Vietnam pharmaceutical firms record falling profits in Q3
Drug producers in Vietnam saw a steep decline in third-quarter profits compared to the same period last year, with some hitting their lowest levels in four quarters.
Hau Giang Pharmaceuticals JSC (DHG Pharma), listed on the Ho Chi Minh Stock Exchange (HoSE) as DHG, reported a Q3 revenue fall of 5.3% to nearly VND1.1 trillion ($44.8 million).
Its gross profit margin decreased from 49.8% in Q2 to 46.8% in Q3, while sales and administrative expenses increased by 13% and 29% year-on-year. As a result, its net Q3 profit reached VND166 billion ($6.76 million), down 36.6% over the same period last year, marking the lowest level in the last three years.
Ha Tay Pharmaceutical (Hataphar) (HoSE: DHT) saw its Q3 revenue drop 3% to VND479 billion ($19.5 million), while its net profit plunged 21% to VND18 billion ($733,300), the lowest in two years.
Central Pharmaceutical Joint Stock Company 3 (Foripharm), listed on the Hanoi Stock Exchange (HNX) as DP3, and Imexpharm (HoSE: IMP) reported their profits hit the lowest levels in the last four quarters but still higher than the same period last year.
Foripharm earned VND91 billion ($3.7 million) in revenue in Q3, down 16% year-on-year. However, sales and management costs decreased by 27% and 18% to VND29 billion ($1.18 million) and VND12 billion ($488,900), respectively. Thanks to that, its net profit expanded 16% to VND19 billion ($774,000).
Meanwhile, some businesses went upstream, gaining higher revenue and profit in Q3. Imexpharm (HoSE: IMP) saw its Q3 revenue increase by 12% to VND467 billion ($19 million) and net profit by 25% to VND70 billion ($2.85 million) - the lowest in four quarters.
The company said that thanks to its market expansion strategy, restructuring of its product portfolio, and effective control of sales and management costs, its net revenue continued to rise.
Danapha Pharmaceutical JSC, registered on the Unlisted Public Companies Market (UPCoM) as DAN, saw its highest Q3 profit in seven years, reaching VND31 billion ($1.26 million), up 72% over the same period last year. Revenue growth of 13%, improved gross profit margin, and a 44% cut in sales costs were the main factors behind the soaring profits.
In its development orientation, Danapha plans to expand its export markets to European countries, Southeast Asia, Thailand, Japan, and South Korea; maintain and develop the ethical drugs channel (ETC) for oriental medicine and psychiatric drugs; and push the over-the-counter (OTC) channel to increase coverage and brand recognition.
Thanks to good results in the first half of the year, many pharmaceutical businesses still recorded growth in the nine-month period, and even a few exceeded their year targets.
Hataphar exceeded its yearly pre-tax profit plan by 12% after nine months with VND90 billion ($3.7 million), up 14% year-on-year. Danapha surpassed its 2023 pre-tax profit target by 52% and reached profit growth of 80% to VND94 billion ($3.83 million).
Imexpharm completed 94% of its year profit target with VND286 billion ($11.65 million), while DHG Pharma achieved 77% of the year's pre-tax profit target with VND867 billion ($35.32 million), a year-on-year increase of 4%.
OTC channel loses stream
Weaker purchasing power due to lowere consumer income has affected the pharmaceutical industry, especially the OTC channel.
According to Imexpharm, purchasing power in the OTC market maintained growth in Q1, but decreased from Q2. It added that the OTC channel contributes 58% of the company's revenue.
DHG Pharma also said that economic difficulties have reduced purchasing power, impacting many sectors, including pharmaceuticals. In addition, the company has strengthened marketing activities and invested in developing new products to implement long-term strategies, thus pushing costs up.
Therefore, it has recently pushed the ETC channel, which accounted for 13% of its revenue from manufactured goods in 2022.
The ETC channel will be the driving force for growth. According to FPT Securities, ETC is the main distribution channel making up 70% of the pharmaceutical market value and will continue this role as the health insurance coverage rate increases.
In 2022, the Ministry of Health issued legal documents to help ease drug shortages and create conditions for ETC to develop in the long term.
As a result, ETC bidding activities livened up in the last months of Q2, bringing positive growth to many domestic pharmaceutical manufacturers, according to Imexpharm.
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