Vietnam: An emerging market for pharmaceuticals

by Minh Ngo

In the pharmaceutical space, Vietnam is proving to be an exciting strategic opportunity for many foreign organisations. Here’s how a more customer-centric strategy can help you capitalise on this market potential.

Why is the Vietnam market so hot right now?

There are many economic and social trends elevating Vietnam as an emerging strategic market for pharmaceutical businesses. Key economic drivers include the steady growth in GDP, increasingly brand-aware consumers and a rapidly ageing population.

Additionally, the improvement in living standards has seen a rise in healthcare provider facilities and consumption of pharmaceutical products. Between 2015 – 2020, the drug expenditure Compound Annual Growth Rate (CAGR) per capita increased by 14.1% (from $44 USD to $88 USD) - a figure that’s predicted to reach $163 USD by 2025.

It’s important to note that Vietnam’s healthcare system is heavily regulated in relation to the distribution and marketing of drugs to their key customers i.e. state-owned hospitals, private hospitals, private clinics, and pharmacies. Whilst in recent years the number of private hospitals has increased to meet demand from the affluent class, state-owned hospitals hold a 84% market share – therefore remain critical to driving top-line growth for Pharma organisations.

What are the challenges in this growing market?

Under its World Trade Organisation (WTO) commitments, Vietnam does not allow foreign-invested entities (FIEs) to conduct distribution services for pharmaceutical products. Therefore, FIE pharmaceuticals rely heavily on local wholesaler partnerships, who manage sub-distributors to deliver their drugs nationwide.

In over 1,200 state-owned hospitals, drug expenses (excluding some patented or originator products) are predominantly covered by Universal Health Insurance — which has been mandated for all Vietnamese nationals. Those within Ho Chi Minh City and Hanoi tend to be where the most reputable Health Care Professionals (HCPs) build their practice. This attracts patients from within the cities and all nearby provinces, driving up the demand for drugs and solidifying the strategic importance of these hospitals.

When looking to unlock value from this market, public drug tenders are considered big-ticket sale items – however, FIE players can’t directly take part in these submissions and must participate through their distributors. Consequently, key considerations that will determine success include:

  • Choosing the right distributors with strong logistics capabilities, who have stable relationships with both private and government stakeholders
  • Strategically deploying a sales team who understand how a product portfolio fits into different customer segments and territories, and know the best way to engage them
  • Equipping your sales team with the right knowledge to influence relevant stakeholders, who will then have the power to impact tender procurement decisions.

So how can you win in this growing market?

The Pharma sales force indirectly influences tender outcomes via HCPs, Key Opinion Leaders (KOLs), and other government bodies through account management strategies.

With competition booming, it’s important for organisations in the sector to shift their go-to-market strategy beyond brands and products, and more towards customer-centricity.

But how can you get ahead of the competition? A good place to start is by addressing the following questions:

  • How can I segment customers based on revenue-generating potential and other attributes such as market share, innovation, and product mix?
  • What is our customer journey (differentiated by personas) and the desired customer experience (CX) at the ‘moments that matter’ across each stage?
  • How do I engage customers based on their preferences, considering channel economics (both traditional and digital), to ensure that my efforts are going towards uplifting CX at prioritised ‘moments that matter’?
  • How do I build an organisational culture with the right mindsets, behaviours and operating model, to support a shift towards customer-centricity?

So for any pharmaceutical organisation looking to unlock potential from the Vietnamese market, success is dependant on understanding local nuances, equipping your sales force to influence decisions and reorganising around the customer.

Watch our short video to find out more about what a customer-centric journey in pharma looks like.