Experience in developing chain stores will be an advantage of electronics giants in a fragmented pharmaceutical distribution market.
Mobile World Investment Joint Stock Company (stock code: MWG) has just announced the recruitment of a professional pharmacist in Ho Chi Minh City on the job page for the health sector. This move is considered to be the next step of a part of the merger and acquisition (M&A) plan worth 2,500 billion VND which was approved by the company's management in the annual meeting held at the beginning of the year. Accordingly, The Gioi Di Dong is expected to test its drugstores.
Digital World Joint Stock Company (Digiworld, stock code: DGW) has also recently added a new business line of health care, in addition to the existing technology product distribution. The company has implemented the first product distribution as a functional food and is expected to sell more pharmaceutical products, beauty care cosmetics, and supplements for men and children.
Another retailer in the industry, FPT Retail, also revealed its expansion into other retail sectors. The head of this unit once said that pharmaceutical might be one of the potential areas that FPT Retail can think of.
In an increasingly competitive and increasingly saturated electronic distribution market, this move by distribution businesses is seen by experts as a new step in seeking growth drivers.
Mobile World has just announced the announcement of the recruitment of a pharmacist in charge of specialty in Ho Chi Minh City, the next step for joining the field of pharmaceutical distribution.
With the fragmented pharmaceutical distribution market, the experience of developing the chain system will be an important advantage for these businesses to attack the market, although the ambition to reshape the market will still have many challenges. Of the three main pharmaceutical distribution channels currently being hospitals, pharmacies and private clinics, single pharmacies still dominate with about 70% of drug distribution.
However, according to some experts, the pharmaceutical distribution market is still very primitive. According to recent statistics, the size of the market is in the hands of branded distribution systems, which account for less than 5% of the market share, mainly in the hands of private pharmacies.
"The pharmaceutical market is now similar to the electronics market 10 years ago, lacking the brands capable of repositioning the market," an industry expert said.
In the distribution market, the famous pharmaceutical retail chains such as Phano Pharmacy, Pharmacity, Phuc An Khang, Sapharco, Vistar, or My Chau still do not have any units that own up to 100 pharmacies. Meanwhile, most of these units are concentrated in the southern market and Ho Chi Minh City, the remaining markets are almost open.
A simple comparison operation to see the difference between the current pharmaceutical and electronics chains is that Mobile World operates 1,669 supermarkets as of the end of August 2017 with a charter capital of more than 3,000 billion. Dong, while the leader of the pharmaceutical retail market, Phano Pharmacy currently has a charter capital of VND 120 billion with nearly 70 pharmacies.
Compared to these units, in terms of expertise and experience in the market, Mobile World, FPT Retail, or Digiworld almost start from the number 0. However, these are conditions that can be offset. by new hiring personnel. Instead, these electronics giants have the ability to develop and experience large-scale system management.
Another reason for the giants to look at the pharmaceutical distribution market is the rapid growth of the market in recent years, accompanied by the recovery of the economy and increasing incomes. per capita.
According to data from Business Monitor International (BMI) in the report on Vietnam's pharmaceutical and healthcare industry, the market size is estimated to reach US $ 4.7 billion in 2016, up 13% from the previous year. and will continue to maintain double-digit growth for the next 5 years. In particular, retail sales of pharmaceuticals account for a third of the value, equivalent to US $ 1.56 billion.
IMS Health had a positive forecast of revenue growth of Vietnamese pharmaceutical enterprises, ranking Vietnam second in the group of emerging countries after Argentina, higher than China and other countries in the world. ASEAN region.
Unlike normal consumer products that can be found through various sales channels, consumers with pharmaceutical products tend to look to distribution channels that are pharmacies or health facilities to buy goods. In an underdeveloped market, this is an opportunity for units capable of developing the system.
However, despite its management advantage, participating in a new market also presents many challenges, whether it be large-scale companies such as Mobile World, FPT Retail or Digiworld. Billion dollar pie is still open, not without reason.
Most of the pharmaceutical distribution chains that could be within the scope of electronics giants are quite small. The acquisition of these units may be a stepping stone to enter the market, but if you want to become the leader and reshape the market, the "burning money" to expand is inevitable. One of the challenges is that the ability to expand the scale in the retail pharmaceutical market will be very different from the electronics distribution market.
Currently, large-scale pharmaceutical distribution units comply with GPP standards (good pharmacy practice). This standard requires a pharmacist during opening hours, properly storing the drug on the temperature, area, transparent origin of the drug or selling the medicine according to the doctor's prescription ... This will increasing operating costs and expanding markets, instead of opening electronics supermarkets with lower staffing requirements and regulations.
In addition, pharmaceutical distribution is also considered a sensitive area, subject to policy risks. Even a small change in drug storage policy or inventory can cause the distribution chains to spend money to change the entire system. The cost of this process will be greatly amplified with large chains.
Reshaping a fragmented market with many out-of-the-box links between hospitals and pharmacies, especially in big cities, will also present potential risks and alert newcomers. may face risks unlike the electronics market.
