Healthcare to Vietnam
Trends and opportunities
Healthcare expenditure in Vietnam in 2016 is estimated at US$ 14.9 billion and expected to reach US$ 21.6 billion by 2020 (Source: BMI, Vietnam Pharmaceuticals & Healthcare report, November 2016). Key market drivers are a large and expanding population, rising incomes and improved access to healthcare services. Ongoing healthcare system reforms will continue to focus on expansion and improvement of access to health services, stronger regulatory frameworks, balancing between public healthcare coverage and higher private spending on healthcare toward financial sustainability.
The development priorities for the sector include:
- improving basic and preventive health-care services
- developing human resources and information systems
- renovating health service operations
- developing pharmaceuticals and bio-medical products
- investing in advanced technology lines to improve domestic production.
The Vietnamese Government is also focused on improving healthcare
infrastructure and plans to establish an eHealth Information Exchange
platform, in particular telemedicine and shared information database to
enable access for rural patients and to reduce the costs of expanding
healthcare services to rural areas. There is strong support from the
government to encourage joint-venture projects between local manufacturers
and foreign companies to enable skills and technology transfer in
biotechnology and medical devices. The Government hopes to shift away from low-end consumable
devices towards production of vaccines and in-vitro diagnostic technology.
Vietnam is highly reliant on pharmaceuticals imports with imported products
accounting for around 80 per cent of total hospital pharmaceutical
spending. Vietnam’s pharmaceutical market was valued at US$ 3.81 billion in
2014, an increase of 16.5 per cent from 2013, and double-digit growth is
expected to continue towards 2020.
The government also seeks to turn Vietnam into a pharmaceutical production
hub. The government has outlined plans to invest US$ 241 million in eight
projects within the local drug manufacturing industry. The government aims
to have 80 per cent of domestic demand met by local producers by 2020, up
from around 50 per cent currently.
The healthcare market is dominated by the services sector, which represents more than US$ 10 billion out of the estimated total market size of US$ 14.9 billion. The Ministry of Health estimates that available hospital beds would have to increase by 115 to 250 per cent to provide for current demand. A new healthcare law will phase in mandatory health insurance, which will cover 80 to 95 per cent of health expenses (Source: Business Monitor, Vietnam Pharmaceuticals and Healthcare Report, November 2016).
The financing of hospitals will shift gradually from state contributions to fees levied on patients and these fees will be allowed to increase to achieve cost recovery. The first step in this direction was taken in 2012 and a road map is in place to complete the process by 2018 (Source: LuatVN, Decree 85/2012/ND-CP, October 2012).
Public hospitals usually offer poor quality healthcare and long waiting times, often requiring patients to bribe healthcare workers to receive treatment and beds are often shared. Private hospitals are used by just 7 per cent of patients, while US$ 2 billion is spent annually by Vietnamese residents who seek healthcare services abroad as a consequence of quality concerns (Source: Reuters, Vietnam preps for medical makeover to recoup lost billions in healthcare, October 2014). According to the Association of Vietnamese Private Hospitals, half of the 170 existing private hospitals are struggling financially, as they often do not manage to inspire the same level of trust in potential patients as hospitals in typical ‘health tourism’ destinations do (e.g. Thailand and Singapore).
Australian enterprises are generally perceived as delivering high quality services, following international standards and best practices, giving the Australian hospitals or clinics in Vietnam an advantage to compete with the foreign treatment facilities.
A large and expanding population, robust economic growth and improved
access to healthcare will continue to underpin strong pharmaceutical market
growth in Vietnam over the next decade. Another boosting factor to the
sector’s development is an increased level of foreign investment due to
government relaxation of foreign ownership.
Local drug production is weak and incapable of meeting domestic demand.
Foreign enterprises are responsible for an estimated 20 per cent of
domestic pharma production. Given the prevalence of counterfeit medicines
and lack of inspection and quality control, trust in local pharmaceuticals
is limited and imported goods with strong brands can take advantage of
This creates demand for foreign investment and expertise to establish
compliance. The government has allocated US$ 1.5 billion to be disbursed
over the next 10 years on projects that benefit domestic pharmaceutical
manufacturing, including technology transfer and upgrade to meet good
manufacturing standards and the establishment of joint ventures with
(Source: Business Monitor, Vietnam Pharmaceuticals and Healthcare
Report, November 2016).
