The pharmaceutical industry less affected by the pandemic

VIETNAM, June 14 –

A worker operates equipment at a Traphaco plant. In the first quarter of 2022, the profit after tax of Traphaco Joint Stock Company (TRA) increased by 60.2%. —Photo

HÀ NỘI While most manufacturing and trading industries have struggled due to rising input prices, the pharmaceutical industry has been less affected.

Việt Nam’s pharmaceutical industry imports 80 to 90% of raw materials, mainly from China and India.

In the first quarter of 2022, the after-tax profit of Hậu Giang Pharmaceutical Joint Stock Company (DHG) increased by 25% compared to the same period last year. Imexpharm Corporation (IMP) profit growth was nearly 26%, Domesco Medical Import – Export Joint Stock Company was over 32%, Traphaco Joint Stock Company (TRA) was 60.2% , that of Vidipha Central Pharmaceutical of 54.4%. Joint Stock Company, nearly 135% at SPM Joint Stock Company and 150.4% at Mekophar Chemical – Pharmaceutical Joint Stock Company.

The first quarter 2022 financial statements of many publicly traded pharmaceutical companies showed that the average input cost structure was 60% for raw materials, 20% for labor, 10% for marketing and 10% for % for other expenses.

The cost of raw materials accounted for a large proportion, but the ingredients that make up drugs need many different active ingredients and pharmaceuticals, so the increase in the price of raw materials affects the price of the drug has been separated.

During the outbreak of COVID-19 in two major pharmaceutical suppliers, China and India, the application of strict distancing measures increased the cost of raw materials. However, many companies compensate for this cost by increasing the selling prices.

According to estimates from SSI Research, average retail prices for fever, cough, vitamin, supplement and COVID treatment medications in the first quarter of 2022 increased by 5% compared to the first quarter of 2021 and by 13% since the first outbreak in 2020. Other medicines have seen lower growth rates, ranging between 5 and 9% from 2020.

China’s implementation of the “zero COVID” policy has not registered any significant impact on the supply chain of pharmaceutical raw materials.

India, the world’s second largest producer of medicinal raw materials, is stepping up production and exports to replace China’s dominant market position. Commodities from India are expected to help reduce prices in the near future.

SSI Research said demand for pharmaceuticals will continue to rise. In the first quarter of 2022, Việt Nam’s total pharmaceutical revenue is expected to increase by 7% compared to the same period in 2021, of which the pharmaceutical channel increased by 23% and the hospital channel decreased by 5%.

Pharmaceutical companies’ sales in 2022 will be driven by strong growth in pharmacy channels in the first half and the strong recovery in hospital channels and drug purchases should normalize in the second half.

It is estimated that pharmaceutical industry revenues in the last six months of 2022 will increase by around 13% compared to the same period in 2021, so the figure for the full year would be 11%. , almost returning to the level before the outbreak of COVID -19. The race to open new pharmacies of major drugstore chains such as Pharmacity, Long Châu and An Khang will drive the revenue growth of the pharmaceutical industry.

The chairman of the board of FPT Retail expects that by 2022, the Long Châu chain will bring in about VN50 billion ($2.16 billion) to VN100 billion in profit, compared to nearly 5 billion NV in 2021.

According to market research firm IBM, the Vietnamese pharmaceutical market in 2021 was worth around $7.7 billion and is expected to reach $16.1 billion by 2026.

“The pharmaceutical industry has long-term growth prospects, but stocks have not really attracted investors yet, because business results are generally stable over the years, there is no breakthrough,” said said Lê Đức Khánh, Director of Analysis, VPS Securities Company.

Phan Dũng Khánh, director of investment advisory, Maybank Investment Bank Securities Company, said that when the market recovers, the rise in pharmaceutical stock prices is usually below the middle ground. However, this is seen as an accumulation group for cash flow during tough times in the economy and stock market. VNS

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