Davipharm

Vietnam boasts rapid GDP growth, which leads to an increasing demand for drugs and medical products – says Michał Wieczorek, General Director of Davipharm from the Adamed Group, in an interview with Krzysztof M. Zalewski (Boym Institute).

How did Adamed’s adventure in Vietnam begin?

Let’s start from the beginning: in 2010, Adamed’s acquisition of Polfa Pabianice allowed the company to internationalize its activities on a larger scale. Initially, these were mainly countries from the former Eastern Bloc. Simultaneously, we began exploring other export markets in a B2B model based on license out – the temporary sale of rights to produce or trade our drugs to a distributor.

Vietnam was one of such markets. As our sales grew dynamically there, we began social and economic analyses to assess potential growth. Next, we identified companies worth acquiring. This project was particularly close to Małgorzata Adamkiewicz, Chairwoman of the Supervisory Board and co-owner of Adamed.

A breakthrough step was acquiring a stake in Davipharm, giving us the ability to locally produce drugs for the Vietnamese market. Recently, Adamed became the sole owner of the company.

What determined the choice of Vietnam over other Southeast Asian countries?

Vietnam boasts very rapid GDP growth, leading to a dynamic demand for drugs and medical products. Many indicators suggest that this growth will be sustained.

Moreover, when deciding on the acquisition, the medical market resembled Poland’s situation two decades ago. We assumed we had a “crystal ball” allowing us to predict the future: we could use our national experiences from the transformation period in Poland.

Additionally, Vietnam’s population is rapidly aging, increasing demand for our products. Currently, about 15% of over 100 million Vietnamese are over 60 years old. By 2050, this will be over 60% of the population.

What sells best there?

As Adamed, we have registered about 12 products in Vietnam. Davipharm has over 200 molecules in various therapeutic areas, particularly in cardiology, gastroenterology, CNS (central nervous system) diseases, and oncology. Due to regulatory reasons or medical habits, there is demand for slightly different products than in our country.

Regulations play a special role in the medical products market. How do you cope with the regulatory differences between the EU and Vietnam?

 Adamed’s products are available to patients in dozens of countries. Before moving to Davipharm, I was responsible for opening and managing these markets. Despite this extensive experience, Vietnam is a significant regulatory challenge. Regulations change very quickly, affecting business unpredictability. These new regulations are not always consulted with entrepreneurs. Information flow between administrative units is also difficult.

Hanoi is home to the most important institutions for us, such as the Ministry of Health or the Drug Administration of Vietnam (DAV) – the body responsible for drug registration. Everything related to medicinal products, their registration, and related regulations happens in the capital. However, for matters related to production at our factory in Binh Duong province near Ho Chi Minh City (formerly Saigon), we contact local authorities.

Vietnam is still characterized by slow administrative processes. Often at lower administrative levels, there is no understanding that money flows into the budget from companies through taxes. A Polish entrepreneur can sometimes be surprised by the slowness of the bureaucratic machinery.

What does this mean for companies?

It is extremely important to react very quickly, be highly flexible, and build a team capable of operating under permanent changes. Although change is a constant factor in business, in the Vietnamese market, one must be prepared for deep and rapid transformations, often involving unclear or contradictory legal regulations.

Is Vietnam the new “world’s factory”?

The country has been changing rapidly for a decade. It has become one of the significant recipients of foreign direct investment, amounting to about 36 billion dollars last year. Geopolitical factors play a role in this – production is increasingly being transferred from China to Vietnam. Vietnam’s popularity is also influenced by government policy, actively attracting investors.

GDP is growing rapidly. The World Bank forecasts a 5-6% growth for 2024 and 2025. Along with the overall economic expansion, healthcare expenditures are increasing. The number of doctors, hospitals, and beds is growing dynamically. Better healthcare is one of the first needs of a wealthier society.

In my neighborhood, a French-Vietnamese hospital has been established, reaching the level of the best facilities in Europe. However, this is a gem, not a standard.

With the influx of capital, administrative understanding of business and its needs is increasing. Fighting corruption is a priority for the current leadership. For example, two years ago, dozens of people, including the incumbent minister, were dismissed or arrested in the Ministry of Health. This is a very clear signal sent to officials.

You mentioned that Vietnam is changing rapidly. Where does it draw inspiration for these changes?

Despite bureaucratic challenges, business is increasingly treated as a partner. For example, in terms of medical technology transfer rules, the market regulator is still learning. Consultations with business are active, and the administration is open to knowledge and the use of various solutions proven in the world, specifically in the EU and the US.