Vitamin and nutritional supplements
Vitamins and dietary supplements registered a growth rate at 13 per cent in
2015 (Source: EuroMonitor, May 2015). Vietnam witnessed increasing
demand for health supplements as a result of improvement of disposable
incomes, living standards, rising consumer awareness about health and
wellness, the higher level of environmental pollution as well as the
increasingly hectic and stressful pace of modern life in the country
especially in the big cities and urban areas such as Ho Chi Minh City and
The majority of Vietnamese consumers still retain the habit of
self-medication. This practice is favoured due to the poor management of
over-the-counter medication, increasing costs of healthcare services and
inadequate clinics / hospital system.
General and combination dietary supplements, especially products for
seniors and women are the most popular product category. Paediatric health
supplements is also an emerging trend amongst young parents in urban areas
like Ho Chi Minh City and Hanoi.
The trend of using vitamins and dietary supplements has increased
dramatically in Vietnam and it is leading to a fragmented environment with
many different brands and products. Although most Vietnamese consumers tend
to use foreign brands, domestic players are more active within
herbal/traditional dietary supplements, which is a new trend within
consumer health in Vietnam. Private label in Vietnam remains negligible in
vitamins and dietary supplements in 2016.
Australian-made vitamins and nutritional supplements are well received in
Vietnam for quality and effectiveness, however are facing strong pricing
competition with other international products and products imported through
‘grey’ channels into the country.
Aged care services
Vietnam is projected to be aging at a very rapid pace. According to UN data
in 2015, only 7 per cent of the population is aged 65 and older. By
2040, the number of people of 65+ is projected to almost triple to 18.4
million and account for 15 per cent of the population. The speed of aging
in Vietnam is among the fastest across the globe, and is
happening at a much lower income level than current countries with an
older population. Currently, 90 per cent of the elderly (65 years and
older) have at least one child living in the same commune, resulting in
in-family care, despite a high female labour force participation rate of 73
per cent (Source:
The World Bank Data
As urbanisation takes place, the nature of aged care services is likely to
change. The next generation of elderly people will be larger, wealthier and
more likely to live alone or with a partner, potentially increasing the
demand for formal aged care services. Like hospitals, public nursing homes
are underfunded and overrun. Private institutions are few and tend to focus
on wealthier individuals. The government is trying to incentivise private
aged care facilities by offering preferential access to land and a lower
tax rate of 10 per cent.
The speed of demographic transition in Vietnam poses new challenges for the
labour market and policy makers in terms of long-term care system and
insurance/pension system. There are niche opportunities for Australian
suppliers in health delivery model consultation, education/ training and
development, as well as in health-related information and communications
technology. Financial constraints may limit the scope for foreign investors
to run nursing homes.
Vietnam medical device market is growing steadily with around 92 per cent
of medical devices imported, mainly from Japan, United States, Singapore
and China (Source: Frost & Sullivan 2015). Diagnostic devices,
laboratory equipment, and patient monitoring devices are the main products
Government funded hospitals account for 70 per cent of demand for medical
devices, the remaining coming from foreign-owned hospitals and clinics,
local private hospitals and research and educational institutions. However,
foreign suppliers cannot sell to government hospitals directly and have to
work with a domestic intermediary or partner.
The use of telecommunication and information technologies (telemedicine) in
order to provide clinical health care at a distance is currently being
tested. The government has expressed support for biotechnology, but any
development in this area is starting from a very low base and in a
Vietnam is potentially a low-cost alternative to China for sourcing and
manufacturing of medical devices. Labour costs are lower and domestic
Vietnamese medical device manufacturers currently produce low-end products
such as medical disposables, hospital furniture, and hospital garments. The
Vietnamese Government has initiated a plan to increase local capabilities
in biotechnology and medical device manufacturing with ambitions to be able
to produce medical devices which are not currently being produced in
Vietnam and attract more foreign investments to establish manufacturing
facilities in the country.
