 2.8 2.5 2.3 2.5 Traphaco Traphaco Joint Stock Co 4.4 3.6 3.0 2.3 Hapacol Haugiang Pharmaceutical 1.3 1.8 2.1 2.1 Joint Stock Co Efferalgan UPSA, Laboratoires 1.9 1.9 1.9 2.0 Cheong-Kwan-Jang Korea Ginseng Corp 1.2 1.3 1.4 1.5 IMC International Medical 1.5 1.5 1.5 1.5 Consulting Co Ltd (IMC) Homtamin Ginseng ICA Biotechnological - 0.9 1.1 1.3 1.4 Pharmaceutical JSC Upsavit UPSA, Laboratoires 1.3 1.1 1.1 1.0 Salonpas Hisamitsu 0.6 0.7 0.8 0.9 Pharmaceutical Vietnam Co Ltd Nutroplex United Pharma (Vietnam) 1.0 1.0 0.9 0.9 Inc Homtamin ICA Biotechnological - 1.0 0.9 0.9 0.8 Pharmaceutical JSC Pharmaton Boehringer Ingelheim 1.0 0.9 0.8 0.8 Pharma GmbH & Co KG Strepsils Boots Co Plc, The 0.9 0.8 0.7 0.7 Decolgen United Pharma (Vietnam) 0.7 0.6 0.6 0.6 Inc V Rohto Rohto-Mentholatum 0.6 0.6 0.6 0.6 Vietnam Co Ltd Clarityne Merck & Co Inc - 0.7 0.6 0.5 Figura Herbapol Lublin SA 0.6 0.6 0.6 0.5 Phosphalugel Boehringer Ingelheim 0.8 0.7 0.6 0.5 Pharma GmbH & Co KG Enervon-C United Pharma (Vietnam) 0.6 0.5 0.5 0.5 Inc Stilnox Sanofi-Synthélabo 0.7 0.6 0.5 0.5 Vietnam Pharmaceutical Shareholding Co Paracetamol Union Pharma 0.8 0.6 0.5 0.5 Urgo Urgo Healthcare 0.6 0.5 0.5 0.5 Products (Thailand) Ltd Berocca Bayer Vietnam Ltd 0.5 0.5 0.4 0.4 MyVita SPM JSC 0.4 0.4 0.4 0.4 Lysopaine Boehringer Ingelheim 0.5 0.5 0.4 0.4 Pharma GmbH & Co KG



Cimet Sanofi-Synthélabo 0.5 0.4 0.4 0.4 Vietnam Pharmaceutical Shareholding Co Eagle Borden Co (Pte) Ltd 0.5 0.4 0.4 0.4 Band-Aid Janssen Pharmaceutica 0.4 0.4 0.3 - Toplexil Rhône-Poulenc Rorer 0.4 0.4 0.3 - Clarityne Schering-Plough Corp 0.7 - - - Others 59.3 59.6 61.1 61.8 Total 100.0 100.0 100.0 100.0


