Executive Summary
Market Entry
Current Market Trends
Best Prospects
Market Size
Main Competitors
Registration Process
Reimbursement
Barriers
Government & Association Links
U.S. Commercial Service Contact Information
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Executive Summary
Market Entry
Current Market Trends
Best Prospects
Market Size
Main Competitors
Registration Process
Reimbursement
Barriers
Government & Association Links
U.S. Commercial Service Contact Information
Executive Summary
Economic growth and demographic changes are driving demand for healthcare services throughout Vietnam, and not just in the two economic centers of Hanoi and Ho Chi Minh City. Public, provincial-level hospitals funded by the government are undergoing upgrades of their facilities and opening new departments for specialty treatment. Such developments are creating new opportunities for medical device companies in Vietnam.
The country represents a growing healthcare and medical equipment market for U.S. exporters. According to FitchSolutions, Vietnam’s healthcare expenditure was approximately $17 billion in 2019, representing 6.6 percent of the country’s GDP. The intelligence solutions provider also forecasts that healthcare spending will grow to $23 billion in 2022, recording a compound annual growth rate (CAGR) of approximately 10.7% from 2019 to 2024. This is partly due to the government’s effort to promote partnerships between public and private healthcare providers to share the cost. Private healthcare expenditure is expected to grow at a CAGR of 7.5%, largely due to increasing insurance coverage for citizens.
The Vietnam healthcare sector is currently facing the following challenges:
Many hospitals are outdated and face chronic overcrowding. Hospitals in major cities like Ho Chi Minh and Hanoi often do not have the capacity to serve both local and provincial patients.
Much of the existing medical equipment in public hospitals in Vietnam is obsolete and needs replacement. Many hospitals lack sufficient equipment for surgery and intensive care units.
Vietnamese public hospitals rely largely on the State budget to upgrade their facilities, equipment, and services. The total budget for the healthcare sector has increased but is still too low to meet demand.
A shortage of qualified medical staff is prevalent in many hospitals. Doctors and nurses work under stressful conditions and wages are relatively low.
As high-quality healthcare service is not yet available in Vietnam, the Ministry of Health estimates that around 40,000 Vietnamese people spend approximately $2 billion to travel abroad for medical services every year.
Market Entry
Vietnam is not a market for inexperienced exporters. U.S. companies preparing to enter Vietnam must plan strategically and be persistent and consistent with face-to-face follow-up. It can take one or two years to make commercial inroads in this market. Building relationships is critical to success.
U.S. companies entering the Vietnamese market will need to consider two marketing strategies; one for the northern part of the country; which has a higher concentration of government ministries and regulatory agencies, and one for the south; which is the dominant industry hub. The two markets also differ in terms of consumer behavior and preferences.
To enter or expand in Vietnam, U.S. businesses may do so indirectly through the appointment of an agent or distributor. U.S. companies new to Vietnam should conduct due diligence on potential local agents/distributors to ensure they possess the requisite permits, facilities, and human and financial resources. Firms seeking a direct presence in Vietnam should establish a commercial operation utilizing the following options: a representative office license, a branch license, or a foreign investment project license under Vietnam’s revised Foreign Investment Law.
Current Market Trends
Vietnam has made significant progress toward achieving universal healthcare coverage for its population. More than 81 million Vietnamese people, or nearly 87 percent of the population, were covered by health insurance by the end of June 2018, according to the Vietnam Social Security. According to Fitch Solutions, the government is committed to roll out universal healthcare in the country, with efforts to reach 95% of the Vietnamese population by 2025. This will continue to shape the healthcare sector.
The government is also encouraging public-private partnership (PPP) investments in the healthcare sector. The PPP model can mobilize financial resources to upgrade infrastructure and facilities, purchase modern medical equipment, and improve the qualifications of healthcare personnel. Vietnam also believes that private sector involvement can also introduce enhanced management and service delivery standards.
Best Prospects
U.S. suppliers of healthcare products and services are widely known and favorably regarded by Vietnamese healthcare authorities, end-users, and distributors in Vietnam due to innovative technologies, lifecycle cost efficiency, and professional customer service.
