Qualifying for European standards at an early stage

Imexpharm Pharmaceutical JSC's (IMP) business results of the first nine months of 2023 have greatly satisfied its shareholders. During the period, it recorded revenue of approximately VND1.4 trillion ($57.67 million), up nearly 30 per cent on-year.

Moreover, the business gained more than VND227 billion ($9.35 million) in after-tax profit, up by nearly a half. This is a record for IMP.

Meeting the EU-GMP standards brings clear advantages for IMP. In the third quarter of 2022, it opened its third EU-GMP-compliant factory cluster, IMP4, in Binh Duong. After investing in a GMP factory in 2014, Imexpharm was certified with GMP for the first time in the fourth quarter of 2016.

The firm currently has the highest number of manufacturing lines meeting the EU-GMP standards in the country, with 11 lines in 3 clusters – IMP2, IMP3, and IMP4.

To date, only 10 per cent of the domestic pharmaceutical enterprises meet EU-GMP standards, or Japan's GMP equivalent. The Drug Administration of Vietnam said there were 18 EU-GMP-qualified and 5 Japan-GMP-qualified companies out of a total of 228 in Vietnam as of July.

According to regulations from the Ministry of Health, drugs produced to EU-GMP standards are eligible for drug bidding packages, including generic groups 1 and 2. This also means that experts, doctors, and pharmacists will have a wider range of options for medications.

Since the EU-GMP factories were established, IMP's products have gradually become the first choice and replaced many imported drugs in hospitals.

After slowing down due to the impacts of the pandemic, IMP’s revenue grew by 30 per cent in 2022, and continued throughout 2023. The after-tax profits have continuously climbed during this period, allowing the company's reinvestment strategy to improve product quality.

As an equitised state-owned enterprise, IMP aims to become the leading pharmaceutical manufacturer in Vietnam. Before having its first factory certified to EU-GMP standards at the end of 2016, IMP had been bringing in European technology to utilise in its production since 1999.

In 2007, for the first time, the firm successfully demonstrated the bioequivalence of the antibiotic Imeclor (125mg). In addition, IMP started to put its Cephalosporin factory into operation. This facility, which is located in the VSIP II Industrial Park in Binh Duong, produces medications and powders with European technology. Since then, the vision of top-quality European standards has begun to be realised.

Aiming for top quality

There is no doubt that EU-GMP-compliant factories bring IMP a golden advantage. It is a testament to IMP's sustainable development strategy and its bid to compete with other pharmaceutical enterprises in a market where foreign businesses are currently dominating.

According to a report by the Drug Administration of Vietnam, the total value of Vietnam's pharmaceutical market is estimated to increase from about $2.7 billion in 2015 to more than $10 billion in 2026.

Despite the high potential, domestic enterprises mainly produce generic drugs. Those in the segments of patent medicine (sometimes called proprietary medicine), planted drugs (innovator drugs), and specialised drugs are mostly in the hands of foreign businesses.

They hold a market share of about half in value terms in this segment. The ETC channel (ethical drugs, especially in hospitals) is estimated to account for 70 per cent of the pharmaceutical market value. According to an evaluation from FPT Securities JSC, the proportion of imported drugs needed in 2022 was up to nearly 80 per cent. This rate in patent medicine and group-1 generic bidding packages even reached nearly 100 per cent.

It is obvious that IMP chose the most reasonable investment strategy at a very early stage. Improving product quality to European standards helped it replace many imported goods. IMP's business results for the first 9 months of 2023 also show a clear shift in distribution structure.

In 2022, the structure of drug distribution through pharmacies and hospitals was 68 and 32 per cent, respectively. By the end of September, IMP had increased the proportion of drugs distributed through the ETC channel to 42 per cent.

According to assessments from experts, achieving the EU-GMP standards at the IMP4 factory has created a strong boost for the supply to the ETC channel, opening up more opportunities to penetrate more deeply into the bidding packages for drug segment 1.

This increases IMP's competitiveness, allowing it to counter the participation of foreign pharmaceutical companies in the Vietnamese market.

According to a report by IQVIA Organisation in 2022, that was the year when IMP gained recognition for its impressive rankings, sitting 11^th among the leading companies in the market – moving up 1 position compared to 2021. Moreover, sales on the OTC channel and the ETC channel increased by 23 and 26 per cent, respectively.

The strategy is to promote IMP's current role in the production of common antibiotics. According to FPTS, antibiotics are one of the most used drugs in hospitals, with over 20 per cent of the sales value. Popular antibiotic groups such as Cephalosporin and Penicillin make up more than 70 per cent of this, which are IMP's key products.

Besides the competition with other domestic companies, IMP aims to prepare EU-GMP-standardised factory clusters for exports in the future. Since September 2022, it has launched seven products registered with 12 chemical patents to export to the European market.

With the professional support of its major shareholder, SK Group (South Korea), IMP is showing great promise and developing its resources on its global journey.

Tran Thi Dao, general director of IMP said, "With the advantage of leading technology, IMP is determined to pursue an investment strategy for product quality so that it can directly compete with imported medicinal products. We hope to contribute a small part to realising the pharmaceutical industry development strategy that the government has proposed until 2045."