Digital health technology
At the national level, the Ministry of Health has established goals and
broad policies for the development of e-health capacity and capabilities
and is currently working on improving required conditions to apply digital
health technologies to healthcare services across all levels of the
healthcare system. However the Vietnam healthcare system presents a number
of issues including low investment in health IT, no standardisation for
health data, no unique patient ID, and shortage of health IT human
resources which has to date prevented any real progress towards
implementation of e-health solutions.
The introduction of health IT in hospitals has been limited to business
processes and management systems, with very limited or no use of clinical
applications such as electronic health records, order entry systems,
decision support, pharmacy systems. This presents opportunities for
Australian companies in digital health to collaborate and provide e-health
solutions to local healthcare providers.
The Vietnamese Government has committed to a rapid development of the
health sector and to improving the standard of facilities. Partnerships
have been forged with countries such as the US, Belgium, Indonesia and
Thailand regarding health infrastructure, training, research and insurance
setup. The government encourages private sector participation in the
healthcare system and welcomes foreign investors providing services and
collaborating with Vietnamese pharmaceutical manufacturers.
French and US companies are the dominant foreign players running hospitals,
while companies based in Thailand (Bumrungrad Hospital PCL), Indonesia
(Lippo Group), Malaysia (IHH Healthcare Bhd, KPJ Healthcare Bhd), Singapore
(Chandler Corporation, Parkway Holdings), India (Fortis Healthcare) and
Canada (Triple Eye Infrastructure) are currently setting up operations or
have expressed an interest in establishing facilities. Domestic
organisations planning to expand their operations in Vietnam include the
Saigon Institute of Technology and VinGroup (owner of VinMec hospital).
Healthcare service providers also compete for patients with “healthcare
Pharmaceutical companies are faced with erratic price increases and a price
approval regime which disadvantages importers. Government policies attempt
to give preference to domestically produced pharmaceuticals, though
consumers are generally sceptical of their quality.
Domestic pharmaceutical companies focus mainly on generic drugs, with very
low expenditure on R&D. This restricts the scope of domestic companies’
operations, forcing them to establish themselves either within Vietnam or
through exports. At present, the five leading pharmaceutical companies in
Vietnam are Sanofi, Hau Giang Pharmaceuticals (DHG Pharmaceuticals),
Imexpharm, Traphaco and Domesco.
Foreign manufacturers and major domestic players:
- Bristol-Myers Squibb
- Roche and United Lab
- HauGiang Joint-Stock Co
- Vipaco and Vabiotech
Tariffs, regulations and customs
Important laws governing healthcare in Vietnam are:
- The National Assembly of Vietnam adopted a new Law on Pharmacy
(105/2016/QH13) on 4 June 2016. The new law took effect on 1 January 2017,
replacing the current version which was passed in 2005. In an effort to
update certain aspects of Vietnam’s legal framework to be more in line with
international practices, the new pharmaceutical law is expected to provide
quicker access to drugs for patients, increased consumer protection, and
more incentives for local manufacturing of drugs.
Health Insurance Law,
, 14 Nov 2008 with Decree
, 15 October 2012.
Medical Examination and Treatment Law
, 23 November 2009.
Foreign investors entering the Vietnamese market through Private Public
Partnerships (PPP), profit-sharing arrangements or joint ventures enjoy a
preferential corporate income tax rate of 10 per cent (in place of the
regular 25 per cent), tax exemption over the first four years of a project
and a 50 per cent subsequent tax break in the following nine years (Source: HKTDC,
Vietnam private healthcare sector lures foreign investors
, July 2013)
Foreign investors are allowed to operate 100 per cent foreign owned
hospitals and clinics, with no restrictions placed on foreign qualified
doctors to practice and foreign backed insurers are allowed to offer
healthcare plans. Foreign owned enterprises are permitted to operate in the
areas of drugs production, drugs maintenance, drug testing or the import of
), but not in distribution (Circular
The National Strategy on the Development Scheme of Vietnam’s Pharmaceutical
Industry up to 2020, with Vision to 2030 (Decision
, 10 Jan 2014) aims to support domestically produced pharmaceuticals. This
includes promotional activities addressing healthcare professionals and
patients but also encouraging joint ventures. Future regulations might
present further disadvantages for imported pharmaceutical products.
