Vietnam’s pharmaceutical sector is seeing rapid growth as shares jumped on expectations of foreign ownership limit removal and government’s divesting plans, amid optimistic industry outlook.
DHG Pharmaceutical Joint Stock Company (DHG), Vietnam’s top pharmaceutical manufacturer by market value, so far this year rose around a quarter, while prices of Traphaco (TRA) shares doubled within a few first months of 2016.
Likewise, DMC stocks of Domesco Medical Import-Export Corporation (Domesco) advanced more than two third to VND74,000 /share as of June 15, after hitting its eight-year high in April.
Analysts and traders said the share prices soared due to investors’ hope on a possible removal of 49 percent foreign ownership limit in pharmaceutical firms, while many others also expect the State Capital Investment Corporation (SCIC) will soon divest from those companies.
Room for foreign holdings in several top pharmaceutical firms are nearly full now.
Optimistic outlook of the industry also lends further support, with the country's rising health concerns and fast growing middle class who are willing to spend more on healthcare.
Vietnam health expenditure per capital is relatively low compared to the Southeast Asia region, ranking 5th place after Singapore, Malaysia, Thailand, and Philippines. The country's pharmaceutical market is projected to maintain double digit growth until 2019, according to BMI report.
Recognising market potentials, many local companies quickly expand their business to meet the demand. Traphaco plans to open new factory in Hung Yen, pledged to start operation in 2017, with designed capacity of 4 billion units per year, after the firm's retail customers doubled within two years since 2013.
Besides, upbeat earnings results of several leading pharmaceutical firms in first quarter of 2016 are a driver for gains in those stocks. Traphaco reported a 12-percent increase in first-quarter net profit while Q1 earnings result of DHG also rallied 35.5 percent compared with same period last year.
Many big foreign funds and international pharmaceutical giants have shown their interests in the industry, including Deutsche Bank, Dragon Capital, Franklin Templeton, J.P Morgan or CFR International SPA, a subsidiary of Abbott Group.
Whether the expectations of investors really happen is unknown. But if they come true, pharmaceutical shares will likely climb further.
Luong Tuan
Vietnamese
