In this report, we review the prospects and competitive landscape of Vietnam’s pharma industry, including the retail distribution space (i.e., pharmacies). Our key conclusions are: (1) Vietnam boasts ample long-term growth headroom on the back of its aging population and rising consumer income against low medicine spending per capita, (2) the Government’s policies  favor high-quality, locally produced drugs in the hospital channel, which in turn benefit local drug producers that are equipped with top-tier production standards, and (3) the consolidation in the pharmacy space is accelerating with the aggressive store expansion of the leading nationwide chains. In terms of our coverage, we currently have OUTPERFORM ratings on two pharma stocks — DHG (OUTPERFORM, TP VND106,000/share) and IMP (OUTPERFORM, TP VND76,900/share). Meanwhile, while we have a positive view on FRT’s pharmacy business, our cautious view on its mobile business drives our current UNDERPERFORM rating (TP VND35,000/share).

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