Imexpharm - Poised to lead growth in pharmaceutical industry

Vietnam’s pharmaceutical industry is a promising growth market within Asia, marked by growing demand driven by population expansion, rising incomes, rapid urban sprawl, and more convenient living environments.

The IQVIA Institute has classified Vietnam in the Pharmerging Market group, and the country’s pharmaceutical industry is forecast to continue to grow at a compound annual growth rate (CAGR) of 6-8 per cent in the 2023-2028 period.

Vietnam’s average annual drug spending stands at about $75 per person. This, coupled with a population of nearly 100 million people and a rapidly-growing economy, suggests that the market still has much potential for breakthrough and sustainable development in the future. This will bring opportunities for domestic pharmaceutical businesses, especially leading companies like IMP, to continue to flourish.

Benefits of having EU-GMP standard factories

IMP ranks among the top pharmaceutical enterprises today, alongside Hau Giang Pharmaceutical, the Vietnam Pharmaceutical Corporation, and Binh Dinh Pharmaceutical - Medical Equipment. Notably, IMP boasts the largest number of drug production lines in Vietnam meeting EU-GMP principles and standards.

This robust technology platform positions it for long-term growth momentum, aligning perfectly with the goal of Vietnam’s pharmaceutical industry to adopt modern production technologies of international quality to serve the domestic and export markets.

Among listed businesses, only two - IMP and Pymepharco - pursued the EU-GMP factory investment strategy before 2015. Consequently, IMP has benefited from these factories since 2019.

Due to modern production lines, IMP’s products have replaced imported drugs in many Vietnamese hospitals, increasing the company’s competitiveness in the domestic market and creating new entry barriers for foreign competitors. In 2023, it posted significant growth on the OTC (over-the-counter) channel, with OTC sales contributing up to 51 per cent to total revenue.

In addition, IMP is one of the leading businesses in Vietnam in the production and distribution of antibiotics, with a market share of nearly 9 per cent. IMP is also a major player in the ETC channel (ethical drugs), experiencing rapid growth and with sales estimated to be 1.8-fold higher than the second-ranked company nationwide.

Solid financial foundation

Therefore, even in a volatile business environment, IMP has still recorded solid growth over the past five years. The CAGR of its pre-tax profit and after-tax profit in the 2019-2023 period were 13.6 per cent and 16.5 per cent, respectively.

The CAGR of its EBITDA over the past five years stands at 17.5 per cent, while the CAGR of its equity reached 7.5 per cent and of total assets 6.7 per cent.

In 2023 in particular, revenue and profit saw record growth. Total revenue reached VND2.113 trillion ($82.5 million), which represented growth of 26 per cent compared to the overall industry growth of 8 per cent. Net revenue reached VND1.994 trillion ($78.2 million), an increase of 21 per cent against 2022 and exceeding the plan by 14 per cent.

Pre-tax profit reached VND377.3 billion ($14.8 million) for the year, up 30 per cent over the previous year and 8 per cent higher than the plan. Both revenue and profit achieved record growth.

According to Standard & Poor’s standards, IMP’s financial risk assessment indicators, such as FFO / Debt and Debt / EBITDA, have remained at minimal levels in recent years. This level of risk is the lowest in financial risk evaluation.

Continuing to expand new markets

The Mirae Asset Vietnam Securities Company has forecast that Vietnam’s pharmaceutical industry, fueled by continued market expansion, will post a value of $7.89 billion in 2024, up 9.1 per cent against 2023. The ETC channel is projected to outperform OTC thanks to universal insurance coverage reaching 93 per cent. It has been forecast that the value of the ETC segment will reach $6 billion in 2024, an increase of 9.4 per cent.

In 2024, IMP aims to increase total revenue by 24 per cent and net revenue by 19 per cent. The company also plans to grow revenue on the OTC channel by 12 per cent, compared to 6 per cent growth in 2023, and increase revenue on the ETC channel by a targeted 49 per cent.

The company plans to continue to maintain the development of its EBITDA margin that has been kept stable over the years, targeting 23 per cent for 2024.

This plan is feasible when considering IMP’s strong product portfolio. It currently has over 333 products licensed for circulation nationwide by the Ministry of Health. This includes eleven EU MAs (European Product Registration Numbers) issued in 2023 for six products, the Registration Numbers of which were licensed for difficult products such as Ampicillin / Sulbactam, bringing the total number of EU MAs to 27 out of eleven products.

The revised Pharmaceutical Law, particularly the financial autonomy mechanism for public hospitals, will incentivize domestic businesses to pursue high standards like EU-GMP or equivalent. This will prioritize the selection of high-quality domestic medicine lines.

This policy will help domestic manufacturing enterprises like IMP improve their market share compared to imported products in the hospital channel. The impact of these policies will be seen more clearly in 2025 and 2026.

IMP also fosters collaboration with foreign pharmaceutical companies to bring new medical technology to the Vietnamese market. Notably, its recent partnership with renowned South Korean pharmaceutical group Genuone Sciences Inc. will allow it to produce and distribute high-quality brand-name drugs in the future.

This collaboration aims to establish IMP as a leading pharmaceutical company by promoting the expansion of new therapeutic drug groups in fields such as cardiovascular disease and diabetes.