According to Fitch Solutions, the Vietnamese pharmaceutical market is forecasted to reach $6.5 billion in 2019 and $9.6 billion by 2023, growing at a 10-year compound annual growth rate (CAGR) of 10.6% in local currency terms, and 9.4% in US dollar terms. Fitch Solutions shows that the country’s pharmaceutical imports are expected to post a CAGR of 11.6% in local currency terms, and 10.2% in US dollar term.
Demand for better healthcare in Vietnam over the past years has greatly contributed to the growth of the medical device market. According to the Ho Chi Minh City Medical Equipment Association, in 2017 Vietnam spent $1.1 billion on medical equipment imports comprised mainly of diagnostic imaging equipment such as X-rays, ultrasound technology, magnetic resonance imaging technology, and computed tomography scanners, as well as equipment used for surgery, including endoscopy tools, sterilization equipment, and testing and medical waste treatment. The Vietnamese medical device market is expected to reach around $1.8 billion by 2022, recording growth at a CAGR of 9.6% during the period 2017-2022.
The Health IT sub-sector also presents growing opportunities and holds high potential for U.S. suppliers of IT hardware and Electronic Health Record software. Starting on March 01, 2019, the Ministry of Health stipulates that health facilities will begin the process of replacing paper records with electronic medical records. 100 percent of hospitals have applied IT in medical examinations and treatment, and deployed hospital information management software; 92.3 percent of hospitals implemented testing management software applications; 86.2 percent of hospitals employ executive management software such as electronic documents, email etc. However, at present, the level of IT application is still low and uneven among hospitals. Data connection is still difficult and the process of implementing electronic records faces many difficulties.
In addition, the growing healthcare sector in Vietnam provides opportunities for U.S. suppliers of design, engineering and management services, and medical training services since local suppliers are still new to these sub-sectors and are not yet able to provide the same level of sophisticated services as international suppliers.
Finally, the sub-sector of specialty building materials for healthcare facilities will also provide significant opportunities as Vietnamese healthcare authorities and hospital administrators have come to better understand and appreciate the benefits of building operationally efficient facilities.
Market Size
Healthcare spending (including investment)
… as percent of GDP: 6.5%
https://www.fitchsolutions.com/
… of which spent on inpatient services (including long-term care)
… of which spent on pharmaceuticals/consumables
… of which spent on investments
… of which spent on outpatient services
Hospitals, Procedures, Healthcare Professionals UN
Demographics
Main Competitors
Primary foreign suppliers of pharmaceuticals, including food supplements, in Vietnam include those from France, India, Germany, South Korea, Italy, the United States, the United Kingdom, and Switzerland.
Registration Process
The Ministry of Health (MOH) is the main regulatory authority. Under the MOH, the Department of Medical Equipment and Health Works (DMEHW) has jurisdiction over the import of medical devices. The Drug Administration of Vietnam (DAV) and Vietnam Food Administration (VFA) regulate pharmaceuticals and food supplements, respectively.
Medical Equipment
The Vietnamese government encourages the importation of medical equipment because local production cannot meet demand. Imported medical equipment has low import duties and no quota restrictions; however, medical devices are subject to regulation and licensing requirements set by the Ministry of Health (MOH). Only companies with a legal business entity registered in Vietnam and that have an import license are eligible to distribute medical equipment. To fulfill this requirement, foreign suppliers often sell through local distributors or agents. Strong representatives should provide immediate access to an established marketing network and possess in-depth knowledge of pertinent regulations. The MOH determines the guidelines for medical device purchases for all health systems. The Ministry of Science and Technology (MOST) performs regulatory functions for domestically made medical devices.
The registration process for medical devices manufactured within Vietnam is different than those that are imported. Imported devices are not required to be registered. Instead, a product specific import license is utilized. In 2011, the MOH issued Circular 24 to provide updated guidance on the importation of medical equipment to Vietnam. U.S. exporters should be aware of Article 5, which requires a Certificate of Free Sale to be copied and certified by the Embassy of Vietnam in the producing country.
The importation of used and refurbished medical equipment is strictly controlled by the Ministry of Health. Decision 2019/1997/QD-BKHCNMT stipulates that MOST must inspect and certify all imports of used medical equipment. Because of the restriction, local companies are generally not willing to deal with foreign suppliers of used and refurbished equipment. In practical terms, the MOH accepts used equipment for donation purposes only.
