GROUP PROJECT

Nguyen Le Dieu Quynh - QS170184

Nguyen Nhat Anh Thu - QS170075
Pham Ngoc Nhu Quynh - QS170081
Dương Thị Kim Oanh - QS170182
Bui Thi My Duyen - QS170127
Ho Thi Truc Ha - QS170177
Table of Contents
1. Introduction ............................................................................................................... 3
1.1.Company profile .................................................................................................... 3
1.2.Current context and objectives of the company ...................................................... 3
1.3.Missions and Values ............................................................................................... 4
2. Analysis ...................................................................................................................... 4
2.1.Analyzing Competitive Environment ..................................................................... 4
2.1.1. Environment analysis ...................................................................................... 4
2.1.2. Five forces analysis......................................................................................... 7
2.1.3. Competitor analysis ...................................................................................... 10
2.1.4. Competitive Life cycle analysis .................................................................... 13
2.2.Analyzing Competitive Position ........................................................................... 19
2.2.1. Stakeholder analysis ..................................................................................... 19
2.2.2. Capabilities analysis ..................................................................................... 21
2.2.3. Strategy Maps and Generic positions ............................................................ 24
2.2.4. Portfolio Planning Matrices (Diversification) and Internationalization .......... 26
3. Synthesis of findings and evaluation of alternative strategies ............................... 36
3.1.SWOT .................................................................................................................. 36
3.2.Different scenarios of future (business environment and company capabilities) ... 37
3.3.Evaluate strategic options and alternatives for each scenario ................................ 38
4. Conclusion ................................................................................................................ 39
4.1.Valuable competitive position............................................................................... 39
4.2.Chosen strategic options: Internationalization? Diversification? ........................... 40
5. References ................................................................................................................ 40
6. Appendices ............................................................................................................... 41
1. Introduction

1.1.Company profile

- Binh Dinh Pharmaceutical - Medical Equipment JSC (Bidiphar) is the leading

pharmaceutical enterprise in Vietnam, specifically ranked in the top 5 most prestigious
pharmaceutical enterprises in 2022, top 1 market share of cancer drugs, top 2 market
shares of dialysis. *Source-1:tinnhanhchungkhoan.vn.

- DBD has 43 years of operation and development.

- Achievements in pioneering technology:

- The first domestic pharmaceutical company to research and produce: injectable

antibiotics (1992), antibiotic infusion solutions, Vitamins and Acidamines (1997),
Cancer treatment drugs (2008).

- First domestic pharmaceutical company to research and apply freeze-dried injection

manufacturing technology (2003).

- 2016, achieved GMP for the first cancer treatment drug production line in Vietnam.

*Source-2: bidiphar.com/gioi-thieu.

1.2.Current context and objectives of the company

- Distribution system in Vietnam:

o Bidiphar has 16 branches nationwide and 1 distribution company.

o ETC channel: Supplying products to about 2,000 medical facilities.

o OTC channel: Supplying products to more than 20,000 pharmacies and drugstores
nationwide.

- Main activities: Production, purchase and sale of pharmaceuticals, medicinal materials,

machinery, equipment, tools and supplies for the medical industry.

*Source-3: tailieugioithieudoanhnghiep.
- Main product lines by revenue: Antibiotics (24%), Cancer treatment drugs (15%),
Dialysis solution (10%). The above 3 groups account for ~50% of total revenue and 49%
of total gross profit in 2021. *Source-5: Baoviet-Baocaolandaucongtyduocbinhdinh.

- Objectives: 2024, revenue target is VND 2,000 billion. 2026, top 5 Vietnamese
Pharmaceutical Companies. 2030, Top 3 Vietnamese Pharmaceutical Companies
specializing in providing high quality health care products and services. (*Source-
5:bidiphar.com/tintuc).

1.3.Missions and Values

- Mission is "Caring for health - Sharing joy". Motto is "Quality - Efficiency -

Customer Satisfaction".

- Core values: Mind - Wisdom - Progress

o Mind: bright mind, illuminating mind, understanding mind.

o Wisdom: clear goals, good cooperation, eager to learn.

o Progress: brave, innovative, pioneering.

2. Analysis

2.1.Analyzing Competitive Environment

2.1.1. Environment analysis

 Demographic Trends

- Vietnam has a relatively large market size: The population is over 98 million people,
the average life expectancy is about 76 years. Around 30% of the Vietnamese
population is increasingly able to afford relatively expensive Western medicine,
equivalent to 30 million people – the size of the entire Australian population.

