# Pharmaceutical Industry in Vietnam: Sluggish Sector in a Growing Market
## 1 Introduction  
Vietnam is among the highest growing markets in Asia for pharmaceutical products during 2011-2015 [1] and the country is expected to keep the pace for the next 20 years [2]. The overall market value of the industry in 2015 amounted to about 4.2 billion USD, and it is expected to reach 10 billion USD in 2020 [3]. According to BMI (Business Monitor International), Vietnam ranked 13/175 countries for the fastest growing global markets in drug spending in 2013 [4]. The demand for pharmaceutical products rapidly expanded as a consequence of high economic growth, rising income per capita, higher urban population as well as ageing population. Since early 1990s, acknowledging the importance of the healthcare sector, the Vietnamese government formulated various policies to promote the development of the domestic health care sector in general and of the pharmaceutical industry in particular. Although the effectiveness of such policies is still controversial, the development of the health care sector is quite remarkable. The World Bank frequently hailed Vietnam for achieving health outcomes better than what its income level would suggest [5]. However, as of 2015, it is estimated that 90% of national drug expenditure depends on imported sources [3]. Looking at the trade patterns in recent years, although the pharmaceutical industry has performed significantly well, doubling the volume of exports in the interval 2011-2015, it seems that Vietnam still lags behind other neighboring economies in the East Asian region. In 2015 Vietnam has exported pharmaceutical products for a value of 113 million USD, equal to 4.6% of its total imports in pharmaceuticals, which is considerably lower with respect to other regional competitors such as China(6.9 billion USD exports, equivalent to 36% of its total import), Indonesia (586 million USD exports, equivalent to 79% of its total import) and Thailand (438 million USD, equivalent to 21% of its total import). Moreover, the country exhibits increasing trade deficits with both East Asian mature and emerging markets, such as Japan, South Korea, China, Malaysia and Thailand [6], thus revealing a dependent position of the country in the international division of labor and the lack of competitiveness of its domestic production. Indeed, in most cases local manufacturers only manage the lowest stages of drug production, mainly importing raw materials, and are far from self-reliant in producing raw medicinal materials and inventing new drugs [7]. So far, the literature on the Vietnam pharmaceutical industry is quite limited. Apart from periodical reports from analytical firms such as BMI, FPT Securities, VietinBank, certifying an increasing interest by the private investors towards the sector, few updated studies attempted to investigate the development of pharmaceutical industry with a comprehensive approach. In this regard, in the last fifteen years the academic literature on the topic has been revealed to be quite fragmented, focusing on wider issues (such as the structure of the country's healthcare system) or stressing specific sectorial topics. For example, [PERSON], et al. [8] analyzed the evolution of the structure and the funding of the Vietnamese healthcare system providing some brief arguments regarding the pharmaceutical sector On the other hand, [PERSON] [9] reviews the transition policies implemented in the 90s and highlights their impact on healthcare provision and in terms of modernization of the pharmaceutical industry. Following the WTO accession, a stream of research has investigated Foreign Direct Investment (FDI) entry strategies in the Vietnamese pharmaceutical market trying to assess the main determinants in terms of localization and entry mode and stressing the effects of regulations, licensing and entry barriers on market expansion [10; 11]. In parallel, some other contributions explore the macroeconomic constraints that are likely to affect the performances in the sector.