Insights and Opportunities
Overview: With a population of over 85 million and steady annual GDP growth topping 8% in recent years, Vietnam represents a good opportunity for U.S. exporters of medical equipment. According to the Vietnam Ministry of Health (MOH), the health care system consists of some 13,051 state-owned facilities with approximately 185,900 beds.
Hospitals are generally overcrowded with a bed utilization rate of 15 per 10,000 inhabitants. At present, the system is over capacity and lacks the facilities to serve a population growing in both number and in ability to pay. Many hospitals are lacking in both general and specialized medical equipment, presenting difficulties for patients and physicians alike.
On the one hand, MOH points to the considerable progress that Vietnam has made in developing preventive medicine and treatment over the last ten years. On the other hand, MOH also points out that state-owned hospitals generally face the following challenges: Many hospitals in large cities were constructed long ago and face chronic overcrowding; They do not have the capacity to serve both local patients and those from other provinces; Half of the existing medical equipment in Vietnam is obsolete and badly needing replacement; Many hospitals lack sufficient equipment for surgery and intensive care units; More than 70% of hospitals lack a CT scanner; 35% of the equipment has been used for more than 20 years; and nearly 40% of the equipment been used from 10 to 20 years.
A shortage of qualified medical staff is common in many hospitals. Doctors and nurses work under stressful conditions. In addition, the low income of healthcare staff has led to ethical issues. Outdated management systems hinder operations in many hospitals. Medical experts note an urgent need for the application of information technology in hospital management if Vietnam is to undertake comprehensive modernization and development of its health care system.
The government encourages participation of the private sector in the health care system so as to ease the situation. These current weaknesses in Vietnam’s health care sector pave the way for the development of private projects as well as the entry of foreign invested facilities to the market. Foreign investors are looking at the health care sector in Vietnam as presenting potential business opportunities. To date, there are 40 private hospitals, and 15 foreign invested hospitals have come into operation.
According to industry estimates, the market for medical equipment will be worth $220 million in 2009 and is growing by 10% each year. Since local production is small, the market relies almost entirely on imports. So far, Vietnam has 56 medical equipment manufacturers including 27 private and joint stock companies, 10 state-owned enterprises and 12 joint venture companies. They produce some 600 kinds of medical equipment, instruments and electronic devices for use in hospital interiors and surgery rooms. However, modern pieces of equipment stand at only roughly 5% of the total. This includes physiotherapy machines, functional rehabilitation machines and electrical surgical knives.
MOH has set out to implement a project called “Research and Development of Medical Equipment in Vietnam by 2010” during the period between 2007 and 2010. This project aims to expand manufacturing capacity for common equipment to meet 60% of the country’s demand for medical instruments by 2010.
Top foreign suppliers of medical equipment to Vietnam include Germany, Japan and the U.S., each accounting for about 30% of the market. Vietnam also imports medical equipment from France, Italy, Korea, Taiwan, and China.
Since the U.S. – Vietnam Bilateral Trade Agreement (BTA) was implemented in 2001, economic links between the two countries have strengthened, creating opportunities for U.S. suppliers of a wide range of medical equipment from the U.S. that enjoy a strong reputation for high quality and reliability. In 2009, imports from the U.S. are expected to reach $80 million.
Buyers of medical equipment can be grouped into four categories: Government-funded hospitals, clinics, and health care centers that purchase the largest quantity of medical equipment. With financial allocations from the Government, they tend to look for advanced and brand name equipment; Wholly foreign-owned and joint-venture hospitals, clinics, and health care centers are significant buyers, although they often procure directly from their sponsoring or affiliated country; 40 local private hospitals nationwide that are keen to upgrade to advanced equipment; and a number of medical education and research institutions that are open to experimenting with new, innovative methods and systems. These end-users present an excellent strategic opportunity to market U.S. equipment in Vietnam, given their desire to explore new technologies.
Imports of medical equipment face low import duties and no quota restrictions. By regulation, only Vietnamese companies are eligible to distribute medical equipment in Vietnam. Foreign suppliers sell their products through local distributors or agents. The agents provide immediate access to an established marketing network and in-depth knowledge of pertinent regulations. Buyers and end-users expect a local representative to handle after-sales service and stock spare parts. It is essential that U.S. companies seeking to import and market medical equipment in Vietnam have a local partner with strong technical skills and good connections with MOH, hospitals and other health care facilities.
Most imports of used and refurbished medical equipment are strictly controlled by the MOH. Decision 2019/1997/QD-BKHCNMT dated December 1, 1997, stipulates that the Ministry of Science, Technology, and Environment (MOSTE) must inspect and certify all imports of used medical equipment. Such used medical equipment must retain at least 80% of its life expectancy and must have fuel or electricity consumption ratings that do not exceed 110% of the consumption of newer versions of the equipment. The Government is encouraging foreign investment in the health care sector. Incentives are being offered for construction of hospitals and production of pharmaceuticals and medical equipment.
Best Products/Services: Imaging diagnostic equipment (i.e., X-ray machines, CT Scanners, Color Ultrasound machines, Magnetic Resonance Imaging machines); Laboratory equipment; Operating theaters and sterilizing equipment; Patient monitoring equipment; and Emergency equipment.
Opportunities: The Government of Vietnam has approved a national master plan to develop the health care network through 2010 and a conceptual plan for the years up to 2020. These cover public health/preventative medicine and primary care systems as well as medicine manufacture and supply. These plans aim for 20.5 hospital beds, seven physicians and one pharmacist for every 10,000 people by 2010. By 2020, 25 hospital beds and at least eight physicians and two pharmacists should be available for every 10,000 people.
Almost all communes and wards nationwide are to have built their own medical stations by 2020 with 80% of them meeting national standards. All economic sectors will be encouraged to provide health care services with state-run establishments playing the key role. For medical equipment, Vietnam is projected to spend $1.8 billion to build 57 new hospitals from 2006 to 2010. Medical equipment will account for $1 billion of this total amount. In addition, the MOH has launched an ambitious plan to develop three hi-tech medical centers nationwide and increase the number of skilled medical personnel.
Foreign aid and loans will be used to upgrade provincial hospitals, district clinics and communal health centers, as well as fund epidemic prevention drives and medical check-ups for the poor. These projects address safe blood transfusion, HIV/AIDS prevention and care, and the need to upgrade central hospitals in the city of Hue, health care for people in the Central Highlands and poor people in the mountainous Northern provinces. Ho Chi Minh City, the economic hub of Vietnam, alone will spend $900 million to develop the municipal medical sector, mainly for building new clinics between now and 2020. The HCMC Health Service has submitted to the city government a master plan to build and upgrade 41 public hospitals and 28 private hospitals. These projects offer export opportunities to U.S. medical equipment suppliers, architects and consultancy and training services providers.