I.

INTRODUCTION
1.1 Introduction to McKesson corporation profile
McKesson Corporation, often simply referred to as McKesson, is a global healthcare company that
plays a pivotal role in the healthcare industry, providing a wide range of services and products to
healthcare providers, pharmaceutical manufacturers, and patients. Established in 1833, McKesson has
a rich history and has evolved into one of the largest and most influential companies in the healthcare
sector.
1.2 The group's strategic purpose when bringing McKesson Corporation to
Vietnam
The purpose of this essay is to undertake a comprehensive analysis of McKesson Corporation with a
specific focus on establishing Vietnam as a potential market for the company. Through an
examination of McKesson's global presence, its portfolio of healthcare products and services, and the
healthcare landscape in Vietnam, this essay aims to provide evidence and insights that support the
idea of expanding McKesson's operations into the Vietnamese market.

By analyzing factors such as competitors, environment, and using dimensions such as the Five Forces
of Analysis, Capabilities analysis, Strategic map and SWOT analysis the essay seeks to demonstrate
that Vietnam presents a promising and viable opportunity for McKesson to extend its influence and
contribute to the advancement of healthcare in the region.

II. ANALYSIS
2.1 Pestel:
2.1.a) Political
The pharmaceutical industry in general and the pharmaceutical retail industry, in particular, is one of
the industries that are strongly influenced by the management of the state. The Government has issued
many legal documents to manage the pharmaceutical industry, including documents related to issues
such as State policy in the field of pharmacy, state management of drug prices, conditions for drug
trading, management of drugs on the list of drugs subject to special control, drug quality standards,
etc.
2.1.b) Economical
The pharmaceutical industry in general as well as the pharmaceutical retail industry in particular are
influenced by the level of economic development. The scale of Vietnam's pharmaceutical industry as
of 2020 is about US$6.4 billion, achieving a compound annual growth rate (CAGR) of 6% in the
period 2018-2020 (IQVIA,2021). The growth rate of the pharmaceutical industry in 2020 will slow
down compared to previous years due to the tightening of infection control measures in hospitals and
the decrease in income of workers as business activities of enterprises are affected. effects of the
Covid-19 pandemic
2.1.c) Social
According to the General Statistics Office (Ministry of Planning and Investment), Vietnam is
witnessing rapid changes in population and social structure. The population over 60 years old will be
21 million people, equivalent to 20% of the total population in 2038 and 27 million people, equivalent
to 25% of the total population in 2050. On average, a person aged 65 and over in Vietnam has at least
3 diseases, while people over 80 years old have an average of 6, 9 diseases. Therefore, the need for
care and treatment with drugs and pharmaceuticals is higher and higher.
Vietnamese people have a habit of taking medicines without a doctor's prescription. Currently, the
number of traditional drugstores in Vietnam is about 57,000, accounting for about 85% of the market,
the remaining 15% are modern pharmacy chains. However, pharmacy is a special industry and
requires safety and credibility. Therefore, the growing drugstore chains are holding many advantages.
(Phu Hung Securities Joint Stock Company (PHS) .
2.1.d) Technological
This is the element that affects corporate governance most and with the greatest strength. Threats and
possibilities are both present in technological progress.
+ Opportunities: Fostering technology transfer with other linked sectors, lowering costs for new
technical applications, and enhancing service, product, and many new feature quality.
+ Threats: The danger posed by the development of new technology to existing technology, the
need for innovation to bolster competitiveness, the rise in the number of prospective new
rivals, the weight of enterprise expenses while investing, and the lengthening of the
depreciation period.
2.1.e) Environment factor:
There are a variety of landscapes and climates, as well as abundant natural and biological resources.
This could be a source of raw materials for McKesson to make herbal and alternative medicine-based
pharmaceuticals and healthcare goods.
Climate change, contamination of the air, water, and soil... In order to do this, McKesson must be
accountable to both the environment and society, taking steps to protect the environment and reducing
the effects of its operations. environmental impact on business.

2.1.f) Legal factor:

Vietnam has participated in numerous international agreements on the protection of intellectual
property and is a member of the World Intellectual Property Organization (WIPO). Vietnam still has a
lot of challenges to overcome in terms of upholding the law and combating intellectual property
infringement, particularly in the pharmaceutical industry. McKesson must take action to safeguard its
intellectual property rights and work with law enforcement to address infringement.

Vietnam's environmental protection laws, which include the Law on Environmental Protection 2014,
the Law on Tax Administration 2019, and the Law on Climate Change Prevention 2012, are fairly
thorough and stringent.

