Healthcare Resource Guide: Vietnam

Vietnam Statistics

Summary

Policy

Market Entry

Current Market Trends

Main Competitors

Current Demand

Registration Process

Reimbursement

Barriers

Trade Events

FAQs


CS Contacts

Best Prospects

Market Size

Capital: Hanoi

Population: 96 million

GDP: US $240 billion

Currency: Vietnamese Dong

Language: Vietnamese

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 governments are undergoing upgrades of their facilities and opening new departments for specialty treatment. Such developments are creating new opportunities for medical devices in Vietnam.

The country represents a growing healthcare and medical equipment market for U.S. exporters. According to Business Monitor International (BMI), Vietnam's healthcare expenditure was estimated at $16.1 billion in 2017, representing 7.5% of the country's GDP. BMI forecasts that healthcare spending will grow to $22.7 billion in 2021, recording a compound annual growth rate (CAGR) of approximately 12.5% from 2017 to 2021.

Vietnam’s public healthcare expenditure is predicted to increase at a CAGR of 9.5% between 2016 and 2021, compared with 17.2% in the period of 2011 to 2016. 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% with a large part of the growth due to increasing insurance coverage for employees.

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  • Many hospitals are outdated and face chronic overcrowding.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  • Much of the existing medical equipment in public hospitals in Vietnam is obsolete and needs replacement.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 a State budget to upgrade their facilities, equipment, and services. The total budget for the health sector has increased but is still too low to meet the demands.
  • 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 available in-country, the Ministry of Health estimates that around 40,000 Vietnamese people spend approximately $2 billion to travel abroad for medical service every year.

Market Entry

Vietnam is not a market for inexperienced exporters. U.S. companies preparing to enter the Vietnamese market must plan strategically and be persistent and consistent with face-to-face follow-up. It can take one or two years to make a successful sale 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 sufficient due diligence on potential local agents/distributors to ensure they possess the requisite permits, facilities, manpower, and capital. 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

To improve the quality of healthcare service, the government encourages both public and private investments in developing or expanding healthcare facilities, training medical professionals, implementing IT solutions, and the management of healthcare facilities.

Vietnam continues to rely on imported pharmaceuticals (including food supplements), medical equipment, Health IT, hospital building material, and architectural design and management consulting services due to local suppliers not being able to offer the same range of products and solutions.

According to BMI, Vietnam’s pharmaceutical market was valued at $5.2 billion in 2017, with imported pharmaceuticals worth $2.863 billion, accounting for approximately 55%. U.S. market share is approximately 5% of the imported pharmaceutical market. In the meantime, Espicom Business Intelligence (a subsidiary of BMI) reported that Vietnam’s medical equipment market was estimated at approximately $914 million in 2017, and is forecasted to reach $1 billion in 2018 and $1.09 billion in 2019. Vietnam’s Ministry of Health estimated that Vietnam imports roughly 90% of medical equipment, of which approximately 30% is imaging diagnostics, including MRIs, CT scanners, ultrasound equipment, and X-ray equipment.

Main Competitors

Primary foreign suppliers of pharmaceuticals (including food supplements) for Vietnam include those from France, India, Germany, South Korea, Italy, the United States, the United Kingdom and Switzerland.

Primary foreign suppliers of medical devices for Vietnam include those from the U.S., Japan, Germany, Italy, the Netherlands, Korea, Taiwan, and China.

There are roughly 50 domestic firms who make approximately 600 products licensed by the Ministry of Health. Their product lines include hospital beds, scalpels, cabinets, scissors, and consumables.

Current Demand

Vietnam continues to rely on imported pharmaceuticals (including food supplements), medical equipment, Health IT, hospital building material, and architectural design and management consulting services due to local suppliers not being able to offer the same range of products and solutions.

Registration Process

The Ministry of Health (MOH) regulates the management of pharmaceuticals, food supplements, and medical devices. Specifically, MOH’s Department of Medical Equipment and Healthcare Works oversees medical devices, MOH’s Drug Administration oversees pharmaceuticals, and MOH’s Food Administration oversees food supplements.

  • Medical Equipment

The Vietnamese government encourages the import 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 with 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, MOH issued Circular 24 to provide updated guidance on the import of medical equipment in 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 countries.

Imports of used and refurbished medical equipment are strictly controlled by MOH. 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, MOH accepts used equipment for donation purposes only.

The Government recently issued Decree 36/2016/ND-CP regulating the management of medical equipment, including the classification of medical equipment; production, circulation, procurement, supply of medical equipment, medical equipment labels, and the management and use of medical equipment.

Decree 36 is considered the highest legal document to date on the management of medical equipment. Under Decree 36, all medical devices imported into Vietnam are required to register for marketing authorization (MA) licenses. MOH began receiving registration dossiers on January 1, 2017, for medical devices categorized as Class A (low risk), and began receiving dossiers on July 1, 2017, for higher-risk medical devices in Classes B, C, and D. Following an extension by the Office of the Government, the registration deadline for classes B, C, and D is now January 1, 2019.

