Investing in Vietnam’s Pharmaceutical and Medical Sector

Vietnam’s pharmaceutical and medical device industries have experienced remarkable growth in recent years, driven by increasing healthcare demands, regulatory reforms, and foreign investment incentives. With a rapidly expanding middle class and rising healthcare expenditure, the country presents a lucrative opportunity for investors seeking to enter the healthcare sector. The Vietnamese government has implemented policies to improve healthcare access, modernize infrastructure, and encourage local manufacturing, making it an attractive destination for pharmaceutical and medical device businesses. Let’s dive deeper into the specific drivers and opportunities shaping this dynamic market – read our full article to understand how you can capitalize on Vietnam’s healthcare boom! 

An Overview of Vietnam’s Pharmaceutical and Medical Device Market 

The market potential is substantial. As of 2023, Vietnam’s pharmaceutical industry was valued at $7.7 billion and is projected to more than double, reaching $16 billion by 2030.  

The medical device market, valued at $2.1 billion in 2023, is forecasted to grow at a compound annual growth rate (CAGR) of 9%, reflecting increasing demand for modern healthcare solutions.  

Total healthcare expenditure in the country reached $20.3 billion in 2022 and is expected to continue rising due to factors such as an aging population and improved insurance coverage.  

Additionally, 55% of pharmaceutical products in Vietnam are imported, indicating ample room for local production and investment in domestic manufacturing. 

In essence, Vietnam presents a compelling landscape for pharmaceutical and medical device companies seeking to capitalize on a rapidly expanding and increasingly sophisticated healthcare sector. 

Strategic Advantages of Vietnam’s Healthcare Market 

Vietnam offers multiple advantages that make it an attractive market for pharmaceutical and medical device investors. One of the key factors is its favorable regulatory environment.  

The government has enacted policies to encourage foreign direct investment (FDI) in healthcare, easing market entry and business operations for international investors. Decree 54/2017/ND-CP allows foreign participation in pharmaceutical distribution and retail, enabling international businesses to establish a presence in the country. 

 Resolution 20-NQ/TW aims to strengthen Vietnam’s pharmaceutical manufacturing capabilities, with a goal of 70% domestic drug production by 2030. Meanwhile, Circular 30/2015/TT-BYT regulates medical device imports and classifications, ensuring a transparent and structured regulatory process for businesses entering the market. 

Another significant advantage is the growing demand for healthcare solutions. Vietnam’s population is aging rapidly, with projections indicating that 25% of its citizens will be over 60 years old by 2050. This demographic shift is driving increased demand for medical treatments, pharmaceuticals, and healthcare services. 

 Additionally, urbanization and lifestyle changes have led to rising cases of chronic illnesses such as diabetes, cardiovascular diseases, and hypertension, creating opportunities for specialized medicines and advanced medical devices. The expansion of Vietnam’s Social Health Insurance (SHI) scheme, which now covers over 90% of the population, further boosts accessibility to pharmaceuticals and medical equipment, enhancing market growth. 

Vietnam also benefits from cost-effective manufacturing and a skilled workforce. The country’s relatively low labor costs make it a competitive alternative to traditional manufacturing hubs such as China and India. Many international pharmaceutical companies are now shifting production to Vietnam to take advantage of these cost benefits.  

Additionally, the government is investing in the training and education of healthcare professionals, ensuring a growing pool of skilled workers to support industry expansion. 

Opportunities for Foreign Investors 

Foreign investors looking to enter Vietnam’s pharmaceutical and medical device market have a variety of opportunities. In the pharmaceutical sector, local manufacturing partnerships present a profitable investment avenue. By collaborating with Vietnamese firms, foreign companies can establish production plants while benefiting from government incentives, such as tax reductions and streamlined regulatory procedures. The generic drug market is another promising area, given the country’s high demand for affordable medicines. With rising healthcare needs, investment in biotechnology and advanced drug research is also highly encouraged, as the government provides incentives for research and development (R&D) activities. 

The medical device sector offers equally compelling opportunities. The demand for diagnostic equipment and imaging technologies is increasing, as hospitals and clinics seek modern tools to improve patient care. Telemedicine and digital health solutions have gained rapid traction, particularly after the COVID-19 pandemic, as healthcare providers look for ways to improve accessibility and efficiency. Additionally, investing in the production of medical consumables, such as syringes, gloves, and surgical masks, presents significant potential. Vietnam’s reliance on imported medical disposables creates a gap that local production can fill, reducing import dependency while enhancing supply chain resilience. 

Source of Asia: Enhancing Healthcare in Remote Vietnam Through a Tripartite Parnership 

A notable case example of successful investment in Vietnam’s healthcare sector is Source of Asia’s project in collaboration with Tesalys, a leading manufacturer of medical waste treatment equipment and a Vietnamese NGO. This tripartite partnership aimed to improve healthcare access in remote regions of Vietnam by introducing innovative portable diagnostic devices.  

The initiative not only enhanced medical services in underserved areas but also demonstrated the potential of foreign-Vietnamese partnerships in driving sustainable healthcare solutions. 

Source of Asia help to improve healthcare infrastructure in three remote provinces 

To read more about this successful case study, click here: Enhancing Healthcare in Remote Vietnam Through a Tripartite Partnership. 

Challenges and Considerations for Investors 

While Vietnam presents substantial investment opportunities, foreign businesses must navigate several challenges to succeed in the market. Regulatory compliance remains a key consideration, as the registration and approval processes for pharmaceuticals and medical devices can be time-consuming and complex. Companies entering the Vietnamese market must ensure they fully understand the regulatory landscape and work closely with local authorities to streamline approvals. 

Market competition is another factor that investors need to account for. The pharmaceutical industry is dominated by established multinational companies, requiring new entrants to develop strong market entry strategies. Foreign investors should consider forming joint ventures or strategic partnerships with local firms to gain a competitive edge.  

Additionally, intellectual property (IP) protection is a concern in Vietnam’s rapidly expanding pharmaceutical and medical device markets. Investors should take proactive steps to safeguard patents and trademarks, ensuring that their proprietary products and technologies are protected. 

Final thoughts 

Vietnam’s pharmaceutical and medical device industries offer immense potential for investors looking to capitalize on Southeast Asia’s rapidly growing healthcare market. With a supportive regulatory framework, increasing healthcare demand, and a cost-competitive manufacturing environment, the country is emerging as a key hub for healthcare investment. The government’s commitment to fostering domestic production, coupled with rising consumer demand, presents opportunities for businesses to establish a strong presence in the market. 

Foreign investors who can effectively navigate regulatory challenges, understand market dynamics, and leverage local partnerships will be well-positioned for success in Vietnam’s dynamic healthcare landscape. Whether through pharmaceutical manufacturing, medical device production, or digital health innovations, Vietnam offers a gateway to long-term growth and profitability in the healthcare sector. 

Interested in exploring investment opportunities in Vietnam’s pharmaceutical and medical device sector? Contact us for expert insights and strategic guidance.