Vietnam Healthcare Market Overview

10 December 2015

Todays webinar agenda

Introduction of speakers
The shift in ASEAN market AEC & TPP impact
Vietnam healthcare market overview
Outline opportunities in hospital sector
Introduction to Medical Science & Health Services Mission to
Vietnam July 2016
Q&A
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Introduction
Ms Janelle Casey Senior Trade Commissioner, Austrade
Vietnam
Mr Dong Pham Vice Chairman, Vietnam Private Hospital
Association
Ms Minh Cao Business Development Manager, Austrade
Vietnam
Ms Milena Bliss Senior Trade Adviser International Health,
Sydney Australia
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Why Vietnam

Vietnam the next growing healthcare market

in ASEAN
Large population, rapid urbanization & increasing
spending power
Increasing demands for quality healthcare
Strong economic growth

Increasing healthcare expenditure

Next growing medical devices/ pharmaceuticals
manufacturing industry
Global shift in ASEAN markets
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The shift in ASIAN market: impacts from AEC

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AEC impacts to healthcare industry

Removed or lowered tariff /
tax rates
Harmonised requirements
for inter-ASEAN licensing &
permits for practice

Opportunities in
Vietnam

Free flow
of Goods

Free flow
of skilled
labor

Import of services for

physicians

Easier medical business

expansion & transfer of
capital

Free Flow
of
Services
AEC
OBJECTIVES

Manufacturing base
for medical devices
Next in production of
and R&D
pharmaceutical and
medical devices

Expansion & exporting of

services such as medical &
technical expertise

Expansion of
pharmaceutical & medical
device manufacturers &
distributors

Free Flow
of Capital
Free Flow of
Investment

Source: BMI, Frost & Sullivan

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TPP Outcomes for Australia in the health sector

CANADA

Elimination of duties

USA

Greater access & operating conditions

Improve competition level of Australian

pharmaceutical & medical devices
manufacturers

JAPAN
MEXICO
PERU
CHILE
VIETNAM
SINGAPORE
MALAYSIA
BRUNEI
AUSTRALIA

TPP Parties

Ability to participate in tenders for

government procurement contracts
For further information, visit www.dfat.gov.au/fta/tpp/

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VIETNAM HEALTHCARE
MARKET

Vietnam the next healthcare market in ASEAN

Large & fast growing Population
Year 2015

90% Medical devices are imported

Consumables

Year 2020e
19.5%

URBAN RATE

33.6%

22.3%

Diagnostic Imaging

36.9%

32.3%

29.3%
Dental products

Growing at 1.05%

91 million

Year 2015

97 million

Patient aids

13.3%

4th largest in
ASEAN
14th largest
in the world

4.9%

Public

5.9%
5.0%

Year 2020e

Growing at 13.4%

175

Pharmaceuticals market value

1,204
Year 2020e

Year 2014

US$24
billion

25.4%

12.0%

Others

Hospitals

1,090

5.8% GDP
highest
in ASEAN

Year 2015

Year 2020e

5.2%

Total healthcare spending

US$13
billion

24.9%

Orthopedics &
prosthetics

Private

200

25.1 Hospital beds per 10,000

US$3.8
billion
Year 2014

US$7.3
billion
Year 2019e

habitants
Year 2014

7.9 Doctors per 10,000 habitants

Growing at 14.1%
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Source: BMI, Frost & Sullivan, World Bank

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Where we see opportunities

Hospitals &
clinic
management

Healthcare
infrastructure

Health IT
system

PPP
projects

NICHE medical &

surgical equipment &
devices

Technology transfer
projects

Drugs & vaccines

development /
R&D

Research excellence in
medical products,
technologies,

General hospital
supplies, laboratory
equipment

Extensive research
expertise in developing
new therapeutics for
tropical diseases

A global hub for medical research

Underdeveloped healthcare system

Global leader in medical
science & technologies:
breakthrough
products.

Emergency
response
Diseases
management
Human
resources
Education
& training

Tele-health/ Telemedicine
Hospital management &
patient administration
systems
Electronic health record

Sophisticated
domestic
pharmaceutical &
health care system

Robust regulatory
regime

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Vision to turn Vietnam into a pharmaceuticals

production hub in the region
To have 80% of domestic demand met by local producers by
2020, up from ~ 50% currently
Focus on drugs, vaccines, blood and other biologics products

Calling investment from both domestic and foreign

organizations
Plans to invest US$241 million in eight projects within the local
drug manufacturing industry

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Pharmaceutical sector risky but promising

Top countries for imported
pharmaceuticals in Vietnam - 2012
1th
2nd
3rd
4th
5th

FRANCE

US$ 235.9 mil

INDIA
SOUTH
KOREA
GERMANY

US$

230.5 mil

US$

164.4 mil

ITALY

US$

Tender
regulations
favor local
manufacturers

US$ 143.4 mil

93.9 mil

Highlyfragmented
distribution

Key drivers and trends

Increasing regulation &
compliance level

Increasing use of health

supplements

Low market entry barriers &

Self-medicating culture

Increase in the use of modern,

self-medication & traditional
medicine to self-diagnose

Universal Health Coverage

drives the needs for production
of generic pharmaceuticals

Top quality
drugs are
mainly
produced by
foreign
players

Large
market size

80% of
pharmaceutical
are imported

Legislation
mandates
using a local
partner for
importing &
product
registration

Government
focuses on
the production
of generic
pharmaceutic
als

Joint
partnerships
will provide
quicker
market access

Increasing competition
between foreign & domestic
companies
Source: BMI, Frost & Sullivan

