Indian firms up pharma investments

Vietnam Investment Review

In anticipation of future growth potential, Indian businesses are venturing further into investments in pharmaceutical production in Vietnam, with more fresh projects in the pipeline.

According to the Indian Business Chamber in Vietnam (Incham), Indian companies have extensive expertise in generic drug production. An increasing number of leading pharmaceutical firms from the subcontinent are now looking to up their investments in the country.

“Some large companies, which are among the top 10 in India, are expected to come to Vietnam in 2019 to invest in production bases in the lucrative local pharmaceutical industry. They are taking the necessary steps for the entry,” a senior official of Incham told VIR. “In addition, some Indian drug makers now have their production bases in Malaysia and Thailand, and Vietnam will be the next destination. Production in Vietnam will enable Indian businesses to export their products to the ASEAN market.”

Pharmaceuticals have been a focus in recent trips made by Indian firms in search of investment and business opportunities in Vietnam, along with agriculture, IT, and biological technology.

The new expected investment is likely to enable Indian firms to benefit from the incentives offered by the Vietnamese government’s plan to privilege domestically produced pharmaceuticals in order to increase the percentage of domestically produced pharmaceuticals among drugs sold in Vietnam from 50 per cent at the end of 2015 to 80 per cent by 2020.

Vietnam now offers some prioritised polices for local drug production, which are specified in the Pharmacy Law and circulars 9, 10, and 11 on pharmaceuticals bidding. High-tech drug production projects are also connected with tax incentives.

What is more, such facilities are to benefit from the Vietnamese government’s policy to give priority to generic drugs, which is considered a speciality of Indian drug markers.

The move among Indian drug makers proves how attractive the Vietnamese pharmaceutical industry is and how highly lucrative the local investment climate is. Vietnam’s pharmaceutical market is on track to grow on a steep incline. The 2017 turnover of the domestic market was estimated at $5.2 billion according to data from Business Monitor International, up approximately 10 per cent on-year. The industry is expected to continue its double-digit growth over the next five years.

At present, Indian investors focus on energy, infrastructure, and mineral projects in the country. Tata Group, Adani Green Energy Ltd., and Suzlon Energy Ltd. are big Indian players on Vietnam’s energy market. They are planning to invest in plants in various Vietnamese regions, while some other firms are interested in marble mining and mineral resources.

According to Incham, despite several issues related to policy and the bankability of projects in the renewable sector, the first green field solar project which is backed by Indian investors has completed major approval steps, resolved financing issues, and on the verge of beginning construction in Vietnam.

India’s total pledged capital in Vietnam hit around $128.14 million in the first seven months of 2018, placing the country at the 17th position among countries and territories with investments in Vietnam.

To promote Indian investment in Vietnam, Incham is now becoming more active. Last week, it worked with the Vietnam Chamber of Commerce and Industry on strengthening co-operation and hosting joint activities in Vietnam and India, including “Summit 2018”, which will be organised in Surat, as well as the Vietnam-India Business Forum.

Further tariff cuts under the ASEAN-India Trade in Goods Agreement–part of the ASEAN-India Free Trade Agreement – are expected to be a key driver of a rise in Indian investment into Vietnam in the near future.

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