Moving upstream for growth

In 2023, pharmaceutical manufacturing and trading enterprises encountered many difficulties such as reduced demand, fluctuations in energy and input material prices, competition between businesses in the same industry, and pressure from rising exchange rates.

However, within the same context, Imexpharm went upstream and achieved many impressive results. By the end of 2023, the company's total gross revenue had reached VND2.11 trillion ($89 million), and growth had hit 26 per cent – compared to the overall market rate of about 8 per cent. Moreover, net revenue reached VND1.99 trillion ($84 million), increasing by 21 per cent over the same period.

Tran Thi Dao, general director of Imexpharm (IMP) said, "The Vietnamese pharmaceutical market is one with a stable growth rate. The industry still maintains its momentum, even though some industries have shown signs of slowing down."

"IMP's achievements and strong business results are thanks to in-depth investments in product quality and reasonable prices. In particular, the company has promoted its advantages by maintaining a production system that meets international standards, concentrating its resources and systematically investing in factories that meet EU-GMP and other advanced international standards," added Dao.

In fact, IMP is still leading in the antibiotic market, and is maintaining its advantages to achieve impressive results. When the EU-GMP IMP4 Factory was put into operation, it achieved a first-year revenue of nearly VND80 billion ($3.4 million). The company had 11 European Product Registration Numbers issued in 2023 for six products, including high-standard offerings such as Ampicillin and Sulbactam.

The company is also seeing many positive results from its restructuring strategy and professional management model. This brought IMP some notable awards such as Top 50 best listed companies, Top 50 most effective companies, and Top 5 best workplaces in Vietnam in the pharmaceutical, medical equipment, and healthcare industries.

IMP's success shows the transformation of Vietnamese pharmaceutical companies in a market that is considered to have good growth potential in the region.

However, at the beginning of 2024, many forecasts show that the pharmaceutical industry in general and IMP in particular are facing many challenges with heavy pressure from slow economic growth and weak consumption. In particular, the over-the-counter medicine channel will face numerous barriers in maintaining growth because the economic recovery is still slow and is unlikely to improve in the short term.

In addition, despite the fiscal space for development, obstacles in terms of limited research and development (R&D) capacity and new technology transfer are hindering pharmaceutical enterprises as they look to expand their scale in the domestic market.

Moreover, the competition between foreign investors and domestic businesses in the medical and pharmaceutical fields in Vietnam will continue to be fierce as 2024 begins.

"In 2024, challenges still lie ahead and require us to continuously innovate and adapt. With the orientation of sustainable development for next year, sales branches need to pay attention to legal compliance issues, strengthening customer capacity appraisals, and not taking risks which could lead to bad debt. At the same time, it is necessary to have strict financial management, especially in the current difficult economic situation," said Dao.

The boost for 2024

Pharmaceutical companies like IMP expect the government's strategy (Decision No. 376/QD-TTg) to prioritise development to reach a 75/25 ratio of domestic to imported drugs. With policies of no longer choosing the cheapest drugs, this is a golden opportunity for domestic manufacturers in groups 2 and 3 to offer high-quality products at reasonable prices.

The race for EU-GMP standards has been fierce among domestic pharmaceutical companies, especially as Vietnam has become an attractive destination for foreign investors in the pharmaceutical field. Most leading enterprises have foreign strategic shareholders, namely Hau Giang Pharmaceutical (DHG-Taisho), Domesco (DMC-Abbott), Traphaco (TRA-Daewoong), Imexpharm (IMP-SK), and Pymepharco (PME-Stada).

Among them, IMP has 11 drug production lines that meet EU-GMP standards, and is among the top 8 per cent of domestic drug manufacturers that meet the bidding standards for groups 1 and 2 in the ETC channel in Vietnam.

IMP currently has large fiscal space in terms of both revenue and profit over the 2023-2028 period. In particular, with the participation of its major shareholder SK Investment Vina III Pte., Ltd., IMP will have significant support with modern technology, finance, and R&D. It plans to complete its product lines for infusions, pills, and liquids to meet various treatment needs.

In addition, the pharmaceutical company is also promoting its export activities with booths at CPhI in Thailand and Barcelona, and conducting surveys of potential export markets such as Cambodia, and Myanmar. In 2023, the company successfully exported the first batch of goods to Mongolia.

In its plan for 2024, IMP's general director said the company would continue to invest and implement initiatives to increase the productivity of existing lines and factories. Furthermore, it is also researching and evaluating the feasibility of some ventures with new sites and production lines to meet the increasing domestic and foreign needs.

Expanding production capacity to meet international standards and enhancing the ability to produce new generics that face technical challenges will promote the competitiveness of domestic drugs when compared to imported products of the same type.

The company has built a global cooperation development team to exploit foreign markets, and it researches and makes proposals for outsourcing manufacturing for multinational pharmaceutical companies.

To strengthen this activity, IMP will expand the market with new therapeutic areas by cooperating with South Korean and other international partners on technology transfer, imports, production, and distribution. Currently, the company is negotiating with some of the world's leading partners and plans to sign an MoU in 2024.

According to IMP's leaders, completing the management model, improving the level of professionalism, and optimising operations have helped IMP's earnings before interest, taxes, depreciation, and amortisation margin in 2023 to improve from 22 per cent to 23 per cent thanks to strong revenue growth. These trends and actions will continue to be promoted in 2024.

From the beginning of the year, IMP has proactively implemented procurement-related initiatives to control its purchasing activities more easily, reduce prices, and cut the number of suppliers. It is expected to control input costs even further from the second quarter, helping it to save 15 per cent or more compared to previous purchase prices.

The general assessment shows that pharmaceutical companies like IMP are capable of ensuring a stable and sustainable drug supply with reasonable prices and high quality. They are helping to create a developed pharmaceutical market and strong motivation for businesses as they constantly bring new drugs to the market.