realised.
Research, expertise and equipment are required to extract active components from plants with
healing properties, as well as management and marketing skills.
Aged care services
According to the latest Vietnam Aging Survey, only seven per cent of the population is aged
65 and older, a consequence of war and this figure is estimated to double within 20 years,
quicker than in other countries. 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, Labor
force participation rate, female, Nov 2014).
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
spouse, 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.
Due to cultural reservations against formal aged care, education and human resources in this
area are limited. Niche opportunities for Australian suppliers lie in management and staff
training and development, as well as in health related information and communications
technology (ICT). Financial constraints may limit the scope for foreign investors to run
nursing homes.
Equipment and devices
Vietnams medical device market is growing steadily, reaching an estimated market size of
US$200 million in 2013, with 90 per cent of medical devices imported, mainly from Japan,
USA, Singapore and China (Source: GIFT, Appropriate Healthcare Equipment for Emerging
Markets, Mar 2014).
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 difficult environment.
Competitive environment
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 USA, 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 (SaigonTech) and VinGroup (owner of VinMec hospital). Healthcare service
providers also compete for patients with healthcare tourism destinations.
Pharmaceutical companies are faced with erratic price increases and a price approval regime
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, methods of testing, the devices
composition breakdown listing all its chemical ingredients and operational license with safety
and quality and hygiene standard testimonies or cosmetic good manufacture practice
certificate. Imported goods require an original catalogue, instruction manual and technical
guide (including a Vietnamese translation), manufacturers 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 counter drugs.
Tariffs
The maximum rate of 14 per cent is due to decrease to five per cent (including supplements
and functional food) in line with Vietnams WTO obligations (Source: Business Monitor,
Vietnam Pharmaceuticals & Healthcare Report, Sep 2014).
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 five to 10 per
cent.
MARKETING YOUR PRODUCTS AND SERVICES
Market entry
The bureaucratic nature of Vietnams 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
Vietnam.
Distribution channels
Most government hospitals procure medical devices though 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,
Mar 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 pharmacy chains.