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Domestic drug companies wrestle with competition

Update: October, 27/2014 - 07:37

To sell drugs abroad, domestic firms have to invite foreign partners to Viet Nam to check the quality of the production facilities and materials, and pay the inspection costs. Meanwhile, foreign medicines can be imported quite easily, according to Phong Lan. — Photo dantri.com.vn

HCM CITY (VNS) — Domestic drug producers are facing significant obstacles in selling their products in both the domestic and foreign markets, the Tin tuc (News) Newspaper has reported.

"The majority of the domestic companies have to deal with the market issue," said Pham Khanh Phong Lan, deputy director of the HCM City Department of Health, adding that most local factories currently operate at only half their capacity due to this hindrance.

"Locally manufactured drugs see many trade barriers when they are exported," said Huynh Thi Lan, director of the Mekophar Chemical Pharmaceutical Joint Stock Company in HCM City.

To sell drugs abroad, domestic firms have to invite foreign partners to Viet Nam to check the quality of the production facilities and materials, and pay the inspection costs.

"The registration charges for medicines that are distributed are also much more expensive in foreign countries than in Viet Nam," she said.

Meanwhile, foreign medicines can be imported quite easily, according to Phong Lan.

India is the leading exporter of drugs to Viet Nam, having 12,160 registration numbers in the total of 28,000 registration numbers of medicines imported here. But Viet Nam has been able to inspect only one factory in India so far.

Extremely low local registration costs have let all kinds of drugs, of any quality, penetrate the domestic market. "If this situation continues to persist, domestic firms will not be able to compete," Phong Lan said.

Even Sanofi, a French joint venture producing drugs in Viet Nam, reportedly considers expansion of markets a major concern.

"Seventy-five per cent of our equity is held by foreign partners, and we are investing in up-to-date production chains. Still we are worried about how to sell our products better," a representative of Sanofi told Tin tuc on condition of anonymity.

Industry insiders said that the biggest disadvantage causing domestic companies to be uncompetitive is that they have to import production materials at high prices. Many local firms manage to survive by seeking contracts to sell drugs in hospitals.

This has resulted in stiff competition among domestic enterprises in the home market.

HCM City has 25 medicine factories and most of them produce general drugs such as antibiotics and analgesics, while few focus on making specific remedies for cancer or heart diseases.

Nguyen Tan Binh, director of the HCM City Department of Health, suggested that domestic firms should link up to produce more high-value products, rather than working separately on similar products.

Binh noted that the city has given a priority to local firms that sell drugs in local hospitals in recent years.

Of VND3.8 trillion (US$180.95 million) worth of generic drugs (pharmaceutical products that are usually intended to be interchangeable with brand products and manufactured without a licence from the brand company) distributed in the hospitals here every year, the value of domestic drugs amounted to VND2.6 trillion ($123.80 million).

"But enterprises need to have long-term measures to help themselves for sustained development," he said. — VNS

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