Table 7 Sales of Consumer Health by Distribution Format: % Analysis 2006-2011

% retail value rsp 2006 2007 2008 2009 2010 2011 Store-Based Retailing 89.7 86.0 74.7 63.9 65.9 64.5 - Grocery Retailers 3.4 3.4 3.3 5.3 5.1 4.7 -- Discounters 0.0 0.0 0.0 0.0 0.0 0.0 -- Healthfood shops 0.0 0.0 0.0 0.0 0.0 0.0 -- Hypermarkets 0.8 0.9 0.8 2.8 2.8 2.5 -- Small Grocery 0.7 0.7 0.7 0.7 0.7 0.6 Retailers -- Supermarkets 1.8 1.8 1.8 1.7 1.6 1.5 -- Other Grocery 0.1 0.1 0.0 0.0 0.0 0.0 Retailers - Non-Grocery Retailers 86.3 82.5 71.4 58.6 60.8 59.8 -- Health and Beauty 86.3 82.5 71.4 58.6 60.8 59.8 Retailers --- Chemists/Pharmacies 81.2 77.1 65.4 52.1 53.2 51.1 --- Parapharmacies/ 4.9 5.3 5.7 6.3 7.3 8.3 Drugstores --- Other Healthcare 0.1 0.1 0.2 0.3 0.3 0.3 Specialist Retailers -- Mixed Retailers 0.0 0.0 0.0 0.0 0.0 0.0 --- Department Stores 0.0 0.0 0.0 0.0 0.0 0.0 --- Mass Merchandisers 0.0 0.0 0.0 0.0 0.0 0.0 --- Variety Stores 0.0 0.0 0.0 0.0 0.0 0.0 --- Warehouse Clubs 0.0 0.0 0.0 0.0 0.0 0.0 -- Other Non-Grocery 0.0 0.0 0.0 0.0 0.0 0.0 Retailers Non-Store Retailing 10.3 14.0 25.3 36.1 34.1 35.5 - Vending 0.0 0.0 0.0 0.0 0.0 0.0 - Homeshopping 0.0 0.0 0.0 0.0 0.0 0.0 - Internet Retailing 0.0 0.0 0.0 0.0 0.0 0.0 - Direct Selling 10.3 14.0 25.3 36.1 34.1 35.5 Total 100.0 100.0 100.0 100.0 100.0 100.0


Table 8 Sales of Consumer Health by Category and Distribution Format: % Analysis 2011

% retail value rsp OTC SN VDS WM HTP AC



Store-Based Retailing 100.0 0.0 39.2 95.7 45.3 100.0 Grocery Retailers 6.2 0.0 3.5 6.9 3.7 5.9 Discounters 0.0 0.0 0.0 0.0 0.0 0.0 Healthfood shops 0.0 0.0 0.0 0.0 0.0 0.0 Hypermarkets 1.4 0.0 3.1 2.7 2.9 1.7 Small Grocery Retailers 1.7 0.0 0.0 0.0 0.1 0.3 Supermarkets 3.0 0.0 0.4 4.2 0.6 3.5 Other Grocery Retailers 0.1 0.0 0.0 0.0 0.0 0.4 Non-Grocery Retailers 93.8 0.0 35.7 88.8 41.6 94.1 Health and Beauty 93.8 0.0 35.7 88.8 41.6 94.1 Retailers Chemists/Pharmacies 89.2 0.0 24.2 83.0 30.8 91.0 Parapharmacies/Drugstores 4.6 0.0 10.9 5.8 10.3 3.1 Other Healthcare 0.0 0.0 0.6 0.0 0.5 0.0 Specialist Retailers Mixed Retailers 0.0 0.0 0.0 0.0 0.0 0.0 Department Stores 0.0 0.0 0.0 0.0 0.0 0.0 Mass Merchandisers 0.0 0.0 0.0 0.0 0.0 0.0 Variety Stores 0.0 0.0 0.0 0.0 0.0 0.0 Warehouse Clubs 0.0 0.0 0.0 0.0 0.0 0.0 Other Non-Grocery 0.0 0.0 0.0 0.0 0.0 0.0 Retailers Non-Store Retailing 0.0 0.0 60.8 4.3 54.7 0.0 Vending 0.0 0.0 0.0 0.0 0.0 0.0 Homeshopping 0.0 0.0 0.0 0.0 0.0 0.0 Internet Retailing 0.0 0.0 0.0 0.0 0.0 0.0 Direct Selling 0.0 0.0 60.8 4.3 54.7 0.0 Total 100.0 0.0 100.0 100.0 100.0 100.0 PCH Store-Based Retailing 81.9 Grocery Retailers 5.7 Discounters 0.0 Healthfood shops 0.0 Hypermarkets 2.1 Small Grocery Retailers 1.3 Supermarkets 2.3 Other Grocery Retailers 0.1 Non-Grocery Retailers 76.1 Health and Beauty 76.1 Retailers Chemists/Pharmacies 69.8 Parapharmacies/Drugstores 6.1 Other Healthcare 0.2 Specialist Retailers Mixed Retailers 0.0 Department Stores 0.0 Mass Merchandisers 0.0 Variety Stores 0.0 Warehouse Clubs 0.0 Other Non-Grocery 0.0 Retailers Non-Store Retailing 18.1 Vending 0.0 Homeshopping 0.0 Internet Retailing 0.0 Direct Selling 18.1 Total 100.0




