Masataka “Sam” Yoshida, Head of the Cross-border Division of RECOF Corporation, cum CEO of RECOF Vietnam, said that each year, Vietnam records an average of two M&A deals with Japan in the medical and pharmaceutical field. In recent years, Vietnam has had 20-30 M&A deals with Japan each year if other industries are included.
A notable deal is Taisho Pharmaceutical's acquisition of DHG Pharma in 2019, in which Taisho has invested a total of more than 200 million USD as of 2019 to increase its ownership rate in this pharmaceutical company. Most other smaller transactions (up to about 10 million USD) either do not disclose the transaction value with most of the companies invested having small-scale, or investors only buy a percentage of the non-dominant shares. Mr. Yoshida believes that when Vietnamese companies are willing to cooperate with Japanese investors, the number of M&A deals will increase significantly.
According to Ms. Huong Trinh, Managing Director at BDA Partners in Ho Chi Minh City, healthcare and pharmaceuticals are still attractive sectors for foreign investors. Vietnam's rapidly growing middle class and increasing public health awareness during the pandemic will drive demand and higher standards in all areas of health care. In particular, the increase in people's spending on health care will open up opportunities for the private health market.
During the pandemic and in the long term, M&A activities in the private health service will continue to be active as foreign investors continue to target private hospitals and clinics in the country. In recent years, private hospitals and clinics have been increasingly trusted and chosen by Vietnamese people Vinmec, FV, Hoan My, etc., are the most common choices. The private hospital segment is attracting investment flows.
Ms. Huong Trinh also pointed out that specialty clinics focusing on some other medical fields such as gastroenterology, physiotherapy, and pediatrics are in strong demand. In particular, Vietnam will witness a strong development of medical technology with applications that allow users to book appointments and visit doctors through video chat.
According to Fitch Solutions, healthcare spending in Vietnam is expected to reach 23 billion USD by 2022. Meanwhile, BMI Research's research shows that Vietnam's pharmaceutical industry may reach 7.7 billion USD by 2021 and 16.1 billion USD in 2026. Thus, the potential of Vietnam's medical and pharmaceutical market opens up many opportunities for M&A activities in the coming time.
The stressful situation of the Covid-19 pandemic in the past two years is one of the reasons why investors have rushed to pour capital into startups in the fields of medical technology, pharmaceuticals, and healthcare in Vietnam.
Recently, Doctor Anywhere announced the completion of a 65.7 million USD funding round, coordinated by Asia Partners with the participation of investors such as Novo Holdings, Philips, and OSK-SBI Venture Partners. This startup has been operating in Vietnam since mid-2019. In the first phase, there were only about 200 appointments through the application, but now it has increased to 300-400 cases/day, the highest reaching more than 500 cases/day.
Medical startup Medici also received seed funding from Insignia Ventures. This startup is cooperating with more than 50 clinics and hospitals, present in more than 30 provinces and cities with more than 100,000 electronic medical records on the platform, 100% quarterly revenue growth, and monthly users growth reach 20%.
Mr. Ngo Thanh Son, Deputy General Director of VMED Group assessed that education and health are two areas that domestic and foreign investors are very interested in. According to the general trend, the large capital poured into medical startups in Vietnam is increasing. In particular, in the context that the economy in general and the investment market, in particular, are negatively affected by Covid-19, health technology startups can still maintain hope, even have a breakthrough.
In a more optimistic view, Mr. Le Ngoc Hai, CEO of Doctor Anywhere Vietnam, emphasized that even without the impacts of Covid-19, the healthcare sector in Vietnam is already a golden land for investors in Vietnam and abroad.
According to Mr. Hai, with a population of nearly 97 million people and more than 1,000 hospitals nationwide, the potential for technology application in health examinations in Vietnam is huge. Applying digital technology at medical examination and treatment facilities can both help treat diseases and contribute to administrative reform to improve convenience for both medical staff and sick people.
From an investor's perspective, Mr. Philipp Breschan, CEO of Siemens Healthineers in Vietnam, said that Covid-19 poses many problems, forcing countries to change and update health trends in the digital age. Even when Covid-19 is under control, digital adoption will continue to increase rapidly as patients, healthcare providers, and the public realize the benefits of home care and remote medical care.
According to Mr. Breschan, in Vietnam, the Government encourages taking advantage of telecommunications services in the health sector, helping people access more public health care services. Smart solutions are being strongly encouraged to help ease the overload of public hospitals, such as using big data technology, artificial intelligence (AI), and cloud computing. In addition, Vietnam's telecommunications infrastructure is also well developed. Vietnam is the 5th country in the world to master 5G technology and produce 5G infrastructure equipment, etc. These are favorable conditions for the development of medical technology.
Reports of international investment funds also assess that Vietnam is emerging as a new startup hub in ASEAN. With a young intellectual population, high Internet coverage and smartphone usage, and the support of the Government, Vietnam will continue to maintain its position as an attractive destination for investors.
Compiled by VietnamCredit