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Restrictions curbing success of pharma groups of all sizes



Amid a lacklustre picture in the market, domestic pharma giants are attempting to cut costs to weather the storm of COVID-19, while multinational corporations are making new preparations.

According to a VIR source, a number of domestic leaders in the pharmaceutical market are facing standstills in their operation and insufficient numbers of pharmaceutical ingredients, thus making their path to fulfil 2020 targets more difficult.

Nguyen Vu Cuong, an analyst at FPT Securities told VIR, “Those focusing on international cooperation and doing new business, while expanding by building new factories and exporting, are suffering some delays due to COVID-19.”

Domestic players in silence

Cuong cited Imexpharm Pharmaceutical JSC (IMP) and Pymepharco JSC as examples. Pymepharco, one of the key players in the local market, is building a new factory but is still waiting for international experts for appraisal. Similarly IMP, Vietnam’s fourth-biggest pharmaceutical firm, is also in a period of waiting for international experts to appraise its new high-tech factory. The experts cannot yet enter Vietnam due to pandemic restrictions.

IMP is seeking the Ministry of Health’s approval of EU-GMP recognition for the facility. However, the postponement might delay the plan entirely. IMP aims to export the products and increase tenders in the ethical drugs channel or the hospital channel in order to profit.

Currently, IMP’s foreign investors hold a total of 47.34 per cent stake, with the company yet to attain a strategic foreign partner.

Binh Dinh Pharmaceutical Company is also in a similar situation. Its plan to build a new factory is being delayed, as it waits for imported equipment and machines.

Elsewhere, Traphaco JSC – the country’s second-largest publicly-traded drugmaker – is finding it a challenge to meet its early-set plan to have 10-15 new products transferred from foreign partners for trading and for manufacturing this year because of the pandemic.

“The facts show that no products transferred are produced at Traphaco factories. We have only seen some products transferred for trading so far,” Cuong elaborated.

Boosting international cooperation in technology transfer is considered as among the key solutions that Traphaco is betting on to fulfil targets amid mounting competition. The company is working with South Korean partner Daewoong in a tech transfer project for its strategic products at a new factory in the northern province of Hung Yen.

It also has Mirae Asset as an indirect investor which helps it to work with capable partners in tech transfer to shorten research and development times, as well as the manufacturing of new high-quality products, thus enabling it to meet the requirements to join the ethical channel.

Traphaco’s major foreign shareholders are Magbi Fund Ltd., (24.99 per cent) and Super Delta Pte., Ltd (15.12 per cent).

Other domestic pharmaceutical giants like Hau Giang Pharmaceutical JSC (DHG), and Domesco Medical Import-Export are not an exception during the uncertain period.

DHG, the biggest publicly-traded drugmaker in Vietnam, is one of the local pharma groups still suffering from faults in the global supply chain due to health crisis. DHG’s reliance on 90-per-cent ingredient imports is causing a big problem due to price fluctuations and it has yet to find a solution.

DHG, which boasts Taisho Pharmaceutical Holdings, one of the five biggest pharmaceuticals in Japan, as a major foreign shareholder with a stake of over 50 per cent, is said to have plans to boost exports to the EU. Therefore, it needs high-quality medicinal ingredients from countries like the UK and France. However, COVID-19 has caused a fall in the amount of cargo flights, thus increasing costs.

Moreover, DHG is struggling partly due to the prevailing regulations on tenders and approval for circulation of its drugs. “Many of our drugs have not received proper circulation for months. As a result, our business activities have been seriously hit,” said a source from DHG.

DHG is also over-dependent on antibiotics amid the government’s stricter control over their sales in the over-the-counter market. For the time being, the channel is seeing stiffening competition among domestic drugmakers in terms of prices and product segments.

DHG’s concerns are increasing in policy risks as its PIC/S Malaysia factory has fewer competitive advantages in tenders of high-end Group II categories of pain and fever drugs under Circular No.15/2019/TT-BYT dated July 2019 regulating drug tenders at public hospitals.

According to Cuong of FPT Securities, the companies which have the business on tenders are being affected because medical units offered for the majority of them in the first and second quarters have needed to stockpile for fears of COVID-19 developments, thus resulting in a significant decrease in the third quarter.

Le Duc Khanh, director of the Market Strategy Department at PetroVietnam Securities, said that this is a challenging time for domestic pharma businesses. This year, they may do no new businesses or expand, but can only try to maintain normal operations.