- Vietnam's pharmaceutical industry has the highest growth rate in the region thanks to
increasing economic growth, increasing per capita income, aging population.

o According to the World Bank, the number of Vietnamese people >= 65 years old
reached 7.6 million in 2020, nearly 7.9% of the total population. The General Statistics
Office forecasts that this number will reach 18.1% by 2049.
o According to a report from the Vietnam Social Insurance Department, 2010, only 60%
of the Vietnamese population had health insurance, while in 2019 this number reached
90%. Another driver for the pharmaceutical industry is rapid urbanization. Vietnam's
urbanization rate is at 37% (2020) and in 2023 the urban population reach about 42.6%.

*Source-6: Vietnam-briefing/VietnamPharmaceuticalIndustry.

 Socio-Cultural Influences

- According to EVBN, 80% of people in Vietnam buy medicines from private pharmacies
and self-medicate.

- Consumers can buy medicines without a prescription, with the common source of
information to make drug purchasing decisions being relatives, friends.

- Non-genuine and counterfeit medicines can often find their way into pharmacies and
clinics, so buyers value brands they know and advice from people close to them.

- People's demand for prescription medicines is increasing thanks to expanding health

insurance coverage.

*Source-6: Vietnam-briefing/VietnamPharmaceuticalIndustry.

 Technological Developments

- Pharmaceutical R&D activities still lack serious investment. The country's capacity is
still limited in generic medications (pharmaceuticals whose patent protection has
expired), simple dosage forms, functional foods.

- Domestic competition for complex and innovative treatments is not a threat because the
major domestic manufacturers are still small and medium-sized with limited capital,
R&D resources, supply chains.

- Vietnam's pharmaceutical industry is just at level 3 according to the WHO classification

scale (mean has domestic pharmaceutical industry and generic medicine production).
*Source-7: dav.gov.vn/thamluannganhduoc.

 Political-Legal Pressures

- Drug Administration Of Vietnam (DAV) is the only agency of the Ministry of Health
responsible for managing and approving marketing authorization, GMP assessment and
business and product licensing.

- Vietnam’s bidding and grade system

o It takes about 5 years for a medication to enter the Vietnamese market after it has been
developed, 2 and a half years of clinical trials, 2 and a half years to receive approval
from the government.

o Vietnam uses a grading system to divide companies into different groups that decide
how much they can be involved in bidding (1: the most freedom, 5: the least).

- Grade 1:
 Countries that are part of the International Conference on
Harmonization (ICH)
 Pharmaceutical companies that are based in Australia
 Manufacturers certified by PIC/S GMP or EU GMP
 Manufacturers that have won the World Health Organization’s (WHO)
GMP certification given by the Vietnamese government and sell their
products to members of ICH

- Grade 2: Companies must be part of the European Union CMP or certified

with GMP by PIC/S.

- Grade 3: Pharmaceutical producers who have achieved WHO’s FMP

awarded by the Vietnamese government.

- Grade 4: The products must have gone through the bioequivalence

- Grade 5: All other drugs.

- Advertising non-prescription medications are allowed in Vietnam, but advertising

prescription medications are illegal. Especially, advertising to end users or medical
professionals is strictly prohibited.

*Source-6: Vietnam-briefing/VietnamPharmaceuticalIndustry.

- Register for medications advertising through the DAV under the Ministry of Health and
must re-register every year.

- Promotional activities are limited for all pharmaceutical companies. Commercial

discount products must be approved by the DAV and Vietnameseized.

- Tax of imported medicinal ingredients will be VAT at a rate of 5%. *Source-10:

maika.com

- Registered medicinal products are valid for circulation for 5 years. *Source-11:
thuvienphapluat.

- Vietnam commits to protecting inventions for 20 years. *Source-12:vietthink.vn.

- Foreign enterprises are allowed to directly import drugs from January 1, 2009. However,
foreign businesses are permanently not allowed to directly distribute pharmaceuticals
in Vietnam, distribution rights are only reserved for domestic pharmaceutical
companies.

 Global Trade Issues- Macroeconomic Impacts

Vietnam depends heavily on imported pharmaceutical raw materials, The proportion of
imported medicinal materials from abroad is very high, up to 80%-90%. In particular,
imported raw materials from India and China account for up to 85% of the total
imported raw material turnover. As a result, when the problem Covid-19 epidemic
broke out, many manufacturers in China and India had to temporarily close, leading to
a shortage of pharmaceutical input materials in Vietnam. *Source-6: Vietnam-
briefing/VietnamPharmaceuticalIndustry. *Source-8: tuyengiao.vn/duoclieuvietnam.

