Foreign investors earn big from acquiring Vietnam pharma firms
In addition to profiting from stock price hikes, foreign firms have regularly received annual dividends of 20-40% from Vietnamese pharmaceutical enterprises.
Irresistible attraction of pharmaceutical industry
Vietnam's pharmaceutical market has been developing strongly in recent years. According to IQVIA, a provider of biopharmaceutical development and commercial outsourcing services, Vietnam's pharmaceutical market in 2022 was valued at VND187.66 trillion (about $8 billion), an increase of 29% year-on-year and double that of 2018.
Therefore, the industry has become attractive to foreign investors, who have not hesitated to buy shares to become strategic shareholders at many Vietnamese pharmaceutical producers.
From strategic shareholders, they have gradually collected shares to control a series of large drug producers listed on the stock market, such as Hau Giang Pharmaceuticals JSC (DHG Pharma), Domesco JSC, and Imexpharm Corp.
Pymepharco JSC even delisted its PME shares on the Ho Chi Minh Stock Exchange (HoSE) after German pharmaceutical group STADA Arzneimittel AG increased its ownership to nearly 100%.

DHG Pharma, one of the pharmaceutical firms with stakes acquired by foreign investors. Photo courtesy of the company.
STADA started to pour capital into Pymepharco in 2008 and then became a strategic shareholder with a 62% stake in the company. At the end of 2020, the group revealed its intention to increase its ownership to 100% and complete it in late 2021.
After delisting, Pymepharco was no longer required to publish financial information. From 2017 to 2020, the company’s revenue increased from VND1.65 trillion ($68 million) to VND2.04 trillion ($84 million) and its net profit rose from VND286 billion ($11.8 million) to VND317 billion ($13 million). The firm paid regular cash dividends of 20% per year from 2019-2021.
Domesco, listed on the HoSE as DMC, has had a foreign strategic shareholder since 2011, CFR International SpA of Chile. This organization bought up DMC shares from 2011-2013. When Domesco increased its foreign ownership room to 100% in 2016, it gained a dominating stake of 51.7% which it transferred to Abbott Laboratories of the U.S.
Domesco recorded a compound annual growth rate (CAGR) of 3% in revenue and 8.7% in profit in the 2011-2022 period. These stable business results have allowed it to maintain a cash dividend payment of about 25% per year from 2017 to now.
In terms of market price, over the past 11 years DMC has increased by nearly six times from its par value to VND70,000 ($2.88) per share.
In mid-2019, Taisho Pharmaceutical Holdings of Japan completed the acquisition of DHG Pharma (HoSE: DHG), which is among the Top 5 largest pharmaceutical enterprises in Vietnam, with a 51% stake.
After five years in Taisho's hands, DHG Pharma achieved a compound revenue growth rate of 4.7% and a net profit of 11%. Thanks to that, the dividend rate the company pays is also very attractive, up to 35-40% in cash per year. The DHG price has hovered at around VND90,000-100,000 ($4.12) per share and has recently broken out to VND120,000 ($4.95).
SK Investment Vina III - a subsidiary of South Korean multi-industry corporation SK Group has been present at Imexpharm (HoSE: IMP) since 2020 after a 25% stake transfer. Since then, the company and related entities have collected more IMP shares to gain a controlling stake of 65% in late 2022.
In addition, Traphaco JSC, Ha Tay Pharmaceutical (Hataphar), and BinhDinh Pharmaceutical and Medical Equipment JSC (Bidiphar) are attracting foreign partners. In particular, Hataphar, listed on the Hanoi Stock Exchange (HNX) as DHT, is implementing a plan to issue 8.4 million individual shares for Japan’s ASKA Pharmaceutical Co., Ltd at the price of VND21,500 ($0.89) per share. Once completed, the Japanese firm will increase its stake to 32.56%.
Foreign investors have also paid attention to pharmaceutical retailers. Recently, Dongwha Pharm Co., Ltd. from South Korea announced it will spend $30 million acquiring a 51% stake in Trung Son Pharma - the operator of the Trung Son pharmacy chain. Headquartered in the Mekong Delta city of Can Tho, the company now boasts more than 140 pharmacies throughout the Mekong Delta and Ho Chi Minh City.
Most pharmaceutical businesses achieve stable profits and pay regular dividends, making them even more attractive in the eyes of foreign investors.
Great growth outlook
BMI, a research arm of Fitch Solutions, forecasts that Vietnam's pharmaceutical market size will reach about $16.1 billion in 2026, with a compound annual growth rate of up to 11%. The long-term growth drivers of the pharmaceutical industry are demographics, health insurance expansion, rising per capita income, and investment by multinational pharmaceutical companies.
In recent years, Vietnam has faced rapid population aging, with people aged 60 and over accounting for more than 12% of the population in 2021 and estimated to rise to over 25% by 2050. Therefore, health and social care needs are expected to increase, depending on age. Health insurance coverage as of December 31, 2022 had reached 92% of the population and is set to hit 95% by 2025.
As per capita income rises, healthcare spending also increases. According to Fitch Solutions, average per capita spending on pharmaceuticals is predicted to climb from VND1.5 million ($61.8) in 2021 to VND2.1 million ($86.5) in 2026, equivalent to a compound growth rate of 7.8%, accounting for 5% of per capita income each year on average.
Finally, big faces in the international pharmaceutical industry have invested in domestic producers in recent years. Through these partners, Vietnamese businesses have received technology transfers and human resources to invest in factories that meet Japan-GMP and GMP-EU standards. This is a condition for businesses to expand their ethical drugs channel (ETC).
Domesco said Abbott has supported it in upgrading production lines and investing in production equipment meeting GMP-EU standards, while transferring technology for a number of strategic products. At the same time, through this partner, Domeco has expanded its export market. Up to now, the company has exported drugs to 14 countries around the world, especially in Asia and Latin America.
DHG Pharma’s leadership said that thanks to Taisho's personnel development, technology and management processes, the company has reached the international market with Japan-GMP standards. After five years, DHG Pharma has developed a network of 20 export markets and 27 distributors, with a cumulative export turnover of more than $20 million. However, its export turnover only accounts for 2.5% of its total revenue.
Meanwhile, Saigon Securities (SSI) held that export is the new growth driver of DHG Pharma, with revenue expected to soar when Taisho joins hands with the company to export products to five major countries.
Imexpharm CEO Tran Thi Dao expected that with the deep participation of SK Group, the company will make a breakthrough to become the number 1 antibiotics producer in Vietnam. It will continue to implement important projects, including a factory in Quang Khanh Industrial Park, the southern province of Dong Thap, to optimize resources and technology from SK Group. Its board of directors has targeted double revenue and an average pre-tax profit margin of 20% for the 2023-2027 period.
Recently, the Ministry of Health has issued legal documents to help ease drug shortages and create conditions for the ETC to develop in the long term.
The move, in combination with pandemics such as Covid-19, chickenpox and hand-foot-and-mouth disease, has increased the demand for drugs in public medical facilities, according to Imexpharm.
As a result, the ETC bidding activities have livened up in the last months of the second quarter, bringing positive growth to many domestic pharmaceutical manufacturers. On the contrary, the over-the-counter (OTC) channel has tended to decrease since the second quarter due to the difficult economic situation.
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