Key: OTC = over the counter; SN = sports nutrition; VDS = vitamins and dietary supplements; WM = weight management; HTP = herbal/traditional products; AC = Allergy Care; PCH = paediatric consumer health

Table 9 Forecast Sales of Consumer Health by Category: Value 2011-2016

VND billion 2011 2012 2013 2014 2015 2016 OTC 3,019.2 3,250.1 3,493.1 3,746.2 4,004.0 4,262.3 Sports Nutrition - - - - - - Vitamins and Dietary 4,810.4 5,350.6 5,939.2 6,561.7 7,206.1 7,863.4 Supplements Weight Management 448.7 471.3 494.1 516.9 538.8 559.6 Herbal/Traditional 3,332.8 3,772.0 4,259.4 4,787.8 5,361.9 5,958.9 Products Allergy Care 144.0 149.3 154.5 159.6 164.3 168.5 Paediatric Consumer 291.4 320.0 350.1 380.8 409.7 435.1 Health Consumer Health 8,278.3 9,072.0 9,926.5 10,824.7 11,748.9 12,685.4

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources


Table 10 Forecast Sales of Consumer Health by Category: % Value Growth 2011-2016

% constant value growth 2011-16 CAGR 2011/16 TOTAL OTC 7.1 41.2 Sports Nutrition - - Vitamins and Dietary Supplements 10.3 63.5 Weight Management 4.5 24.7 Herbal/Traditional Products 12.3 78.8 Allergy Care 3.2 17.0 Paediatric Consumer Health 8.4 49.3 Consumer Health 8.9 53.2

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources


APPENDIX

OTC Registration and Classification

The Ministry of Health (MOH) is responsible for supervising Vietnam’s pharmaceutical

industry. The Drug Administration of Vietnam (DAV) operates under the guidance of the Ministry



of Health, which it helps to carry out supervision, management, and implementation of

regulations within pharmaceutical and cosmetic areas.

According to circular number 53/2008/QD-BYT, DAV has been assigned the authorisation to

supervise the pharmaceutical industry, including consumer health products.

DAV is responsible for enforcing compliance with pharmacy and cosmetics technical expertise

regulations amongst all manufacturers, retailers, distributors, drugstores etc.

The agency is also responsible for controlling, monitoring, and ensuring that regulations are

followed by all companies throughout the country. DAV is also empowered to grant, suspend,

and withdraw certificates of Good Manufacturing Practice (GMP), Good Laboratory Practice

(GLP), Good Storage Practice (GSP), Good Agricultural and Collection Practice (GACP),

applications for circulating medicines, and import and export permission certificates.

DAV also liaises with relevant authorities such as the Ministry of Culture and Information with

regard to the advertising of medicinal products and cosmetics.

In addition, DAV cooperates with other bodies in deciding what tests should be performed on

medicinal products that are to be distributed in or imported into Vietnam.

DAV works together with other government entities to supervise and stabilise drug prices and

to fine companies or individuals that engage in profiteering.

DAV is responsible for examining and recommending to the MOH the granting, suspension,

and withdrawal of pharmacist certificates, applications to register imported or new products,

manufacturing and distribution certificates, and applications from foreign companies to

operate in Vietnam.

DAV controls and monitors the quality of drugs and cosmetics in Vietnam. The agency

cooperates with other authorities in order to examine individuals and companies that violate

regulations concerning quality (like circulating fake, trafficked, expired, or banned products)

and to distribute fines accordingly.