- EVFTA has opened Vietnam's pharmaceutical market to European businesses, allowing

EU member countries to establish 100% foreign-owned companies to import
pharmaceuticals and sell them to domestic distributors (previously they must cooperate
with domestic businesses).

- About 71% of import taxes have been eliminated after EVFTA took effect.

- Under EVFTA, Vietnam will also comply with international pharmaceutical standards,
meaning products already certified in the EU will not require additional testing and
certification in Vietnam. This gives foreign companies a competitive advantage.

- FDI logistics companies and foreign pharmaceutical companies are not allowed to
directly distribute pharmaceuticals and must sell their products to domestic
pharmaceutical distributors.

*Source-9: Vietnam-Briefing/EVFTA.

 The environment has many potentials and opportunities for domestic businesses.

2.1.2. Five forces analysis

 Intensity of Rivalry

- By 2022, the country has 228 pharmaceutical enterprises that meet GMP-WHO,
including Bidiphar. 17 enterprises meet high standards (PICs, GMP-Japan, GMP-EU),
excluding Bidiphar (DBD is on the roadmap to upgrade to GMP-EU standards).
*Source-13: gmp.com.vn
 High competitive intensity.

- Antibiotic: Mainly competing with domestic enterprises, specifically Hau Giang,

DOMESCO Pharmaceutical, Imexpharm (whose main product line is antibiotics)

o Popular antibiotic groups such as Cephalosporin or Penicillin, accounting for more than
70% of the value in the Vietnamese market are Imexpharm's key products. *Source-14:
imexpharm.com

o DHG has the largest production scale among Vietnamese pharmaceutical companies,
meeting 80% of the demand for antibiotics on the market. *Source-15

o DBD recorded negative growth due to fierce competition in the bidding channel and
strict control in the use of antibiotics (2016-2021).

 High competitive

- Cancer treatment medications: mainly compete with foreign enterprises (Roche

Diagnostics, F.Hoffman, Novartis, Bayer) - whose main products are cancer and all
meet GMP-EU.

o 94.4% of the market share belongs to imported drugs, 5.6% belongs to domestic
enterprises (of which DBD - 3.1%). *Source-4

 High competitive

- Dialysis solution:

o DBD is one of five companies (B.Braun, Baxter Healthcare, Bieffe Medital S.P.A,
Allomed) capable of producing dialysis. Dialysis are subject to little competition due
to complex manufacturing requirements. DBD's dialysis solution market share in the
hospital channel is ~28% in 2021, second only to Baxter Healthcare SA with 31%. The
price of imported dialysis is 2-5 times higher than domestic products. *Source-4

 Low competitive
 Intensity of Rivalry is high.

 Threat of Entry
- Investment costs in R&D are very expensive: average investment for a quality medicine
production line: 30 - 35 billion VND, depending on factory size. Investing in one or
more lines may increase costs. *Source-16

- Cost to research and produce a new specific drug: 13 years, USD 8 million. Out of
1,000 researched drugs, only 2 successful medicinal products have been brought to
market.

 High sunk costs and exit costs.

- Existing companies have a competitive advantage in terms of branding. Most

consumers are wary of a product they've never heard of or a company they don't trust.

 Threat of entry is low

 Threat of Substitutes

- Some other methods (traditional medicine or oriental medicine) can be used to treat
cancer, but there is still no scientific research or evidence proving that it can cure cancer.

- This is the choice when patients cannot be treated with modern medicine (late-stage
cancer; tumor is too large, dangerous location; patient's health is too weak; economic
difficulties).

 Threat of substitutes is low

 Bargaining Power of Buyers

- ETC channel: supplying nearly 2,000 medical facilities (account 60.02%/total revenue-
2022). The bargaining power of DBD's buyers in the ETC channel is large overall, but
because it is divided equally among 2,000 establishments, the bargaining power of
buyers is divided and reduced.

 Bargaining power of buyers in ETC channel: medium.

- OTC channel: supplying more than 20,000 pharmacies/drugstores across the country
(account 36.53%/total revenue-2022). The buyer power from the OTC channel is
insignificant because the revenue from this channel is less and the number of
establishments is 10 times greater, so the impact is very small.

*Source-17: bidiphar.com/baocaothuongnien2022.

 Bargaining power of buyers in OTC channel: low.

 The bargaining power of buyers towards businesses is medium.

 Bargaining Power of Suppliers

Input materials: Depends on imported sources *Source-4

o Main input materials are Active Pharmaceutical Ingredients (API), excipients, other
ingredients (packaging). Mainly imported from Europe, America, China, and India.

o Raw material costs account about 50% of DBD's total production costs, of which the
value of imported raw materials accounts for about 90%.