The price of pharmaceuticals is theoretically overseen by the Drug
Administration Department of Vietnam (DAV) in coordination with the
Ministry of Finance. Importers must submit price suggestions for approval
for each product, although implementation of this policy is fluid. All
material advertising pharmaceutical products must be registered with the
DAV and certain types of drugs may not be promoted on TV, restricting
advertising to print. Nutritional supplements advertising has been
prohibited since 2013, but the ban is not implemented.
The World Health Organisation (WTO) commitments require manufacturers to
follow GMP-WHO and an increasing number of domestic producers comply with
these standards. The government requires following the Good Pharmacy
Practice (GPP), but few have been certified
(Source: Business Monitor, Vietnam Pharmaceuticals and Healthcare
Report, September 2014)
. Domestically-produced generic pharmaceuticals are not usually obliged to
present proof of bioequivalence, which reduces production costs.
Domestic clinical trials are required for marketing approval pertaining to
pharmaceuticals that have not been made available in their country of
origin for more than five years. This includes newly imported medical
devices associated with new therapies or new functions. Imported biological
products and new batches of vaccines must undergo quality testing by the
National Institute for Control of Vaccine and Biologicals. The capacity for
such trials and tests is very limited, which causes delays. Approvals are
valid for five years.
Pharmaceuticals require a free sales certificate, GMP certification and
authorised letter and certificate of analysis and samples. Imported goods
additionally require a certificate of pharmaceutical product (CPP) from the
country of manufacture or packaging.
Medical devices require a certificate of quality standards, method of
testing, a device’s composition breakdown listing all its chemical
ingredients and operational license with safety and quality and hygiene
standard testimonies or cosmetic goods manufacture practice certificate.
Imported goods require an original catalogue, instruction manual and
technical guide (including a Vietnamese translation), manufacturer’s
quality certificate (either ISO 13485 or ISO 9001 certification or FDA/CE
approval of the device manufacturing site), free sale certificate from the
country of origin and a quality declaration letter.
Fortified foods are regulated as food products and supplements as over the
The maximum rate of 14 per cent is due to decrease to five per cent (including supplements and functional food) in line with Vietnam’s WTO obligations. The average tariff rate to be reached for medical devices is zero to five per cent and 25 to 40 per cent for nutritional supplements and VAT is applied at the standard rate of f to 10 per cent.
Marketing your products and services
The bureaucratic nature of Vietnam’s health system makes market entry
difficult. However, the government explicitly supports the establishment of
foreign owned hospitals, clinics, joint-ventures and PPP in pharmaceutical
manufacturing (excluding distribution).
Australian exporters of pharmaceuticals and sellers of devices to public
hospitals are required to cooperate with a local partner for distribution
purposes. Partnerships can help to avoid a tightening regulatory
environment not in favour of imports of pharmaceutical products into
Most government hospitals procure medical devices through bidding, which is
organised by the Ministry of Health. Foreign companies are not allowed to
submit a tender and must form a joint venture or utilise a local
distributor. Private hospitals and clinics purchase directly from
distributors (Source: GIFT,
Appropriate Healthcare Equipment for Emerging Markets
, March 2014)
Hospitals mostly purchase pharmaceuticals through bidding, which is subject
to a price ceiling per medicament set by the regional health department.
Foreign investors are prohibited from distributing pharmaceuticals and must
cooperate with a domestic wholesaler. Access to healthcare, even to
pharmacies, is generally limited in rural areas; the rural population tends
to travel to cities to seek medical treatment or purchase products.
Disruption is expected in pharmaceutical retailing through the entry of
Links and industry contacts
Government, business and trade
Australian Self Medication Industry
Complementary Medicine Australia
Department of Vietnam Customs
Drug Administration of Vietnam
Ministry of Health
Therapeutic Goods Administration
Vietnam Association of Functional Foods
Vietnam Pharmaceutical Companies Association
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