DAV is in charge of regulating the standard, quality, and types of materials used to

manufacture medicinal products in Vietnam.

According to circular 3121/2001 QD.BYT, published 18 July 2001, all companies wishing to

distribute medicinal products in Vietnam must follow several legal procedures. Applications to

register new products must include a Certificate for Sales (CFS), a certificate of Good

Manufacturing Practice (GMP), and other documents. CFS and GMP certificates can be

replaced with a Certificate of Pharmaceutical Product (CPP). Producers of products that are

registered successfully but which are subject to any of the following changes must file for a new

application, even though the initial registration is still valid:

Change in ingredients or in intended recipient of product;

Change in method of manufacturing product;

Change in quality standard or in the clinical tests carried out on the product;

Change in the way the product is to be consumed;

Change in the manufacturing process of the product;

Change in the factory in which the product is manufactured.

If the product is subject to one of the following changes, permission from the Ministry of

Health must be obtained:

Change in the name of the product;

Change in the recommended consumption dose of the product;

Change in the registration entity;

Change in the name of the product’s manufacturing unit (address of manufacturing unit

remains the same);



Change in the shape or colour of the product even if not causing any effect on quality

standard and clinical testing method;

Change in the recommended use of the drug;

Change in the address where the product is manufactured (manufacturing unit remains the

same);

Change in the product’s expiration date;

Change in the appearance of the product;

Change in the product’s packaging.

A product’s registration number is valid for five years and must be printed on the label, with

the application fee costing $US75. If the entity wants to reregister to continue production and

distribution of drugs in Vietnam, it has to submit an application to do so six months before the

registration number expires. At least seven days after a legitimate application for drug

registration is submitted, an authoritative body will verify the application and then send it to the

Ministry of Health for approval. If a product registration application is submitted by an entity that

belongs to the General Pharmacy Company and has a 100% foreign capital base, it only

requires the signature and stamp of the director of the entity before sending it to the Ministry of

Health for final approval and issuance of the registration number. The Ministry of Health will

respond with a final decision on the application no later than three months from the date of the

application for domestically produced products and no later than 12 months from the date of the

application for imported products.

The Ministry of Health published circular 1847/2003 on 28 May 2003 in order to address the

categorisation of OTC and Rx products. The circular listed seven Rx groups: Addictive,

psychoactive, toxic class A and B, antibiotics, harmonic (except for contraceptive), cardiac, and

medical fluid transfer. The decision also claimed that drug sellers are only allowed to sell OTC

drugs and are not permitted to sell Rx products without a doctor’s prescription. However, in

reality, Rx products are often sold without prescription in Vietnam due to the habit of consumers

of buying medicinal products based on personal experience or following guidance from

pharmacists within drugstores. As a result, some common Rx products such as antibiotics can

be easily purchased in pharmacies throughout the country.

Only consumers with healthcare insurance are entitled to reimbursement of healthcare costs.

On 1 January 2010, the amended health insurance law came into effect. People participating in

the insurance programme now have to pay as much as 1.5 times more than what they

contributed in 2009 (4.5% of monthly salary). It should be noted that students need only pay 3%

of their salary and that products purchased for children under the age of six are subject to 100%

reimbursement. Retired people, people of ethnic minority, people in poverty, and those who are

unable to work are entitled to a 95% reimbursement, with all other people being entitled to 80%

reimbursement. According to the Ministry of Health, currently 39 million people (46% of the

population) participate in the healthcare insurance programme, with 16 million of these people

living in poverty.

According to the WHO, generic products can be used in place of original products after the

patent of the original product has expired (patents last for 20 years on average). In Vietnam,

domestic manufacturers wishing to produce generic drugs only need to comply with a number of

requirements set by the Ministry of Health and do not need to perform clinical tests on people.

Generic drugs account for 11% of pharmaceutical product value sales and 35% of total volume

sales in Vietnam, with products within areas like antibiotics, vitamins, and pain killers accounting

for the majority of sales. The majority of domestically produced drugs are generic. The price of

generic drugs is lower than that of original products as when a patent expires, other

manufacturers can produce the products without carrying out any tests on animals or people.