Pharmacy is one of the sectors said to have fewer negative impacts due to COVID-19. While DHG reported slight falls in revenues and profits in the first six months of 2020, Traphaco and IMP obtained good business performance during the period.

According to Cuong, local players are concentrating on cutting costs during 2020. They may not fulfil 2020 revenue targets, but could possibly reach profit goals through cost cuts.

Traphaco aims to make consolidated revenue of VND2 trillion ($87 million) and consolidated after-tax profit of VND180 billion ($7.8 million) this year, up 16 and 9 per cent on-year, respectively. Meanwhile, DHG aims to increase its pre-tax profit by a percentage point. IMP even set 25 and 28 per cent on-year rises in net revenue and pre-tax profit, respectively.

Foreign players move ahead

Even multinational corporations (MNCs) are suffering this year – however they benefit from strong financial capacity, experience, and technology expertise, while making changes in strategies to stand firm in the storm of the pandemic.

Now they are gaining further advantages in the lucrative local pharmaceutical market on the back of the EU-Vietnam Free Trade Agreement (EVFTA). The landmark deal now opens the Vietnamese market in fields that EU businesses have been seeking particular solutions to for years, such as intellectual property rights, direct pharmaceuticals import, tenders, and more.

With this, MNCs are taking the chance to expand business and investment in Vietnam. For instance, AstraZeneca last year announced investment of VND5 trillion ($217.4 million) in Vietnam.

The company in July then signed a distribution partnership with National Phytopharma JSC, one of the first such agreements between a Vietnamese pharma distribution company and an MNC, marking the next step to expedite its innovative solutions to address local healthcare needs and create value for patients and society.

In addition to the benefits from the EVFTA, MNCs like Novartis, AstraZeneca, Sanofi, and GSK are investing in digital health in Vietnam to take advantage of the country’s new digital transformation in the healthcare sector to obtain sustainable gains.

According to Swiss drug manufacturing company F. Hoffmann-La Roche, it is preparing to launch its personalised information platform for healthcare professionals in Vietnam within the year.

Girish Mulye, chief representative of the Hoffmann-La Roche Representative Office in Vietnam told VIR, “By driving new digital channels, this multichannel interaction will create value for healthcare professionals by integrating trustworthy, globally updated, relevant information, and knowledge to one channel, saving time for healthcare professionals and helping them get better treatment outcomes for patients.”

Similarly, AstraZeneca Vietnam is investing in digital technology and innovation to improve health services for Vietnamese patients and enhance the healthcare ecosystem. The company plans to complete building 60 Smart Neb rooms for children’s hospitals in Vietnam by the end of this year.

Since 2019, Novartis has prepared for this transformation journey in Vietnam by adjusting its business and customer-facing model to adapt with new requirements, enhancing capabilities for its staff, and helping customers move forward with new engagement models. VIR

Bich Thuy




Vietnam fifth in global trade connectedness



Vietnam fifth in global trade connectedness

The Tan Cang – Cai Mep International Port in Ba Ria-Vung Tau, southern Vietnam.Photo by Shutterstock/Hien Phung Thu.

Vietnam ranked fifth globally last year in terms of trade connectedness, up five places from 2017, according to a recent report by logistics giant DHL.

With a score of 83 points, Vietnam ranked behind Singapore (92), the Netherlands (92), Belgium (91) and Malaysia (84).

Most countries and territories in the top 10 saw their ranks drop or remain unchanged. Trade is one of four pillars of the DHL Global Connectedness Index 2020, the others being capital, information and people. These pillars are measured by the quantity of traded goods, the amount of international investment and the number of migrants.

The overall ranking of Vietnam in the global connectedness index was 38 among 169 countries and territories, up one place from 2017. “Vietnam has become a serious competitor to China not only in textiles manufacturing, but also increasingly in high tech products,” the report said.

Shoeib Reza Choudhury, CEO of DHL Express Vietnam, said Vietnam was one of the top destinations of companies seeking to diversify their manufacturing, drawn by the young labor force, trade pacts and social stability.

Moving to Vietnam is most popular among hi-tech forms and garment companies, he added. The DHL Global Connectedness Index is compiled every two years to measure the state of globalization in 169 countries and territories.