Food Safety Law: The 2010 Food Safety Law and numerous other legal documents pertaining to the
quality assurance and safety of pharmaceutical and healthcare items are available in Vietnam.
McKesson is required to make sure that its goods are suitable for consumption in Vietnam and have a
food safety certificate issued by an appropriate body.

2.1.g) Competitor analysis:

a) An Khang Pharma +In November 2021, the group of enterprises paid VND 52.2 billion in
business consolidation fees to buy an additional 1,294 million shares of An Khang. This brand
presently has 260 stores and is fast expanding in new store openings in 30 provinces and cities using
the contemporary GPP standard format. Many generic warehouses exist to store and handle
pharmaceutical items, medical equipment, and so on; to function, a team of pharmacists with
intermediate or higher skills is required.
b) Pharmacity +Pharmacity was one of Vietnam's earliest pharmaceutical retail chains. Pharmacity
now operates a statewide network of over 1,100 GPP-certified pharmacies and a workforce of over
3,500 trustworthy pharmacists, offering top medications and healthcare items at the most reasonable
pricing. Pharmacity made a $4 million investment in a retail platform that predicts client shopping
requirements and delivers the appropriate items to them. +Slogan: ‘Nice medication at a low cost’
c) Long Chau Pharma - FPT Pharma - Long Chau always "lights up" till 24 hours a day with the
following commitments: + Always sell at the advertised price (the price registered with the Ministry
of Health); Meet a comprehensive selection of drugs for illness treatment, nutritional pharmaceuticals,
health care, cosmetics, and medical equipment… + Slogan: ‘Good medicine - Good price - Enough
medicine - Delivery to your place.’ (Long Chau sales are predicted to increase in 2021 as a result of
the application's inclusion on Hi FPT, 2021) => When there are too many competitors in a market,
supply increases, and people's desire for our firm decreases. This is a significant impediment.
d) Mckesson Company's competitor statistics table in the Vietnamese market
Competitor Strenght Advantage Oppotinities

An Khang -An Khang Pharmacy Rapid growth with the Rapid expansion with
has a nationwide opening of almost 80 over 80 new stores in
system, with more than additional stores in two months.
530 stores in 63 only two months. Operates in a large
provinces and cities. operates in a sizable market estimated at
-An Khang Pharmacy market with a $7-8 around $7-8 billion.
has fast delivery billion projected size. Increased health
service, within 2 increased public health awareness among
hours, free for orders consciousness people post-pandemic.
from 150,000 VND following the One of the three
-An Khang Pharmacy pandemic. leading drugstore
is a member of The chains in Vietnam.
Gioi Di Dong group, one of Vietnam's top Plans to have 2,000
one of the leading three pharmacy stores by 2023.
enterprises in retailing Chains.
technological
equipment and ambitious plans for the
pharmaceuticals future call for 2,000
outlets by 2023.

Pharmacity -Committed to Established in 2011,

bringing the cheapest now one of the largest Established in 2011.
prices to customers, chains. Network of 1,000
with many promotions Network of 1,000 stores, aiming for 5,000
and refunds1. stores, aiming for by 2025.
Streamline the 5,000 by 2025.
distribution system, Provides quality Provides quality
helping to save costs services with GPP services with GPP
and improve certified network. certified network.
efficiency. Rapid expansion
Rapid expansion across
-Innovate and access across provinces.
provinces.
modern technology, First convenient
creating appropriate pharmacy chain in First convenient
and optimal customer Vietnam. pharmacy chain in
service. Vietnam.
-Use big data systems
 to research and meet
customer needs.
-Think big and be
willing to take risks to
innovate smartly.

Long Chau -Long Chau Pharmacy .Reputable pharmacy

applies technology in chain. Growing
operation and pharmaceutical market
management, helping Network of over 200 in Vietnam.
to optimize business stores in 50 provinces.
Rapid expansion
efficiency and enhance Wide range of products exceeding plans.
customer experience. and services.
-Long Chau Pharmacy Focus on customer
has a widespread Focus on customer experience.
network, with more experience with various
touchpoints. Successful technology
than 400 stores
integration.
nationwide
Significant growth with
Long Chau Pharmacy a revenue increase of Plans for more stores
has a high brand 133% in 2020. and health care services.
reputation, cooperating
with major distributors
-Long Chau Pharmacy
has 6-7 times more
prescription drugs than
normal pharmacies and
Long Chau's prices are
cheaper.

