Increasing demand for medicine amid the COVID-19 pandemic has helped most pharmaceutical enterprises report positive business results in the first quarter of this year.

Employees enter the entrance gate of DHG Pharmaceutical Joint Stock Company
(Photo: cafef.vn) 

Pharmaceutical stocks have attracted investors since the outbreak of the disease due to rising need for medical equipment and drugs, as well as forecasts that the pandemic may be prolonged due to the long timeline of vaccine manufacturing.

DHG Pharmaceutical Joint Stock Company (DHG), the largest Vietnamese pharmaceutical firm by market capitalisation and revenue, recorded the highest profit among the listed pharmaceutical firms in Q1 at VND177 billion (US$5 million).

This represented an increase of 31% year-on-year, fulfilling 27% of the yearly target.

DHG was followed by Pymepharco Joint Stock Company (PME) and Imexpharm Corporation (IMP) with VND75 billion and VND41 billion, up 8% and 13% against last year, respectively.

Imexpharm expects its business to grow strongly thanks to the ethical or prescription drugs (ETC) channel. Revenue in 2020 is expected to reach VND1.75 trillion, up 23.3% from the same period last year.

Pre-tax profit is estimated to reach VND260 billion, up 17%. Therefore, the company has completed 17% of this year’s revenue plan and 20% of the profit plan.

Shares of IMP decreased by 14.5% from an all-time high of VND62,000 per share, recorded on February 24, to VND52,900 per share on May 25.

In Q1, Agimexpharm Pharmaceutical JSC (AGP)'s revenue increased slightly by 1.2% year-on-year to VND131 billion.

However, profit dropped by nearly 12% to VND8.2 billion.

The pharmaceutical industry is also expected to grow strongly thanks to the ageing Vietnamese population and the increasing demand for health care services, especially in the context of the COVID-19 outbreak.

However, the pandemic may bring advantages to the industry in the short term, but if it is prolonged, it will harm supplies of imported raw materials from China. This will force pharmaceutical enterprises to switch to importing from other regions at higher prices.

Binhdinh Pharmaceutical and Medical Equipment JSC (DBD) said more than 80% of the main raw materials for the company's products were imported from China.

But due to the disease, many factories in China had to halt operation, it said.

Domesco Medical Import-Export JSC (Domesco) also said it was facing a production halt and interruptions in some products that rely heavily on imported raw materials from China.

Although recording positive earning results, many pharmaceutical stocks could not maintain the uptrend and have been retreating recently.

After reaching early VND100,000 per share at the end of January, shares of Pharmaceutical Joint Stock Company (DHG) quickly decreased to hover at around VND90,000.

Compared to early this year, DHG has recorded a decrease of about 6%.

Ha Tay Pharmaceutical JSC (DHT) surprised investors as it surged to nearly VND60,000 per share in early February while in previous months, its shares hovered at a price of less than VND50,000 per share.

However, DHT has dropped deeper since then, closing on May 25 at VND45,000 per share.

According to Nguyen Hong Khanh at Vietnam International Securities Co (VIS), pharmaceutical shares are often traded thinly as most stay in the hands of a few insiders, which makes it easier to push prices.

“As pharmaceutical stocks have a low free transfer rate, price movements in the short term will be unpredictable, especially if the demand increases sharply,” Khanh said.