The cost spent on the research and development and production of a new drug can reach as



high as US$800 million and it may take decades before the product is approved for distribution.

However, after a product’s patent has expired, other manufacturers only need to pay US$1

million to buy the rights to produce the drug themselves.

The availability of functional food products via direct selling channels continues to increase in

Vietnam. In addition, some pharmaceutical companies are also developing and producing these

types of product in response to rising demand as a result of increasing consumer health

awareness and rising stress and pressure at work. Functional food is particularly popular

amongst parents, the majority of whom are typically prepared to spend extra on products that

they perceive as being able to improve their children’s health. This area is expected to become

highly profitable over the coming years and is attracting the interest of a growing number of

companies.

Circular 01/2004/TTLT/BVHTT-BYT, which was jointly issued by the Ministry of Health and

the Ministry of Culture and Information in January 2004, published instructions on advertising

activities for medical products. According to the circular, all advertisements for medical products

must include the following information:

Product’s name as given by manufacturer, active substances, and original name of generic

drug;

Formula(e) and information relating to the interaction of pharmaceuticals;

Usage instructions, indications, precautions and special warnings such as possible side

effects, contraindication, and adverse reaction;

Name and address of manufacturer and distributor;

A “Read instructions carefully before use” warning must appear in the advert;

Other necessary conditions as stipulated by the Ministry of Health.

Consumer health medicines approved by the Ministry of Health which have a valid registration

number can be advertised in and via newspapers, magazines, flyers, electronic newspapers,

company websites, banners, transportation vehicles, mobile objects, luminescent objects, and

other advertising means. Products which have been approved for distribution by the Ministry of

Health can be advertised on television and via radio.

The circular also stated advertising activities that are prohibited by the Ministry of Health, such

as the advertisement of toxic drugs, additive drugs, psychiatric drugs, drugs that are prescribed

by doctors, and special drugs that may only be consumed under a doctor’s supervision. Active

substances that are banned by the Ministry of Health are also prohibited from being advertised.

The advertising of cigarettes is also strictly forbidden by law according to Circular 12/2000/NQ-

CP issued on 14 August 2000.

Vietnam’s Drug Administration is mainly responsible for the control and monitoring of the

packaging and labelling of medicines. The guidelines for the packaging and labelling of medical

products are listed in Circular No 14/TT-BYT, issued June 2001 by the Ministry of Health.

Labelling of medicinal products must include:

Name of the medicine;

Name and address of manufacturer and distributor. (Imported products must have an extra

label to show the import agent’s name and address);

Formula(e) of product, including substances within product and unit of measure of those

substances;

Packaging and processing method (quantity and form of drug);

Usage instructions and precautions, provision of suitable warnings in the case that the

product is not suitable for certain consumers, dosage guidelines, and printing of “read

instructions carefully before use” warning on label;



Registration number, manufacturing number, expiration date, storage conditions,

manufacturing date, and quality standard of product;

Some noticeable signs: Drugs that belong to Rx category have to have Rx printed at the

bottom left hand side of the label and must clearly state “prescribed product” on the label.

“Keep away from children” should be indicated on the label if applicable.

The distribution network of consumer health products in Vietnam includes pharmaceutical

distributors, representative agents, branches, and drugstores. The distribution channel is

dominated by domestic companies and three foreign distributors Zeullig Pharma, Diethelm, and

Megaproduct. Herbal products are distributed to consumers through 45 traditional medicine

units, 242 general hospitals that have traditional medicine faculties, 4,000 diagnosis entities,

and more than 1,000 private traditional medicine units. The distribution network for consumer

health in Vietnam is very wide and extends throughout the country. Drugstores serve around

2,000 people on average. Vietnam’s medicinal product distribution network comprises 178

companies producing OTC drugs, 84 companies producing herbal medicine products, 89

companies exporting and importing drugs, 900 parapharmacies, and more than 41,000 retailers.