2.2 McKesson Porter’s Five Forces Analysis

2.2.a) The threat of newcomers
● In the sector where McKesson competes, economies of scale are quite challenging
to acquire. As a result, high capacity producers in the Vietnamese market can more
readily achieve cost advantages. Additionally, it raises the cost of production for new
competitors. As a result, the entry threat from the foreign corporation Mckesson is
less potent than it would be in the Vietnamese market.
● Product differentiation is prevalent in the health sector, where businesses like An
Khang Pharma, Pharmacity, Long Chau Pharma - FPT Pharma, etc. sell their
products. Customers seek out internationally distinct products like its own brand.
Additionally stressed are customer service and advertising. Because of all these
variables, the danger of Mckesson's arrival into this market is a minor one.
● The high capital requirements in the sector make it challenging for McKesson
Corporation to launch a business because it must incur large costs. Due to
significant costs associated with R&D, capital costs are likewise substantial. Due to
all of these elements, McKesson Corporation's threat to this business is less potent.

2.2b) Bargaining power weaker:

 ● In the market where McKesson competes, there are many more suppliers than there
are customers. This implies that suppliers have less influence over prices, which
weakens their negotiating position in Vietnam.
● The goods that Vietnamese suppliers offer are largely uniform, differentiated little,
and have low switching costs. This makes switching suppliers simpler for customers
like McKesson. As a result, suppliers in Vietnam have less negotiating power.
● Suppliers in this industry are not in direct competition with other items. This indicates
that the only available options are those offered by the Vietnamese housing supplier.
As a result, suppliers' negotiating position in the health sector is stronger.

2.2c) Negotiating Power from the Buyer

● Since buyers have little negotiating leverage, McKesson needs to develop a sizable
customer base. The business can achieve this through marketing initiatives focused
at fostering customer loyalty.
● In this market, McKesson may take advantage of its economies of scale to create
cost benefits and offer low prices to customers with modest incomes. This will
assist the business in drawing in lots of customers.
2.2d) Threat of Substitute Products or Services
● There aren't many options out there for the goods produced by the company
McKesson works for. Industries that are not very lucrative develop very few
replacements.
● McKesson can concentrate on offering products of a higher caliber. Customers will
consequently pick McKesson items over alternatives that offer great quality but
higher prices since they offer higher quality and lower pricing.
2.2e)Competition Among Existing Companies
● In Vietnam's pharmaceutical and healthcare markets, McKesson encounters a variety
of rivals. This involves competition between current rivals, the buying and selling
power of suppliers, the danger of replacement goods or services, and the possibility
of new rivals.

2.3 Capabilities analysis

2.3.a)Distribution and Logistics: McKesson is one of the leading companies in the field of medical
and pharmaceutical product distribution. They have an extensive distribution network, modern
distribution centers, and efficient warehouse management capabilities.
For 180 years, McKesson has been a leader in the pharmaceutical supply chain. With industry-
leading supply chain services, they provide on-demand prescriptions to the most intricate logistics
industry in the world:
● Next-day delivery to pharmacies, usually within 12 hours of receiving the order.
● The fill rate from pharmacy to consumer is 99%.
● Nationwide distribution center network with more than 1 million lines per day.
● Single point of ordering from over 500 manufacturers.
● Redistribution services, short-term delivery, returns, and withdrawals management.

2.3.b)Products and Services: McKesson offers a wide range of healthcare products and services,
including pharmaceutical products, medical technology, and healthcare management software:
● Order medicine from the pharmacy
● Specialty drugs for practicing doctors
 ● Vaccine
● Packaging solutions
● Medicine packaging service
● Customer Support Services
2.3.c) Technology and Software: McKesson has invested in developing software and technology
solutions to support healthcare management, supply chain management, and e-health services.
2.3.d) Relationships with clients and partners: McKesson has solid connections with numerous top
medical suppliers, pharmacies, and hospitals. This plays a significant role in their capacity to provide
goods and services. This involves having the resources to finance business operations, buy out rival
firms, and maintain long-term financial stability.
● MySQL
● Okta
● DiCentral
2.3.e) Sustainability: With more than 200,000 doctors, 26,000 retail pharmacies, 10,000 long-term
care facilities, 5,000 hospitals, 2,000 pharmaceutical factories, 150 home care agencies, 600 health
care centers, Health, and 450 pharmaceutical manufacturer clients today, McKesson is genuinely
focused on meeting customer needs and offering information technology solutions to patients.
2.4 Strategy Map
2.4.a) Information about prominent competitors in the Vietnamese market

a) An Khang Pharma:
- An Khang Pharma is a pharmaceutical business with its headquarters in Vietnam. They
produce and distribute pharmaceutical products as their area of expertise. A Khang Pharma
might be referred to as a "Differentiation Leader" if they concentrate on the uniqueness and
quality of their products in the pharmaceutical business.
b) Pharmacity:
- Pharmacity is a chain of drugstores and health care facilities in Vietnam. Pharmacity might be
categorised as a "Difference Leader" or "Narrow Market Focuser" if they concentrate on
offering high-quality healthcare or a single market niche.

