Along with the development of the medical industry, Vietnam's medical equipment industry has continuously grown in recent years. This market is expected to record high growth in the period of 2020 to 2025, despite the difficulties caused by the Covid-19 pandemic.
According to statistics by WHO, it is estimated that Vietnam spent 5.7% of GDP on healthcare in 2020, equivalent to $15.4 billion. However, the demands for health care are still not fully met, and further investment is needed.
The re-growth of the economy and strong investment in the health system as well as health care services will both be the driving forces for the development of Vietnam's medical equipment in 2022 and the coming years.
Vietnam's medical equipment market is the eighth largest market in the Asia Pacific region with a market size of $1,677.4 million, accounting for 0.4% of the worldwide market share. With a compound annual growth rate of 10.2%, Vietnam is considered as one of the fastest growing markets in the region.
However, domestic production of medical equipment is limited to basic items, and imported products account for about 90% of the market. Currently, a number of multinational companies have set up production plants in Vietnam due to the attractive advantages of the Vietnamese market, the most prominent of which are low production and labor costs.
The medical equipment market is divided into 6 sectors: Self-consumable devices, Diagnostic imaging, Dental products, Orthopedics & prosthetics, Patient aid products, and Other medical equipment. Diagnostic imaging and other medical equipment have the largest market share, accounting for 26.57% and 25.68%, respectively.
The strong economic growth, the 10-year health care program for the elderly and the universal health care plan will be the driving forces behind the development of health services.
Vietnam has made many achievements in implementing universal health insurance. However, the Covid-19 pandemic may derail the Government's plan as the public health budget is redirected to solve the challenges caused by the pandemic.
Since the implementation of the universal health insurance program, Vietnam has made strong strides in expanding the universal health care program. According to a report by the Vietnam Social Insurance Agency, by the end of May 2019, there had been 84 million people participating in public health insurance, accounting for 89% of the population.
Before Covid-19, Vietnam's health program had had to face many challenges. In particular, the budget deficit is the most noticeable one due to the high demand for health services. The government focused on improving the delivery of public health care services, but limited public finances, uneven distribution of health services, inadequate infrastructure, and lack of appropriately qualified workers would affect future universal health care goals.
Given the existing limitations, plus the impact of the Covid-19 pandemic, these challenges will only be exacerbated. Funds for universal health care were diverted to Covid-19 relief, extending an already financially constrained health care program.
While the pandemic is still complicated, Vietnam sees this as an opportunity to accelerate reforms in the health sector, continue to improve public health to provide quality health services to the people.
Vietnam is also going to revise the Law on Health Insurance Law on Medical Examination and Treatment, with more emphasis on efficiency and digital healthcare. For example, it is promoting telemedicine with a personal electronic medical record system deployed at all medical facilities, as well as applying telemedicine to mobilize leading medical professionals to support treatment support patients.
Under the EU-Vietnam Free Trade Agreement (EVFTA), which was ratified by the Vietnamese Government in June 2020, medical equipment manufacturers and suppliers will receive significant benefits.
The agreement brings about improvements in regulatory standards, the exchange of information on customs requirements and the simplification of customs procedures. Regarding commercial aspect, Vietnam allows EU investors to bid for public procurement contracts to supply equipment for public hospitals directly managed by the Ministry of Health.
Under the impact of the Covid-19 crisis, potential opportunities are immediately apparent in the areas of digital health, respiratory care, and health and hygiene products.
Source: Fitch Solutions, Babuki
Compiled by Vietnamcredit