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Businesses complain about new CIT payment regulation



Under the new regulation, by the end of the third quarter, enterprises have to estimate the amounts of tax of the fourth quarter and pay the amounts.

Some of the Decree 126 provisions effective on December 5 related to the Law on Tax Administration, say that the total amount of corporate income tax (CIT) that enterprises temporarily pay in the first three quarters of the year must not be lower than 75 percent of the CIT amounts they have to pay for the whole year.

Businesses complain about new CIT payment regulation

This means that by the end of the third quarter, enterprises have to estimate the amounts of tax of the fourth quarter and pay the amounts instead of the end of the fourth quarter as previously applied.

Dang Ngoc Minh, deputy general of the General Department of Taxation (GDT), told the press on the sidelines of the dialogue between enterprises and customs and taxation agencies held some days ago, that the state budget has a shortage and the purpose of the budget collection is to get money to pay for state management operations, especially to allocate to provinces that cannot cover expenses.

In other words, the budget collection progress plays a very important role in the operations of many localities.

Asked if GDT has received complaints about the new regulation from enterprises, he said these are just a few enterprises and they don’t represent the whole business community.

The official stressed that the tax collection must be done in reference to the local budget management and the benefits of society.

This means that despite the complaints, GDT is still determined to collect tax as planned.

What will happen if enterprises are fined not because they did not pay tax, but just because they did not anticipate the sharp increase in the amount of tax they would have to pay in Q4?

In replay, GDT said it believes that this may happen but not regularly, because enterprises can foresee their business performance.

But enterprises disagreed with GDT about the uncommon number of cases that saw revenue soaring unexpectedly in Q4.

“GDT always sets estimates on state budget collections every year. Will it dare to affirm that it can collect 75 percent of the total budget collections of the whole year by the end of Q3?” a businessman said. “Will it be fined if it fails to do this?”

The businessman went on to explain that no business dares to set revenue targets quarterly, but they only dare set for the whole year.

“Everyone wants to fulfill yearly business plans, but unexpected things always occur. Businesses were preparing for the year-end sale season, when new Covid-19 infections were discovered in HCM City,” he said.

According to GDT, the Decree 126 will take place on December 5. This means that enterprises, seriously affected by Covid-19, will not be affected by the new regulation this year, because the deadline for temporary tax payment was the last day of October, or Q3.

“Who dares to say he will make profit this Tet sale season? With the regulation, it is still unclear which businesses will take a loss and which will make a profit, but all of them now have to make temporary tax payments,” he said.

When the Decree 20 dated in 2017 on the tax administration applied to enterprises with transactions with related parties facing businesses’ complaints, the Prime Minister has repeatedly requested to amend the decree. It took three years to do this.

The decree covers only 8,000 businesses, 83 percent of which are foreign invested enterprises and 17 percent Vietnamese enterprises.

Meanwhile, the number of businesses to be affected by Decree 126 is much higher and the businesses are from many different economic sectors which face difficulties.

The regulation will have a big impact on enterprises and lead to serious consequences, even if it is amended later.

The director of an enterprise warned that businesses that have been hit hard by Covid-19 will become even worse because of the new regulation on temporary tax payment.

“You don’t have money, but you still have to pay taxes in advance, based on the estimated profit you may make in the future. It is just like taxing dreams,” he commented.

Meanwhile, according to GDT, the Decree 126 will take place on December 5. This means that enterprises, seriously affected by Covid-19, will not be affected by the new regulation this year, because the deadline for temporary tax payment was the last day of October, or Q3.

So, enterprises will only have to make temporary tax payment in accordance with Decree 126 by the end of October 2021. 

Duy Anh


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Vietnam says Oct. CPI up 2.47 pct on year

Vietnam estimated its consumer price index for October jumped 2.47 percent from a year earlier.



The General Statistics Office said in a report on Thursday that average inflation in the first ten months of this year rose 3.71 percent over the same period of last year.

October inflation slightly rise 0.09 percent against the previous month and December of 2019, the lowest growing rate since 2016.  

Increased prices in education sector and hike food prices due to floods in central region were the main driver of the month’s inflation.

Core inflation in October increased by 0.07 percent over the previous month and by 1.88 percent over the same period last year.

Average core inflation in the first 10 months of 2020 increased by 2.52 percent over the same period in 2019.

The government’s GDP growth target for this year is below 3 percent.

► Vietnam targets 2021 economic growth at 6 percent


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