c) Long Chau Pharma - FPT Pharma:

- Long Chau Pharma is well-known for selling pharmaceutical items at prices that are
competitive with or lower than those of their rivals, which may suggest that they have a cost-
focused business approach.
size: brand recognition

McKesson is a "Differentiation Leader" that can also be any of the following:

- Scale and Reach: McKesson has a vast distribution network and a global reach. Each year,
they send billions of pills to pharmacies and medical facilities all across the world. They are
able to offer a range of healthcare-related goods and services thanks to their size.
- Quality and Reliability: McKesson is well known for its dedication to quality and
dependability in the provision of medications and medical services. To guarantee the security
 and efficacy of medical items, they are required to adhere to stringent standards and industry
norms.
- Services and Technology: McKesson makes significant investments in services and
technology to offer its clients complete medical solutions. This covers contemporary supply
chain management, hospital and pharmacy support services, and distribution systems.
- Innovation: They constantly do research and create fresh ideas for bettering healthcare and
streamlining delivery. Applying innovative technologies to improve pharmaceutical
administration or offer cutting-edge medical services is one example of this innovation.

2.4.b) Reason:

a) Price: because MCkesson's customers are middle class, when entering the
Vietnamese market, the price will be approximately the same as Long Chau Pharma.
b) Quantity: Opportunity for Mckesson because in Vietnam the number of people over
65 years old will increase in the near future so medical demand will also increase,
moreover this is the time after the pandemic so there will be a shortage of medical
equipment. So the market in Vietnam is a market full of development potential.
c) Brand recognition: Mckesson is a brand that has been around for a long time, so it
will easily gain the trust of consumers. Furthermore, Vietnamese people also have a
preference for using foreign products, so it also partly helps Mckesson improve its
position. in the Vietnamese market.

=> Overall, MCkesson's price will be higher than the general market average, but in
exchange for that, MCkesson's brand will be more reliable than other brands. Both of long-
standing origin and of foreign origin. Furthermore, Vietnam's population will age in the next
few years, the number of people over 65 years old will increase, so medical needs will
increase. Finally, the covid 19 pandemic has shown everyone the seriousness of Vietnam's
lack of medical supplies. So Vietnam is a very potential market in the future.

2.5 SWOT Analysis

2.5.a) Summary of SWOT Analysis

Strengths: Weaknesses:
● A well-trained workforce ● Loss of small amounts of market share
● Reliable supply of raw materials in categories
● Strong Dealer Community ● Profit margin and Net Contribution %
decrease
● Excellent results in new markets
● Limited success outside the core
● Strong Distribution Network business
● Experience combining complementary ● More funding needed for new
businesses through mergers and technologies
acquisitions ● High employee attrition rate
● Needing more opportunities to improve
product promotion
Opportunities: Threats:
● Investment opportunities ● Competition with local suppliers
● New technology standards ● The lack of trained labor
● Reducing shipping costs ● Fierce competition
● Opportunity to use differentiated ● Liability laws vary
pricing methods ● There is no consistent supply of
● Economic recovery and increased innovative products
consumer spending ● Data privacy concerns
2.5.b) SWOT analysis to determine:

a) Strengths– Internal Strategic Factors

● A well-trained workforce – achieved through effective education and training initiatives. The
workforce created by the McKesson Group is not only highly skilled but also motivated to
achieve more thanks to the significant resources the Group invests in employee training and
development.
● Reliable raw material supply - Strong brand, The company has a long history and a solid
brand in the healthcare industry. McKesson is a famous brand in the healthcare industry,
which can facilitate market entry and build trust with Vietnamese customers and partners.
● Strong Dealer Community - It has created a culture among distributors and dealers in which
dealers invest in training sales staff to explain to customers how they can get get the most
benefits from the product besides promoting the company's products.
b) Weakness– Internal Strategic Factors
● Loss of small amounts of market share in categories - inability to address the difficulties
posed by new competitors in the industry. McKesson Group must develop internal feedback
mechanisms that draw from local sales teams in the Vietnamese market.
● Profit margin and Net Contribution % decrease - Dependent on a few large customers. A
significant portion of McKesson's revenue comes from a small number of large customers,
making the company vulnerable to losing any large customers when entering a new market
like Vietnam.
● Limited success outside the core business - Although McKesson Corporation is one of the
leading businesses in this field, adjusting to new product areas remains difficult due to its
current culture company.

