Vietnam drug spending makes it a prime pharma target

Last year Sanofi ($SNY) boss Chris Viehbacher ran out his list of his favorite emerging market opportunities including Colombia, Indonesia and Vietnam. A new rundown on recent developments in Vietnam, show the many reasons why Viehbacher would see the southeast Asian country as a very good bet.

It is one of the fastest growing global markets in drug spending, placing 13 of 175 on a Business Monitor International ranking, points out Ames Gross, president of Pacific Bridge Medical, a Bethesda, MD-based consulting firm that specializes in Asia. His piece in pharmaphorum says drug spending there should grow at a rate of 20% through 2017. And per capita drug spending is only going to go up. In 2010, he said it was already $104 anually, twice that of India. That will increase with an expanding economy and health system. By 2020, 90% of Vietnamese are expected to be covered by the national health system, up from 65% today.

Some drugmakers are already tapping that potential. GlaxoSmithKline ($GSK) since 2010 has had a deal with Savipharm, a leading Vietnamese pharmaceutical company. Japan's Nipro Pharma last year invested $250 million to build it own manufacturing plant there. Stada has taken a different approach and now owns nearly half of Vietnamese drug maker Pymepharco.

In fact, Gross points out that while foreign drugmakers had been barred from setting up wholly-owned subsidiaries in Vietnam, they are now permitted, although they must also establish a manufacturing facility to do so.

Vietnam was only one of a number of countries that Sanofi's Viehbacher mentioned. And three weeks after discussing targets, the company swooped in and snatched up Genfar, the second-largest generics maker in Colombia.

- here's the report

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