  • Pharmaceuticals

Vietnam’s pharmaceutical market has tremendous potential; however, domestic policies are making it more difficult for U.S. exporters to access the market.

In 2014, Vietnam issued Decision 68, a national strategy on the development of Vietnam’s pharmaceutical industry. Under Decision 68, Vietnam plans to build its domestic pharmaceutical industry and gradually replace imported medicines. By 2020, Vietnam aims to increase the share of locally procured pharmaceuticals to 80% of market value. Therefore, U.S. industry has expressed concern over public procurement bias towards local producers.

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 Representatives Offices, especially whether such offices can directly or indirectly (through third parties) provide drug information to healthcare providers and employ medical representatives to perform these activities. Also outlined under the strategy in Decision 68, Vietnam 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 exclude 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. 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

According to the Ministry of Health, approximately 99.5 percent of 48,547 healthcare establishments have connected their data with Vietnam’s Social Insurance Agency. Medical insurance coverage, as of the first quarter of 2017, is 81 percent and is predicted to reach 90 percent by 2020.

Barriers

Regulation on registration of medical devices and pharmaceuticals is cumbersome and time-consuming.

Procurement & Tenders

Prior to December 2016, municipal or provincial departments of health were responsible for the procurement of pharmaceuticals and medical devices. However, because of problems with this arrangement, the Government of Vietnam issued Resolution 112/NQ-CP that established the Centralized Pharmaceutical Procurement Center under the Ministry of Health. At the same time, some municipal or provincial governments, including HCMC government are decentralizing the procurement of medical devices to hospitals.

Trade Events

Vietnam Medi-Pharm Expo, Hanoi

May 8-11, 2019

Website: http://www.vietnammedipharm.vn/

Vietnamese Government and Associations

Ministry of Health: http://moh.gov.vn/Pages/Index.aspx

Vietnam Medical Equipment Association: http://www.hoitbyt.vn/

Private Hospital Association http://hiephoibenhvientu.com.vn/

Hanoi Department of Health http://www.soyte.hanoi.gov.vn

HCMC Department of Health: http://www.medinet.hochiminhcity.gov.vn/

HCMC Medical Equipment Association: http://www.hoithietbiytetphcm.com/

FAQs

1. What do you recommend a U.S. manufacturer of medical device do as they consider selling to Vietnam?

They are recommended to first do some initial research on the market prospect for their device. Vietnam’s Country Commercial Guide is a great resource. Then it’s advisable for them to find a local distributor. They should conduct careful due diligence to make sure that they have the right distributor. This distributor should be able to educate them how to do business effectively and successfully in Vietnam, and proactively explore and pursue business opportunities.

2. How long does it take to register a medical device?

It typically takes 60 days.

3. Who can register a medical device in Vietnam?

It’s an authorized distributor or an official representative office of the manufacturer of the medical device.

U.S. Commercial Service Contact Information

Name: Mr. Triet Huynh

Position: Sr. Commercial Specialist

Email: Triet.Huynh@trade.gov

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. This is due to their reputation for innovative technologies, lifecycle cost efficiency, and professional customer service.

According to BMI, the Vietnamese pharmaceutical market is forecasted to achieve double-digit growth from 2018 to 2022. BMI forecasts that the country’s pharmaceutical imports will grow approximately 16% per year during this period. The importation of pharmaceuticals, including patent and generic drugs, is expected to reach approximately 55% of total pharmaceuticals.

The medical device sector in Vietnam is expected to grow at an average rate of 7.9% per year from 2014 to 2019. From 2016 to 2020, Vietnam healthcare authorities and hospitals are predicted to have growing demand and more funding to buy medical devices to equip new hospitals and replace outdated and incompatible devices in the following sub-sectors:

  • Imaging diagnostics
  • Cancer treatment
  • Surgical devices
  • Devices for operating theaters
  • Intensive care unit equipment
  • Test kits

The sub-sector of Health IT also presents growing opportunities and holds high potential for U.S. suppliers of IT hardware and Electronic Health Record software. A report of International Data Corporation shows that expenditure on Health IT was estimated at US$20 million in 2015, with a growth rate of 11.1% over 2014.

In addition, the growing healthcare sector in Vietnam provides opportunities to 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.

Statistics Snapshot

Market Size

Healthcare spending (including investment)

 

… as percent of GDP

7.5%

Hospitals, Procedures, Healthcare Professionals

Number of hospitals

 

… Public (Source: Ministry of Health)

1068

… Private (Source: Ministry of Health)

268

Number of hospital beds:

300,000

Demographics

Population:

96 million

Life expectancy men/women:

70.9/76.2

Infant mortality:

17.8/1,000 live births

Percent of population older than 65:

6%

Sources: Business Monitor Intelligence, Vietnam Ministry of Health, CIA Factbook


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