Although Vietnam’s M&A transactions have slowed, with 35 percent lower transaction value in 2022 compared to 2021, healthcare may buck the trend in 2023. In fact, PwC is predicting that healthcare will be one among a handful of the top sectors drawing FDI in Vietnam this year.
PwC is not alone in asserting that mergers and acquisitions in the healthcare sector will be popular in 2023 either.
Andy Ho, CEO of VinaCapital, has similarly said that the manufacture of medical equipment and pharmaceuticals, as well as drug distribution and medical services are becoming attractive to foreign investors.
With a rapidly growing middle class, an aging population, a number of challenges facing the public hospital system, and an increased awareness of the importance of good quality healthcare, the opportunities emerging for foreign firms are clear.
In the sections below, we will explore the factors behind the increasing demand for investment in Vietnam’s healthcare sector and identify the specific opportunities available in this area.
What’s driving interest in Vietnam’s healthcare sector
Vietnam’s healthcare market is opening up
Healthcare is attracting interest from foreign investors partly because the market is becoming more open.
The EVFTA, for example, has already eliminated tariffs on approximately 71 percent of pharmaceutical products, and the remaining tariffs will be gradually phased out upon the full implementation of the agreement.
As part of the agreement, Vietnam has committed to allowing EU-invested enterprises to import pharmaceuticals into Vietnam and to establish 100 percent foreign owned companies in the pharmaceuticals sector.
This should boost availability of high-quality medications for Vietnamese consumers, while also increasing the profitability of EU firms operating in the sector.
See also: Spain, Poland, Italy, Hungary Pharma Companies Gain Equal Access to Vietnam Market
The population is aging
The population of Vietnam officially entered an ‘aging phase’ in 2017 and is among the most rapidly aging countries in the world. Vietnamese people’s life expectancy is up to 75.4 years, and senior citizens could account for more than 17 percent of Vietnam’s population by 2030.
Vietnamese families are also very close. It is not unusual for extended families to live together for a long time and there is an expectation that children will take care of their parents into old age.
With the rising purchasing power of Vietnam’s middle-class consumers, the ability to allocate more funds towards improving the health of their parents increases too.
As a result, there is a growing demand for improved healthcare services to cater to the needs of elderly dependents.
Increasing awareness of preventative healthcare
Covid-19 thrust Vietnam’s healthcare sector into the spotlight, highlighting several challenges that the country encounters in delivering sufficient healthcare services.
Further, multiple public awareness campaigns were rolled out promoting preventative measures. Short videos, infographics, and catchy songs spread across social networking sites and proved popular with young people. These persuaded them to get vaccinated and reinforced the importance of taking preventative measures to avoid contracting COVID-19.
This has had a lingering effect on the public consciousness, whereby the greater population is taking a greater interest in their health and personal well-being.
Public hospitals struggling to meet demand
Overcrowding in public hospitals is an urgent problem for Vietnam’s healthcare system.
As a result, many urbanites with deep pockets often go overseas for treatment. The Ministry of Health estimates that around 40,000 people spend around US$2 billion every year to travel abroad for medical treatment.
The point being that, for a well-developed and financed private hospital network that can provide world class level healthcare in Vietnam, the demand is already there.