It is important that Polish entities participate in this administrative learning process, making it a subject of intergovernmental agreements. We have excellent cooperation with the Polish Embassy in Hanoi, which always conducts consultations with Polish business during government meetings.

How is the medical market organized in Vietnam?

There is a developing public sector and an even more dynamic private sector. The market’s specificity remains the concentration of medical services in hospitals.

The pharmaceutical market grows at about 10% annually and is expected to maintain this pace for the next decade.

Currently, this market is worth about 6 billion dollars – five times less than in Poland. 45% of pharmaceuticals are sold in public tenders to hospitals. The remaining 55% of the market is retail, i.e., products sold in pharmacies.

This unusual market structure results from the concentration of medical personnel and treatment in hospitals and the still limited role of outpatient clinics.

Especially in the provinces, the availability of doctors is still relatively limited. Pharmacists often advise on what and how to treat. In Vietnam, almost all drugs can still be purchased without a prescription.

That is a huge responsibility.

Yes. Inevitably, part of the social responsibility for health is taken over by us, as a supplier of medicines. As part of our social activities, we conduct the largest screening campaign in Vietnam’s history in basic areas such as cardiology, metabolic diseases, and psychiatry, as we, like other countries, have seen a surge in depression after COVID-19 lockdowns. In agreement with the Ministry of Health, we screen 10,000 people annually. We also train doctors and pharmacists on how to conduct such screenings and diagnose chronic diseases early.

How can Vietnam be assessed in terms of pharmaceutical production?

The country has not been a producer of active substances or high-quality medicinal products until now. Vietnam still imports significantly more pharmaceutical products than it exports.

Currently, we are working to create the image of Vietnam as a producer of high-quality drugs. Similar to those produced in Europe but competitively priced.

We received a new EU-GMP certificate for our factory – including our line producing oncology products. This is the first such certification in Vietnam’s history.

We have been certified by inspectors of the Polish Chief Pharmaceutical Inspectorate. They emphasized that the quality of infrastructure in Vietnam is at the level that can be found in the EU.

What about the availability of educated workers?

The competences of the staff consist of knowledge, skills and commitment. Of these three components, we mainly have great motivation of a very young team. However, we continuously work on the level of knowledge and skills. We put tremendous effort into training and preparing these people for work. Then we implement programs to retain this human capital within the organization. Employees also come for internships to Poland and get certified at Adamed.

Additionally, for five years, as part of the ADAMED SmartUP program, we have been supporting students and teachers from the Polish-Vietnamese Friendship High School in Hanoi. We conduct scientific workshops, English language classes, and, in cooperation with the Polish Embassy in Hanoi, we had equipped classrooms with screens for education purpose and the school library with computers. This is a great use of synergy between our companies.

And this yields good results. We have created a unique DNA of quality production in our Vietnamese company Davipharm. We are a valued employer, evidenced by our ability to retain staff. Last year, our turnover rate was only 5.6%, compared to the market average of about 12%.

What could the Polish state do better to support the expansion of the Adamed Group in the Vietnamese market?

There is a need for a support program—possibly funded by EU resources—for the subsidiaries of Polish enterprises in Asia, which will be the fastest-growing region in the world for at least the next decade. Such funding would help us grow faster and gain market position.

We already have increasingly close cooperation with local universities. We accept students for internships, but there are significantly more applicants than available positions. Hence, we have a project to establish a training and R&D center in Vietnam, to which we would like to invite Polish and international partners. It would serve the development of new drugs and therapies. It would be the role of the Polish state to help us open such a center.

We also willingly share our experiences with other entrepreneurs in Poland from the perspective of a company that has already gone through the entire process of building a business in Vietnam. It is worthwhile to know in advance what to expect and what to be wary of. This knowledge transfer could be facilitated by government agencies.

You are very optimistic about the development of the Vietnamese market. Where are you in this business journey and where would you like to go?

We are already one of the fastest-growing pharmaceutical companies in Vietnam. Every year, we break our sales records by 30-40%. In terms of sales, we currently rank seventh in the Rx (prescription) product market among local companies and twenty-first overall.

Over the next ten years, we aim to become one of the top pharmaceutical companiesin Vietnam and the largest exporter of pharmaceutical products from this country. We want Davipharm’s revenues to consist of at least half of the local market and half of foreign markets.

Will we soon see Adamed products “Made in Vietnam” in Polish pharmacies?

Yes, it is a matter of the coming months. A few weeks ago, we made our first sale to Poland. We have excellent synergy between Adamed and Davipharm, which will soon offer a wide portfolio of oncology drugs for Polish patients.

Read the original article HERE.