Growth in prescription drugs from the first quarter to the third quarter of 2020 have decreased by 10-15 per cent compared to 2019 and fear of COVID-19 is to blame, according to SSI Securities.

Hospital admission procedures have also become stricter during the pandemic restricting the number of patients who are visiting the facilities for periodic health check-ups. This, in turn, has greatly affected the number of people buying medicine.

The pharmaceutical industry has long been considered a stable growth industry, but since the beginning of the pandemic, these factors have seen significant declines in the prescription drug sector.

In 2020, the growth rate of this channel was just five per cent, significantly lower than the figure of more than 10 per cent the previous year.

In contrast to the decline in prescription drug sales, over the counter (OTC) drug sales recorded remarkable growth. This was particularly notable in sales of pain relievers, antipyretics, antiseptics, and hand sanitiser.

OTC drug prices are not affected by the Law on Bidding, which creates favourable conditions for pharmaceutical enterprises to promote and exploit this product line, according to Phu Hung Securities Corporation.

According to a survey by the Vietnam Report, about 71.4 per cent of enterprises participating in the survey chose to develop and expand OTC channels to compensate for the shortage of sales in prescription drugs.

Businesses with well developed OTC sales channels all recorded positive results in the first quarter of this year. Traphaco Pharmaceutical Joint Stock Company (TRA), for example, recorded a VND55.2 billion (US$2.4 million) in profit after tax in the first quarter of 2021, an increase of about 40 per cent over the same period in 2020.

Many businesses, however, that did not have strong OTC sales at the beginning of the pandemic have suffered losses. Ben Tre Pharmaceutical Joint Stock Company (DBT), for example, recorded a loss of VND328 million in the first quarter of this year opposed to a VND6 billion pre-tax profit in the same period last year.

COVID-19 VACCINES

In early June 2021, the Ministry of Health announced a list of 36 medical facilities eligible to import and preserve COVID-19 vaccines, including many companies listed on the stock exchange. These included Vimedimex Binh Duong Pharmaceutical JSC (VMD), Ben Tre Pharmaceutical JSC (DBT), Central Pharmaceutical Company No.1 JSC (DP1), Danang Pharmaceutical Medical Equipment JSC (DDN) and Codupha Central Pharmaceutical JSC (CDP).

Almost immediately after the announcement, pharmaceutical stocks received a much needed boost. VMD, for example, saw an increase from VND23,700 per share on June 1 to VND34,130 per share on June 9. A 44 per cent increase, before sliding back to its current value of VND26,500 per share.

Similarly, DDN recorded five consecutive sessions of gains from June 2 to June 8. This saw an increase of 35 per cent, from VND13,200 per share to VND22,000 per share, before closing Wednesday at VND13,500 per share. This was still 17 per cent above its share price in early June.

DBT shares also increased dramatically over the same period. Shares rose for six consecutive sessions by 42 per cent, rising from VND13,150 to VND18,350 per share only to drop back to around VND13,350. A 9 per cent increase compared to early June.

Notably, DBT has also completed the capital divestment from Nha Trang Vaccine and Biological Products JSC successfully (BIO), selling 4.4 million shares or the equivalent to 51 per cent of BIO's charter capital.

BIO was considered a "dead" stock due to failing to witness any transactions after joining the Unlisted Public Company Market (UPCoM) in August 2018.

However, this changed quickly amid the pandemic with the stock receiving much more attention from investors. On May 27 of this year, BIO hit VND152,450 per share, an increase of 1,594 per cent compared to VND9,500 per share recorded on April 20, 2021.

Currently, BIO has cooled down significantly, trading around VND41,000 per share.

Mergers and acquisitions are also believed to be impacting stock prices in recent months.

On June 7 this year, Pymepharco JSC (PME) announced that Stada Service Holding BV of Germany had made a public offer to buy nearly 356,000 PME shares. This is the equivalent to 0.47 per cent of the company's charter capital. As of March 26 this year, Stada Service Holding BV held 99.53 per cent of capital in PME. This acquisition would give the German financiers full ownership of PME’s capital.

Viet Nam's pharmaceutical market is currently valued at $7.4 billion covering 22,000 different types of drugs. According to Fitch Solutions, growth in Viet Nam's pharmaceutical industry will reach 8.7 per cent in 2021. SSI Securities also forecast a growth rate of 15 per cent higher than the pharmaceutical industry's average growth rate of 11.8 per cent, over the 2018-2019 period.

These strong growth figures are partly attributed to Viet Nam's rapidly ageing population and big increases in per capita income. — VNS