National drive to produce

high-quality pharmaceuticals

Increasing local support for

domestic products
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Medical technology sector - fragmented

Availability of
many
diversified
products
Multiple
stakeholders
for decision
making

Small familyrun
businesses

Regional

National

Provincial

Regional
Segmentation

Fragmented
Distribution
Limited
exclusive
distributors

Distribution channels

Product/ Operational
Segmentation

Relationshipdriven
business

Distributors

Importers &
Distributors

4th party logistics

companies

High focus &

resources
required to
sell medical
devices
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 but poised for growth and change

Key drivers and trends
ASEAN Economic Community &
ASEAN Medical Device Directive

Government vision to become a

regional pharmaceutical generics
production base by 2020

Growing
demand for
high quality
health
services

Increasing investment in hospital

sector from both domestic &
international investors
Biotech will assist the development
of vaccines, higher-quality
pharmaceuticals, gene therapy,
and IVF technology
Increasing activities of telemedicine
in consultation, surgery, imaging,
and cardiology

Increase in in-vitro diagnostics

and imaging equipment

Low
market
entry
barriers

Attractive
manufacturing
base

90% of
medical
devices are
imported

Med Tech is in
its early stage
of
manufacturing

Largely
focused on
low-end
medical
consumables

Low
manufacturing
costs

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Hospital sector

Mr The Dong Pham

Vice Chairman
Vietnam Private Hospital Association

Developing public hospital sector is a priority

Market drivers

Opportunities

Healthcare expenditure is ~ 6% of GDP,

highest in ASEAN region

Collaboration between local manufacturers and

foreign companies for local generics or lowend medical devices

Financial resources from WHO to develop

healthcare infrastructure

Collaboration with distributors for joint ventures

to move the distributor up the value chain

Government reducing barriers to new

hospital set-ups

Expansion or joint ventures in both urban and rural

areas; data warehousing to increase efficiency &
data tracking between vendors and hospitals

20112015 eHealth Plan to improve health

IT applications

Systems adoption to link up private and

public hospital information systems.

Aging society with decreasing birth rates

Aged care services or IVF specialty clinics or

products.

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While private hospital sector continues to grow

Opportunities
for aged care
services to
support the
aging
population

Forecasted
CAGR of
13.4% to 2020

Collaboration
with public &
private
hospitals for
specialised
services

Increasing IT
infrastructure
development
Demand for
private,
affordable
healthcare
services

Growing sector
due to
overcrowding
issue in public
hospitals

High demands
for training in
hospital
management
Low
occupancy
rates at some
hospitals can
lead to
closure

Autonomy to
purchase
directly from
distributors as
Tender is not
required

Government
tax incentive
for new
healthcare
service
facilities

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Via foreign investments & privatisation process

PPP & Hospital privatisation
The Decree 93/NQ-CP on Some
mechanisms and policies to develop health
care - approved on 15 December 2014,
facilitates cooperation between public
and private health care sectors

Public hospital privatisation in Vietnam: 1st

privatisation of public hospital:The
Vietnam Central Transportation Hospital,
The cooperation between City
International Hospital and Cho Ray
Hospital

Foreign Investment
Foreign medical suppliers are able to
provide services via
100% foreign-invested hospitals
JV with Vietnamese partners
Business cooperation contracts with
local medical service providers
PPP agreements allow doctors to work in
both public and private healthcare facilities
JV example
Canadian Triple Eye Infrastructure
Corp & Dai An JSC Co.

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PPP projects in hospital infrastructure

development
Project

Location

Investment
capital (US$)

Investment
model

Project
Governance

Obstetrics
paediatrics hospital

Binh Dinh

24 mil

PPP

Binh Dinh
Department of
Planning and
Investment

Ha Tinh obstetrics
paediatrics hospital

Ha Tinh

17 mil

PPP

Ha Tinh
Department of
Planning and
Investment

International general
hospital

Gia Lam,
Hanoi

200 mil

PPP

Ha Noi
Department of
Planning and
Investment

Phu Xuyen General

Hospital

Phu Xuyen,
Hanoi

161 mil

PPP

Ha Noi
Department of
Planning and
Investment

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SAIGON ITO HOSPITAL GROUP

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Vietnam a market full of potentials

Demands for
healthcare in
Vietnam are unmet
Hospitals overcrowding
Under-served rural population
Poor adoption of technology
High-quality drugs are mainly
imported

Long-term potentials in
medical technology
market

Vietnam may become the

generic drugs manufacturing
hub in the region

Driven by the national initiative for

local drugs & medical devices
manufacturing

Government focus sector

AEC & TPP in place

Lower business boundaries due to AEC &

TPP

Strong foreign investment

Low-cost production & competitive

environment

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Medical science &

health services
mission to Vietnam
Hanoi & Ho Chi Minh City
18th to 22th July 2016

Led by Professor Ian

Frazer
Opportunities to
showcase
Products

Equipment
Technology
Systems
Services, education and
research

Chances to establish
connections with
Industry key stakeholders

Obtain market insights,

first-hand market
understanding

Potential customers,
distributors and partners

Increase brand awareness

Key market players

Leverage the Australian

government badge

Education and training

institutions

Develop business &

collaboration opportunities

Site visits, business

matching activities, net
working functions,
research workshop
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CONTACT AUSTRADE

In Australia: 13 28 78
info@austrade.gov.au
In Vietnam: +84 8 3827 0600
vietnam@austrade.gov.au

www.austrade.gov.au/Vietnam
www.exportawards.gov.au
www.australiaunlimited.com

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