Vietnamese products on display at a drugstore in Hanoi
After her son was diagnosed with bronchitis, Nguyen Thu Ha drove to a pharmacy to fill the doctor's prescription.
All five of the drugs she received were imported.
"The medicines cost me more than VND500,000 (US$24). That's too much," said Ha, a 39-year-old primary school teacher in Hanoi. "I didn't have any choice but to buy them. Locally-made drugs are cheaper, but they aren't as good."
Ha said her family seldom buys Vietnamese medicine, even to treat minor illnesses.
A pharmacist on Giai Phong Street estimated that more than 80 percent of her stock comes from France, the UK, South Korea, China and India. The Vietnamese drugs in her shop are mainly antibiotics, anti-inflammatory drugs, and cough medicines.
"A few doctors prescribe Vietnamese drugs. But, in many cases, patients who would prefer to buy more affordable Vietnamese pharmaceuticals can't. They don't know which medicines they should buy," the shop owner said.
Vietnamese pharmaceuticals haven't fared well at home because doctors and patients don't trust them. Industry insiders blamed the sizeable advertising budgets maintained by foreign pharmaceutical firms for the dominance of foreign drugs on the local market.
According to the Ministry of Health, state-owned hospitals spent VND15 trillion ($727.9 million) on pharmaceuticals in 2010, but only 39 percent of that money went to Vietnamese drug makers.
Le Van Nha Phuong, vice head of the pharmaceutical firm Domesco, said his company has poured a great deal of money into quality control. The company's products, which include everything from treating chronic illnesses to medicines for temporary infections, are 60-80 percent cheaper than imported alternatives.
However, his firm still finds it hard to attract customers.
Phuong attributed the disparity to regulations limiting the ability of domestic pharmaceutical firms to advertise and offer sales commissions. At the moment, Vietnamese law caps pharmaceutical firm advertising expenditures at 10 percent of their annual budgets.
One industry insider estimated that Vietnamese drug manufacturers spend roughly 6 to 10 percent of the money used by foreign pharmaceutical firms to win over doctors and hospital procurement officers.
Doctors typically expect a 15 percent commission from European drug makers and nearly 40 percent from Asian producers, according to a study authored by Nguyen Tuan Anh, a researcher at Hanoi University of Pharmacy in 2011.
"This is one of reasons that doctors prefer prescribing foreign drugs to local ones even when they are of the same quality and the domestic drugs are much cheaper," the industry insider said.
However, Nguyen Ngoc Hien, vice director of Bach Mai General Hospital in Hanoi, said: "Many locally-made drugs aren't as good as imported ones. The most important thing for doctors is to prescribe something that's safe and effective."
Nguyen Minh Huong, a doctor from the Central Pediatrics Hospital, said price is not a decisive factor in convincing a patient to buy a certain drug. Moreover, many kinds of drugs aren't being produced in Vietnam.
Vietnam is now home to 178 pharmaceutical companies, including 98 western drug manufacturers and 80 traditional medicine firms. These manufacturers have the capacity to meet half the local demand and the rest are imported.
The country spent nearly $1.5 billion on importing medicines last year, up 18.2 percent over 2010, according to the General Statistics Office.
Most local pharmaceutical companies are small to medium-sized firms. Domestic pharmaceutical producers Hau Giang, Traphaco, Vinapharm, Domesco and the Central Pharmaceutical Company hold most of the market share.
Foreign firms aren't allowed to directly distribute pharmaceutical products in Vietnam yet. However, some firms are getting around that restriction by investing in local companies.
Chile-based CFR International SPA bought a 44 percent stake in Domesco, a local drug manufacturer.
One industry insider described Vietnam's pharmaceutical sector as highly appealing to foreign investors. Consumers can easily purchase products without many restrictions and the drugstores aren't strictly controlled.
Local pharmaceutical companies are seeking new ways to develop, as they continue to face fierce competition from abroad. Many firms now are focusing on traditional medicines.
Traphaco is an example. Its profits have grown by 28 percent since 2007. Now, three investment funds, including the Vietnam Azalea Fund, have become strategic shareholders in the firm.
Industry insiders attributed the high growth of the traditional medicine maker to its widely popular food supplements.
At the moment, up to 90 percent of materials used by western-style pharmaceutical manufacturers are imported, but materials for traditional medicines can be locally produced.
Explaining the reason for his firm's specialization in traditional medicines, the leader of a local pharmaceutical company, said: "Competition in the pharmaceutical market is very fierce. About half of the western medicines produced in Vietnam are nearly identical. In order to attract customers, domestic pharmaceutical manufacturers need to do more to set themselves apart."
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