Davipharm

As Davipharm marks its 20th anniversary, the journey of this leading Vietnamese pharmaceutical company stands as a testament to resilience, innovation, and strategic growth. Over the past two decades, the pharmaceutical landscape has undergone significant transformations, and Davipharm’s evolution mirrors these changes, highlighting both the challenges and opportunities that have shaped its path.

Transformations in a dynamically evolving market
Davipharm was founded in 2004 and today is one of the most dynamically developing enterprises in the Vietnamese pharmaceutical market. Reflecting on the last 20 years of Davipharm’s operations provides a snapshot of the broader financial dynamics at play in the pharmaceutical industry.

Initially, the company’s strategy focused on rapidly expanding its portfolio by introducing numerous new SKUs to meet market demands. This approach was characterized by speed and efficiency, enabling Davipharm to establish a diverse range of products swiftly.

However, regulatory changes introduced more stringent requirements, slowing the pace of product introductions. While this shift posed challenges, it also brought opportunities. The need to focus on fewer but higher-impact products allowed Davipharm to enhance its strategic selection process emphasizing quality over quantity, which streamlined operations and provided a competitive edge in the market.

First certifications: EU-GMP & HP zone
In November 2017, Adamed Pharma – a Polish pharmaceutical and biotechnology company acquired 70 percent of shares in Davipharm and in April 2023 the company acquired the remaining shares and became the only shareholder of Davipharm.

This acquisition infused Davipharm with a new vision centered on producing high-quality products adhering to EU-GMP standards. Implementing these standards in Vietnam presented considerable challenges, including huge financial investments and the need to transfer expertise from Poland to Vietnam. With an investment of US$60 million, over US$10 million has been allocated to upgrading the Davipharm manufacturing plant in Binh Duong and improving quality processes.

In 2021, Davipharm announced the first in Vietnam certification of the HP Zone for production of – among others – high quality oncology drugs, which represent an important part of Davipharm’s portfolio.

Photo: The medicine undergoes a stringent quality control process at Davipharm.

The same year, the company obtained its first EU-GMP certificate, becoming one of several pharmaceutical companies in Vietnam with EU-GMP quality standard.

This certification elevated Davipharm from competing in a crowded market segment characterized by lower standards to a more exclusive tier where competition is based on superior quality. This transition allowed the company to revise its sales strategy, targeting different market segments and improving overall efficiency and profitability. Participation in central tenders further bolstered sales, demonstrating the tangible benefits of adhering to higher standards.

Strategic shifts and market expansion
One of the notable strategic shifts at Davipharm has been its focus on retail alongside traditional B2B sales. In recent years, it has increased its workforce to over 450 employees, including a significant growth of the sales force dedicated to retail operations. This expansion required substantial investment in training and infrastructure but positioned Davipharm to engage more directly with end consumers.

“From relying solely on distributors to building a retail presence, our headcount has increased by 50% to support this new channel. This shift required careful financial balancing to ensure continued profitability and resource allocation for further investments”, said Mr. Szymon Turynski – Chief Financial Officer of Davipharm.

According to IQVIA’s report for Q1-2024, compared to the same period from the year ago, Davipharm experienced strong growth, with the pharmaceutical market growing by 7% and Davipharm growing by 28%. In the retail channel, the market grew 3%, but Davipharm increased by 17%. In the hospital channel, the market grew by 13%, and Davipharm grew by 37%. Along with marketing activities, increased recognition of high-quality products, and dedicated customer service, this helped Davipharm move up in the rank from 26 to 21 position on the pharmaceutical market. In the domestic market, Davipharm is ranked 9th, and if considering only domestic prescription drugs, it’s the 7th largest company.

Future directions and investment plans
Looking ahead, Davipharm’s strategic priorities reflect a long-term vision. The company has earmarked $12 million for capital expenditures and an additional $12 million for research and development over the next five years. These investments underscore a commitment to innovation and expansion beyond the Vietnamese market. Building a strong, international R&D team is a cornerstone of this strategy, enabling Davipharm to develop products meeting stringent international standards, supported by rigorous bioequivalence studies.

As stated by Mr. Michal Wieczorek – General Director of Davipharm, the company’s goal is to transition Vietnam from a market reliant on imported drugs to one that exports high-value products, marking a new chapter for both Davipharm and the country.

The company’s ambition is to contribute to improving Vietnam’s pharmaceutical trade balance by increasing exports. Currently, Vietnam exports only about 150-180 million euros’ worth of pharmaceuticals annually while importing around 1.5 billion euros. Davipharm’s competitive production costs and high-quality products position it well to bridge this gap. These efforts are aligned with national goals, contributing to the country’s economic growth and pharmaceutical self-sufficiency.

Photo: Davipharm joins CPHI 2023 in Barcelona with Adamed Group to expand international market

Building a sustainable and successful pharmaceutical company requires a long-term perspective and unwavering commitment to strategic goals. This consistency has allowed Davipharm to navigate financial challenges, regulatory changes, and market fluctuations, consistently reinvesting profits and securing additional financing to fuel growth.

Over the past two decades, Davipharm has evolved from a local company into one with ambitions and capabilities that extend far beyond Vietnam, promising to advance even further and faster in the future.

Check out the article on Nhip Cau Dau Tu – Vietnam’s best business read HERE!