Vietnam’s healthcare and pharmaceutical sector is expected to experience significant growth, prompting a surge in mergers and acquisitions (M&As) in 2025. However, experts are urging a more favorable business environment to unlock the full potential of these opportunities.
Binh Dinh Pharmaceutical and Medical Equipment (Bidiphar) is actively seeking a strategic investor through a private share offering of 23.3 million shares. The company’s major shareholder, KWE Beteiligungen AG, has gradually increased its stake in Bidiphar. In March 2024, KWE purchased an additional 222,000 shares, raising its ownership from 5.24 million to 5.46 million shares, amounting to 7.29%. By August, KWE had increased its stake further, reaching 8.09%, with plans to surpass 10%.
The trend of increasing foreign ownership was evident in 2024, although no major M&A deals were finalized. Analysts from ABS report that despite the slowdown in large-scale transactions, foreign investors have continued to show confidence in the Vietnamese pharmaceutical industry, increasing their stakes in local companies.
For instance, Japan’s ASKA Pharmaceutical, the major shareholder of Ha Tay Pharmaceutical, boosted its ownership in 2024 to 38.2%. ASKA also registered to acquire more than 1.4 million shares of Ha Tay. In late 2023, ASKA completed a private offering, increasing its stake from 24.9% to 32.56%, following Ha Tay Pharmaceutical’s sale of 8.4 million shares.
Previously, the market saw significant foreign-invested deals, such as Abbott’s 51% acquisition of Domesco, Stada’s purchase of Pymepharco, Taiso’s acquisition of a 51% stake in DHG Pharma, and SK’s nearly 65% ownership of Imexpharm. However, M&A activity in the healthcare sector saw a slowdown in 2024, with the Long Chau Pharmacy and IHH Healthcare Singapore deal standing out as an exception.
Looking ahead, experts predict that Vietnam’s M&A market, particularly in the pharmaceutical sector, will gradually recover in 2025. This recovery is driven by rising demand for quality healthcare services, an aging population, and increasing foreign interest in the market. Several infrastructure and real estate companies are also eyeing opportunities in healthcare.
Darrell Oh, Chairman of Pharma Group, emphasized the country’s potential for attracting multinational investments. He stated that addressing key issues related to market access, creating a more business-friendly environment, and implementing policies linked to market access are essential to sustain investment.
Despite the significant opportunities, experts caution that M&As in Vietnam’s healthcare sector come with various challenges that investors must carefully navigate. These include regulatory compliance, minimum capital requirements, environmental standards, and the retention of key personnel—factors that can derail a deal if not managed effectively.
Pharma analyst Ngo Thanh Hai pointed out that regulatory hurdles and operational complexities remain major challenges. For instance, foreign investors in healthcare facilities must meet specific minimum capital requirements—$20 million for a hospital, $2 million for a polyclinic, and $200,000 for a specialty clinic. However, there is a lack of clarity regarding the timing and manner in which these capital requirements must be fulfilled, causing uncertainty and potential delays in the approval process.
To mitigate this, experts recommend that foreign investors consider alternative funding strategies. Nguyen Quoc Bao, an industry expert, suggested that convertible loans could be a viable solution, allowing investors to meet minimum capital requirements. These loans could later be converted into equity following the acquisition. He also recommended that investors explore options such as the ASEAN Framework Agreement on Services or special-purpose vehicles within the EU, where capital arrangements may not be subject to minimum requirements.
As Vietnam’s healthcare and pharmaceutical sector shows promise, overcoming regulatory challenges will be crucial for realizing the full potential of future M&As.
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