The Government recently issued Decree No. 169/2018/ND-CP to amend medical device management Decree No. 36/2016/ND-CP dated May 15, 2016. This includes the classification of medical equipment, as well as the production, circulation, procurement, supply of medical equipment, medical equipment labels, and the management and use of medical equipment.
Decree 169 is considered the latest legal document to date on the management of medical equipment. Under Decree 169, all medical devices imported into Vietnam are required to register for marketing authorization (MA) licenses. Following an extension proposal submitted by DMEC to the Government, the implementation of the Decree 169 will be delayed until December 31, 2020. The approval is pending.
Pharmaceuticals
Vietnam’s pharmaceutical market has tremendous potential. However, domestic policies are making it more challenging for U.S. exporters to access the market.
Vietnam’s 2016 Law on Pharmacy, which entered into force on January 1, 2017, is the primary legal framework governing the pharmaceutical sector, including registration, sale, and distribution of pharmaceuticals. U.S. companies have expressed concern that the Law creates uncertainties about the rights and responsibilities of Representative Offices, especially whether such offices can directly or indirectly (through third parties) provide drug information to health care providers and employ medical representatives to perform these activities. Under Decision 68, Vietnam also aims to develop a domestic system of drug distribution and supply. Vietnam’s WTO Schedule of Commitments on Services intentionally excluded pharmaceuticals from the sectors for which market access is open to distribution by foreign investors. As a result, Vietnam has introduced policies that promote the development of indigenous distribution services and excludes foreign companies. Specifically, Decree No. 54/2017/ND-CP, guiding the implementation for the Law on Pharmacy, creates uncertainties for foreign invested enterprises engaged in distribution related activities. In addition, the MOH released the Circular No. 07/2018/TT-BYT providing guidelines for the pharmaceutical sector. Under the Circular, Representative Offices can no longer house medical representatives who provide drug information to doctors and hospital administrators. Future implementing decrees and circulars for the Law on Pharmacy are expected to provide additional guidance on which activities will be reserved for domestic companies.
Reimbursement
The Ministry of Health is expected to take proactive measures to ensure that at least 90 percent of the population is covered by health insurance by 2020.
According to the report of Vietnam Social Security, by the end of May 2019, there were 84 million people participating in health insurance nationwide, covering 89% of the population. This figure is on track to meet the 2020 goal set by the Government. Additionally, the report announced that the expenditure of the health insurance fund reached VND49,021 billion (over $2.1 billion) during the first half of 2019.
According to Fitch Solutions, some 650 medicines are reportedly covered by government reimbursement through the national health insurance program. In Vietnam, reimbursement of prescription drugs is determined by the reimbursement drug list issued by the Ministry of Health. The Vietnam Social Security is the main entity that reimburses services provided to patients covered by social health insurance.
Barriers
Vietnam has introduced Circular No. 32/2018/TT-BYT regarding the registration of pharmaceutical products. There are concerns that the Circular, effective as of September 1, 2019, includes Vietnam-unique Certificate of Pharmaceutical Product (CPP) requirements that impose unnecessary administrative requirements. These requirements would go beyond the WHO CPP scheme on regulators such as U.S. FDA, thus increasing the risk of delayed access to the supply of medicines entering the Vietnamese market. Additionally, under Circular 32, the effective period of a marketing authorization of drugs and medical ingredients is five years from the issuance date or renewal date and within 12 months before the expiration date of the marketing authorization. Its holder may apply for renewal. However, in practice, the renewal process may take companies more than one year, restricting access to the Vietnamese market.
According to Article 6 of Circular 18 under the Decree 15/2018/ND-CP, “from July 1, 2019, organizations and individuals must submit additional certified copies of food safety certificate proving compliance to Good Manufacturing Practice (GMP) for health supplements or an equivalent certificate before production.” Draft Circular 18, guiding those requirements, states that health supplements manufactured after July 1 are currently not able to be exported to Vietnam until the required documentation is submitted to the Ministry of Health.
Government & Association Links
Government:
Associations:
U.S. Commercial Service Contact Information
Name: Thao Nguyen thao.nguyen@trade.gov
Name: Nhung Nguyen Nhung.Nguyen@trade.gov