c) Opportunities– External Strategic Factors

● Investment opportunities in related product categories are represented by stable free cash
flow. The Group can invest in new technology and product areas. McKesson Group will now
have opportunities in other product categories. Vietnam's healthcare sector is experiencing
significant growth thanks to an expanding middle class and increasing healthcare spending.
● New technology standards - opportunity to enter an emerging market. This leads to the
opening of new markets, digital health solutions offer expansion opportunities. Digital health
integration The adoption of digital health solutions can help McKesson tap into the growing
healthcare demand of the Vietnamese market.
● Opportunity to use differentiated pricing methods - in the new Asian market thanks to new
technology. It will enable businesses to attract new customers with various value-oriented
propositions while retaining existing customers with excellent service.

d) Threats - External Strategic Factors

 ● Competition with local suppliers - will bring greater profits to local distributors so the
growing power of local distributors also poses a challenge in the Vietnamese market.
● The lack of trained labor - in Vietnam, McKesson Corporation's ability to maintain
continuous profit growth in some regions will not be uniform.
● Liability laws vary - Ongoing changes in healthcare regulations or unexpected regulatory
barriers can impact business operations and strategy. Between countries and due to changes in
the regulations of those markets, McKesson Group may be subject to a variety of liability
claims.

IIISynthesis of Findings and Recommendations for Bringing McKesson to Vietnam

3.1) Synthesis of Findings:

1) Cooperation Strategy: McKesson is focused on optimizing inventory management

through cooperation with distributors. This strategy aims to ensure efficient drug
supply chain management and minimize the risk of drug shortages or excessive
inventory.
2) Strategic Restructuring: McKesson has undergone strategic restructuring and is
shifting its focus back to traditional healthcare businesses.
3) Project Management and Supply Chain Data: The company is implementing
project management and leveraging supply chain data to optimize its operations. This
data-driven approach can be advantageous when entering a new market.
4) Human Resource Management: McKesson offers various benefits to its employees,
including paid time off, healthcare incentives, training programs, and more.

3.2) Recommendations:

1) Market Research in Vietnam: To bring McKesson to the Vietnamese market, the

company should conduct comprehensive market research to understand the specific
opportunities and challenges in the healthcare sector in Vietnam.
2) Local Collaboration: Collaborating with local partners is a good way to establish a
stable presence in the new market. McKesson should consider partnering with local
distributors and healthcare facilities to leverage local knowledge and networks.
3) Product Segmentation and Predictive Ordering: Utilize data to identify popular
products at local healthcare facilities and establish an appropriate product portfolio. This
helps optimize inventory management and ordering processes.
4) Workforce Training: Ensure that the workforce in Vietnam receives professional
training and development, including product knowledge and McKesson's processes.
5) Addressing Price Concerns: McKesson needs to address concerns about hospital and
medication prices when entering the Vietnamese market. Developing pricing strategies
that align with the local market and healthcare system is crucial.
6) Compliance and Ethics: Adhere to all legal regulations and ethical business
standards when expanding into the new market.
 7) Risk Management: Identify and manage potential risks, including competition,
healthcare workforce availability, and pricing challenges that may arise when entering the
Vietnamese market.

IV. CONCLUSION

In conclusion, the analysis of McKesson Corporation's potential expansion into the Vietnamese
market reveals a compelling opportunity. The advantages that McKesson brings to the table, primarily
its global brand recognition and reputation for reliability, offer a distinct edge that sets it apart from
local pharmacies.

While it is true that exchange rates may result in slightly higher prices compared to domestic
alternatives, the marginal price difference is unlikely to deter customers, particularly when
considering the paramount importance of medication reliability and quality. McKesson's entry into
Vietnam promises not only to meet the healthcare needs of the population but also to raise the overall
standards of the pharmaceutical industry in the region.

With its established global presence and a track record of excellence, McKesson is well-positioned to
navigate the Vietnamese market. The potential benefits for both the company and the Vietnamese
healthcare ecosystem make this venture a strategic and smart choice. As the healthcare landscape in
Vietnam continues to evolve and demand for quality medications grows, McKesson's entry could
mark a significant milestone in advancing healthcare accessibility and quality in the country.

V. REFERENCE LIST

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Anh Hoàng Trung Kiên: ‘Năm 2023 chuỗi nhà thuốc FPT Long Châu sẽ có lãi’ (chungta.vn)
“Nhà thuốc đại chiến”: Long Châu, An Khang và Pharmacity cùng muốn mở rộng ồ ạt
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https://www.essay48.com/term-paper/12612-McKesson-Porter-Five-Forces?
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VI. APPENDICES