Excessively psychological fondness of foreign medicines, tightened State control, high competing pressure and other factors are major difficulties domestic pharmaceutical companies are facing in the context of economic volatility. Vietnam Business Forum interviews Mr Tran Tuc Ma, General Director of Traphaco Joint Stock Company, on this issue. Huong Ly reports.
What is your opinion about Vietnam's pharmaceutical market in the past time?
The global economic slowdown has directly affected the Vietnam’s economy.
Spiralling inflation and lending interest rates have pushed many companies into financial difficulty while they have to compete to boost up slowing sales. As for domestic drug makers, while input prices are volatile, output prices are supervised by the Ministry of Health - a nuisance for any companies, particularly manufacturers. Besides, they always have to compete with from their peers. As more and more new companies are put into operation, extremely fierce competition occurs not only on price but also on products.
However, companies also see tremendous opportunities. As living conditions of people are getting better, they subsequently have a higher demand for health care. The Ministry of Health has sent instructions to hospitals, urging them to use local drugs. Currently, domestically produced medicines can meet only 50 percent of the market demand in the country.
This is a great opportunity for domestic drug makers. With a population of more than 80 million people, expenditure on medicines per person remains low and public health care is supported by the State. This promises a lucrative market for pharmaceutical companies. Nonetheless, the Vietnamese pharmaceutical industry is relatively young in relation to other industries; hence, drug companies are still shy of and confused about market mechanism.
Domestic pharmaceuticals companies are under a very heavy pressure of competition because local people are keener on foreign products. How should they do to win the trust of consumers?
It is normal to see people in developing countries prefer foreign drugs to domestic ones. However, it is not true that all foreign products are better than domestic ones. In general, products made by European or North American companies have better therapeutic effects and diverse dosage forms. But, medicines made by Asian countries like India are not always better than local ones.
To deal with this matter, I personally think that we need to do some works. Particularly, the Ministry of Health should have more drastic policies to force hospitals to use local medicines. It necessarily informs the public and physicians of the current development of pharmaceutical industry.
Drug companies need to boldly invest in R&D, modern machinery and equipment to turn out new products of high quality and diverse categories and carry out in-depth market research programmes.
2011 is a tough year for all companies due to rising inflation, high interest rates and difficult fundraising. What are best measures to overcome these difficulties?
Anticipating difficulties in sales and fundraising for production and business operations, our company has adopted many solutions like enhancing financial management, reviewing the entire company to minimise costs, lowering production costs, and boosting labour productivity.
By applying consistent and synchronous solutions, the company fulfilled 50 percent of the full-year profit target while revenues beat the plan in the first six months. With such a good profit, Traphaco does not suffer so much pressure of mobilising capital for production and business operations.
How can drug prices be stabilised?
The most important basis is to take the initiative of material sources and minimise reliance on outside material suppliers. Besides, we must apply financial management measures to prevent wastefulness and lower production costs. Traphaco has planted medicinal herbs to feed its production facilities. It has also signed long-term contracts with farmers to grow and harvest medicinal herbs.
Do you think large-scaled programmes launched by the Ministry of Health like “Vietnamese people prioritise Vietnamese medicines” help stabilise medicine prices?
In my opinion, this is a good programme in favour of domestic pharmaceutical companies. Drug makers in general and Traphaco in particular are very interested in this programme. We are committed to not changing selling prices, stabilising product quality for hospitals, expanding R&D, enlarging distribution systems, strengthening marketing activities to sell more products to pharmacies, attending international packages to upgrade the company profile, and enhancing the reputation of domestic medicines in general and Traphaco’s products in particular .
Would you mind telling Traphaco’s intentions in the future?
In the coming time, Traphaco will continue expanding fields it is strong at like public health care and natural products. It will maintain annual growth of 25 percent to reach VND2,500 billion of revenues and over VND200 billion of profit in 2015.
The company is running four modern drug and functional food plants, completing and upgrading its distribution system with 25 branches throughout the country. In the near term, it will merge Traphaco High Tech Joint Stock Company with Traphaco Joint Stock Company and build a new factory on an area of some 4.5 ha in Tan Quang commune, Hung Yen province.
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