Drugstores dominate sales in large cities. Some 3,000 drugstores operate in Ho Chi Minh City

alone and there are 1,000 private drugstores in Hanoi. Now that Vietnam is a member of the

WTO, there is the possibility that the country’s medicinal product distribution network will be

taken over by foreign players. In order to compete with them, the domestic pharmaceutical

industry is implementing a strategic plan which will involve all drugstores in the country meeting

GPP (Good Pharmacy Practice) criteria by 2011. GPP aims to ensure the quality of medicinal

products and to protect the health of consumers. In order to become GPP-certified, pharmacies

must only sell Rx drugs according to prescription. In addition, only certified pharmacists are

allowed to sell medicinal products to consumers and all products offered by approved stores

must have documentation of origin and transaction receipts. Moreover, drugstores have to meet

several requirements such as having a minimum area of 10 sq m and separated display and

preservation areas. Stores must also meet several storage condition regulations such as

maintaining a temperature of below 30 degrees Celsius and humidity of less than 75%.

Vitamins and Dietary Supplements Registration and Classification

Whilst vitamins are classified as OTC products, dietary supplements are not classified as

foods instead of OTC products. Currently, both vitamins and dietary supplements are

supervised by the Ministry of Health and Drug Administration of Vietnam (DAV).

Over the review period, the healthy growth of vitamins and dietary supplements was boosted

by rising consumer awareness about health and wellness, a higher level of environmental

pollution as well as an increasingly hectic and stressful pace of modern life in the country.

As a result of the category’s good performance, vitamins and dietary supplements are able to

attract more attention from pharmaceutical companies. Many domestic and international

pharmaceutical companies continue to diversify their product portfolios in response to the more

sophisticated demand from consumers, especially from the middle- and high-income group.

“Prevention is better than cure” is the most popular motto being used by most players to

encourage consumers to purchase vitamins and dietary supplements.

On 18 October 2011, the government issued Decree No 93/2011/ND-CP, which clearly stated

dietary supplements were not classified as OTC medicines. Manufacturers will be fined from

VND30 million to VND40 million if they advertise dietary supplements as OTC medicines. On

dietary supplements packaging, manufacturers have to print the line, “Th?c ph?m này không

ph?i là thu?c; không có tác d?ng thay th? thu?c ch?a b?nh” (This food is not a medicine; it

cannot replace medicine).



Within dietary supplements, combination dietary supplements is the biggest category,

accounting for 61% of the overall category’s value sales. Consumers prefer to purchase

combination dietary supplements, which they perceive as offering more value than single-

ingredient dietary supplements do.

Self-medication/self-care and Preventative Medicine

Within the context of the review period, Vietnamese consumers typically practice self-

medication for mild symptoms such as cold, cough, flu or headache instead of going to seek

advice from doctors or healthcare professionals. It is due to the fact that going to a doctor with

mild symptoms takes up the best part of the day with queuing and waiting in an unpleasant

environment as a result of the overloaded capacity of most hospitals in the country. They only

go to see doctors if their symptoms are not alleviated or become more serious.

Nevertheless, the trend of self-medication appears to less popular in big cities and urban

areas whereby consumers are becoming increasingly aware of the dangers of misusing

medicinal products and are more discerning when choosing consumer health products. Self-

medication continues to be common in rural areas.

Switches

There were no switches within consumer healthcare in Vietnam in 2011.

SOURCES Sources used during research include the following:

Summary 1 Research Sources

Official Sources Central Institute for Medical Science Information (CIMSI)

Department of Drug Administration

Drug Administration of Vietnam

Korea Trade Investment Promotion Agency (KOTRA)

Ministry of Health

Trade Associations Vietnam Pharmaceutical Cos Association

World Self-Medication Industry (WSMI)

Trade Press angi.com.vn

Vietnam Economic Times

Vietnam Investment Review

Vietnam News

Source: Euromonitor International

consumer health in vietnam aug 2012

Marketing