In this report, we review the prospects and competitive landscape of Vietnam’s pharmacy market. We currently have OUTPERFORM ratings for the two retailers under our coverage that have exposure to the pharmacy sector, FRT (TP of VND112,000) and MWG (TP of VND54,700).

Vietnam's pharmaceutical industry is poised for significant growth over the long term, driven by a rising incidence of non-communicable diseases, an aging population, and increasing income levels. According to US-based healthcare analytics consultancy IQVIA, Vietnam's pharmaceutical sales are estimated at USD8bn in 2022, increasing at a CAGR of 9.7% from 2017-2022. Despite this rapid growth in recent years, Vietnam's pharmaceutical spending per capita lags behind Asian countries, amounting to USD81 in 2022 compared to China's USD116 and the Southeast Asian average of USD97. We believe the long-term growth of Vietnam’s pharmaceutical spending will be fueled by the nation’s increasing occurrence of non-communicable cases, aging population, and rising number of middle-income households. 

Vietnam's retail pharmacy sector has surpassed hospital channels in growth over the past three years. Modern pharmacy chains in Vietnam have experienced significant expansion over the past five years. In addition, the COVID-19 pandemic in 2020-2021 presented lucrative opportunities for retail players. In the aftermath of COVID-19, consumers are increasingly favoring retail pharmacies due to the better service quality and their reluctance to visit hospitals for minor ailments. Modern pharmacy chains that offer affordable medications, valuable consulting services, and a wide range of products are well positioned to gain market share. 

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