Imported ingredients mainly include 2 main types of API: *Source-4

o Highly Active Pharmaceutical Ingredients (HP API): main material for cancer treatment
medicines and some other products. DBD depends on high-cost supplies from Europe,
America (in production: oral cancer drugs, vitamins, minerals, digestive drugs) -
because no alternative supply with cheaper prices, better quality. Accounts ~ 25% of
DBD's raw material costs.

o Common APIs have low toxicity: used for pain relievers, antipyretics, antibiotics,
neurotropic medicines. Mainly imported from China-India, accounting for 75% of
DBD's raw material costs. A few other important ingredients, excipients packaging, are
also imported from China-India.

o Practical proof, DBD's profit margins are significantly impacted by China's

environmental policies on API manufacturing. End of 2016, China began to control the
polluting waste of the API manufacturing industry. Large number of API factories not
meeting production quality standards, waste standards being forced to close. Covid-19
make API factories in China to temporarily suspend operations (2019-2020) reopening.
Shrinking supply caused China's API prices to increase rapidly, negatively affecting
DBD's profit margins.

 The Bargaining Power of Suppliers is high.

 Attractive industry

2.1.3. Competitor analysis

 Identify competitors: According to Vietstock 2023 data, based on net revenue (unit:
VND billion).

o Bidiphar JSC (DBD): 1,651

o Imexpharm JSC (IMP): 1,994

o Traphaco JSC (TRA): 2,296

 Gather intelligence
 Analyze rivals

- DBD specializes in antibiotic products, cancer medicines, dialysis solutions. IMP is the
leader in the key product line - antibiotics. Meanwhile, TRA is an oriental medicine
company based on traditional medicine, in addition to expanding into non-oriental
medicine segments.

- Although DBD's net revenue is smaller than IMP and TRA, its higher ROAE and
ROAA indicate a more efficient level of profit generation when using its assets.

- IMP has a competitive advantage in products meeting GMP-EU standards, so it can

participate in bidding for Generic medicines in groups 1-2. Meanwhile, DBD is still in
the process of converting from GMP-WHO => GMP-EU to expand its current market
share from group 3-4 to group 1-2 (with greater value, account 85-90% of the total
bidding value).

2.1.4. Competitive Life cycle analysis

a. Charting businesses positions on CLC

 Revenue Structure By Product Group - VND billion (according to annual report).

Pharmaceuticals's Revenue
1,800.00
1,600.00
1,400.00
1,200.00
1,000.00
800.00
600.00
400.00
200.00
0.00
2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenue 1,214.0 1,155.0 1,310.0 1,318.0 1,270.0 1,188.1 1,220.6 1,253.2 1,545.7

- Pharmaceutical revenue is on a steady growth path.

- Bidiphar's management board said that the growth motivation in the coming years of
the business will continue to come from the self-produced pharmaceutical group.
 In the middle of Growth phase.

Medical equipment and supplies's Revenue

400

350

300

250

200

150

100

50

0
2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenue 73 98 121 122 189 116.6 92.76 366.15 37.69

- 2014-2018: increased steadily.

- 2018-2022: many fluctuations, specifically 2018-2020: slight decrease, 2020-2021:

sharp increase, 2021-2022: sharp decrease.

- COVID-19 has severely impacted the medical devices market, with various segments
experiencing widespread impacts. Some diagnostic imaging procedures: radiology
procedures have decreased significantly during the pandemic. On the contrary, the
demand for personal protective equipment, isolation gowns, nasal swabs, and N95
masks increased sharply, leading to sudden fluctuations in revenue.

- The industry's compound annual growth rate reached 10.2%.

 In the middle of Growth phase.

 Raw materials, packaging, tools's Revenue
180
160
140
120
100
80
60
40
20
0
2014 2015 2016 2017 2018 2019 2020 2021 2022
Revenue 157 13 12 16 12 13 14.32 14.16 32.78

- Slow growth rate.

 In the of Growth phase

 From there we get the chart:

b. Characterizing the CLCs for businesses (cumulative revenues & firms charts)
 Pharmaceutical industry cumulative revenue (billion
dollars)
9
8
7
6
5
4
3
2
1
0
2015 2016 2017 2018 2019 2020 2021 2022
Revenue 4.22 4.72 5.24 5.81 6.42 7.01 7.74 7.9

- According to DAV, currently Vietnam's pharmaceutical industry is near level 3

according to the WHO classification scale. According to UNIDO's 5-level development
level 2 classification scale, our pharmaceutical industry is only at level 3, meaning "the
domestic pharmaceutical industry produces the majority of finished products from
imported raw materials".

