What solutions help the pharmaceutical industry develop sustainably?

(PLVN) - While the global pharmaceutical chemical market is constantly expanding, Vietnamese enterprises mostly focus on producing common drugs and are heavily dependent on imported raw materials. To promote sustainable development and increase competitiveness, Vietnam needs a comprehensive strategy with effective investment attraction policies.

Development is not commensurate with potential

According to the Department of Chemicals, the global pharmaceutical chemicals market reached a size of US$108 billion in 2022 and is expected to nearly double to US$205.6 billion by 2032, growing at a compound annual growth rate (CAGR) of 6.7% during 2023-2032. The increasing demand for innovative drugs and pharmaceutical ingredients is the main driving force behind the growth of this industry. Currently, pharmaceutical ingredients produced by chemical synthesis account for nearly 72% of the global active pharmaceutical ingredients (API) market share.

The pharmaceutical industry is thriving in North America, especially in the United States, thanks to favorable government policies for pharmaceutical chemical research and production. Asia-Pacific is also on a strong growth path, with increasing API production and investments in API research and development from major pharmaceutical companies in the region.

Several factors are driving the growth of the pharmaceutical chemicals market, including the growing demand for new and innovative drugs, rising proportion of aging population, better access to health insurance, and government support for research and development. Pharmaceutical chemicals also have advantages over other types of pharmaceuticals, contributing to the growth of the market demand.

In recent years, the Vietnamese pharmaceutical industry, including the pharmaceutical chemistry sector, has recorded positive growth. The domestic pharmaceutical market reached 7 billion USD in 2020 and is forecast to continue to grow by 10-15% per year. This development reflects the increasing demand for health care from the people along with the government's concern to improve public health.

However, the Vietnamese pharmaceutical industry has not yet developed commensurate with its potential. Most domestic pharmaceutical enterprises only produce common drugs, such as antibiotics, pain relievers, antipyretics, and health protection foods, but have not yet produced specialized and special drugs that require high technology. Currently, the whole country has only 6 enterprises registered to produce pharmaceutical chemicals, of which 3 enterprises meet WHO-GMP standards. The main products include terpin hydrate, magnesium hydroxide, calcium carbonate, calcium phosphate, and gelatin. However, the production scale of these enterprises is small, the technology and equipment are outdated, leading to high costs and poor competitiveness. Products from medicinal plants are mainly produced to supply the domestic market or for export with low added value.

According to UNIDO, Vietnam’s pharmaceutical industry is ranked at level 3/5, meaning “mainly producing finished products from imported raw materials.” According to WHO, Vietnam’s pharmaceutical industry is at level 3 (out of 4 levels), capable of producing generic drugs and exporting some pharmaceuticals but still mainly dependent on imported raw materials. Domestic raw materials only meet 5.2% of the demand for modern medicines and about 20% for oriental medicines.

According to the Department of Chemicals, the domestic pharmaceutical industry is still not competitive enough with regional countries such as China and India, and therefore most of the raw materials for the production of drugs and other health protection products must be imported.

“The main reasons for these limitations include low efficiency in exploiting raw materials, failure to take advantage of the country’s socio-economic advantages, and policies that are not strong enough to attract investment, especially from foreign-invested enterprises. Furthermore, a number of free trade agreements (FTAs) have also put the Vietnamese pharmaceutical industry in a difficult competitive position with imported products,” the Department of Chemicals informed.

For the pharmaceutical industry to develop sustainably

To sustainably develop the pharmaceutical industry, the Department of Chemicals believes that Vietnam needs synchronous, specific and feasible solutions.

Currently, the mechanism and policies to attract investment in the pharmaceutical industry still have many limitations and are not attractive enough to attract the world's leading pharmaceutical corporations. Therefore, the Government and ministries and sectors need to develop a comprehensive research program to complete the policy system, from encouraging and supporting investment to developing research and technology transfer, and reforming administrative procedures. Special preferential policies need to target research and development activities and technology to produce high-value pharmaceutical products, creating conditions for the pharmaceutical industry to develop more strongly.

Regarding science, technology and training, according to the Department of Chemicals, Vietnam needs to learn from the experiences of countries with advanced pharmaceutical industries to build programs to promote research, development and technology transfer. At the same time, it is necessary to promote domestic and international scientific research cooperation, focusing on attracting and training high-quality human resources, creating conditions for scientists, including overseas Vietnamese and foreign experts, to have the opportunity to work in Vietnam.

In the field of finance and investment, the pharmaceutical industry requires a large concentration of investment resources. "To attract investment capital, the Government needs to have policies to encourage domestic and foreign enterprises to participate in the field of research and development of pharmaceutical products. In addition, it is necessary to consider allocating capital from the budget for key projects and programs on pharmaceutical chemistry" - the Department of Chemicals commented.

According to this unit, international cooperation is also an important factor, helping the Vietnamese pharmaceutical industry access the experience of developed countries and effectively participate in the global value chain. Vietnam needs to actively participate in international forums, cooperate with large organizations and corporations in the pharmaceutical industry, take advantage of free trade agreements to attract investment, protect domestic production and expand export markets. The government also needs to create conditions for domestic enterprises to cooperate with foreign partners to promote and build Vietnamese goods brands in the international market.

In addition, Vietnam needs to have specific trade promotion strategies to promote products and build the national image, and at the same time research to turn some pharmaceutical products into national products with high economic value. Communication information also needs to be promoted to raise awareness of domestic consumers about pharmaceutical products.

The Vietnam Chemical Agency believes that although the Vietnamese pharmaceutical industry is facing many major challenges, it also has many opportunities for development. To achieve sustainable development and enhance competitiveness, Vietnam needs to apply comprehensive solutions, from investing in research and development, training human resources to improving quality management, encouraging foreign investment and strengthening international cooperation. Only with drastic and synchronous steps can the Vietnamese pharmaceutical industry expand into the international market, best meeting the health care needs of the people.

Source: https://baophapluat.vn/giai-phap-nao-giup-nganh-cong-nghiep-duoc-phat-trien-ben-vung-post529842.html