- The growth rate of Pharmaceutical industry is always high, enterprises in the

pharmaceutical industry have all recorded stable growth in recent years.

- According to the General Statistics Office, the pharmaceutical industry is predicted to

reach USD 17 billion in 2030.

- According to IQVIA, compound growth rate (CAGR) in revenue is about 8% in the

period 2019-2023.

 Pharmaceutical industry is in the growth phase.

- Number of operating businesses as of December 31 each year by economic sector

divided by Industry and Year - Health sector and social assistance activities (according
to General Statistics Office)
 Firms
6

0
2017 2018 2019 2020 2021 2022
Firms 2.484 2.703 3.581 4.095 4.601 5.523

-The number of businesses entering the industry has strongly increased in recent
years
 “Health sector and social assistance activities” industry is developing.
 Pharmaceutical industry in the growth phase.
- Bidiphar's outstanding drug group - Oncology is leading the trend of increasing demand
for a number of treatment product groups.

- In addition, DBD's treatment group list also includes: Anti-viral, Anti-diabetics

treatment in the above group.

c. Compare with competitors (Margins chart)

Margins
2500

2000

1500

1000

500

0
2015 2016 2017 2018 2019 2020 2021 2022 2023
IMP 383 405 436 469 527 547 488 697 810
DHG 1,412 1,723 1,783 1,716 1,712 1,811 1,921 2,257 2,343
Bidiphar 451 509 490 428 414 491 622 767 798

- DHG is the industry's leading enterprise in growth.

- IMP and DBD have similar scale and gross profit growth rate.

- In general, the industry's profit growth rate tends to increase quite high and stable.
 Vietnam’s Pharmaceutical industry is in the growth phase.

 Bidiphar's ability to respond to change and potential threats from dynamic

pressures is strong, because:

- Bidiphar has focused on innovation and quality, which has helped them increase
revenue from manufactured goods to VND 1,658 billion by 2023.

- Investment in technology: Bidiphar has completed the construction of a cancer

treatment factory and started a new project.

- Market expansion: Bidiphar has expanded its business into new markets, creating more
revenue opportunities.

2.2.Analyzing Competitive Position

2.2.1. Stakeholder analysis

- Employees:

o Currently, Bidiphar has 1,195 employees with an average income of VND 9,5 million
/person/month. Include:

o Research and conduct clinical experiments (CRA), Drug research and testing, Drug
manufacturing, Pharmacist, Clinical pharmacist. *Group E1

o Pharmaceutical Marketing, Drug Registration and other positions. *Group E2

- Community-Customers:

o In 2022, the Company has grown the number of customers to exceed 22,000, an
increase of over 250% compared to 2020. Including:

o Treatment group - hospitals, medical facilities (doctors and medical staff such as nurses,
pharmacists, etc.): most important. *Group C1

o Patients, relatives of patients. *Group C2

o Retail pharmacies. *Group C3

- Government:

Ministry of Health of Vietnam:

o Drug Administration of Vietnam-DAV. *G1

o Department of Health Environment Management. *G2

o Health insurance fund. *G3

- Suppliers:

o Fresenius Kabi Vietnam Joint Stock Company.

o Trucking Technology Limited.

o CBF Coffee Company.

o Shandong Sma Pharmatech Co., Ltd.

- Shareholders/ Investors:

o Mr. Nguyen Tien Hai, Chairman of the Board of Directors.

o Mr. Ta Nam Binh, Vice Chairman of the Board of Directors.

Member of the Board of Directors:

o Ms. Pham Thi Thanh Huong

o Mr. Hoang Van Thang

o Mr. Dau Minh Lam

o Mr. Nguyen Ngoc Dung

o Mr. Truong Thanh Liem

- Stakeholder Issues Matrix:

 Bidiphar needs to pay most attention to the issues of shareholders and investors, then
employees and customers before making a decision.

2.2.2. Capabilities analysis

 Value chain
 Isolate the core set of capabilities

- Processes:

o Project "Research on the technological process of producing Anastrozole, Letrozole,

Capecitabine tablets for cancer treatment" was accepted at the end of 2021, with a
budget of VND 350 billion.

o The cancer treatment drug production line is about to come into operation and the
cancer treatment injection line meets GMP - EU, helping Bidiphar become the leading
pharmaceutical enterprise in Vietnam in terms of cancer treatment drug market share.

- People: Human resources play a key role, especially the team of highly qualified
technical staff in the R&D department.
- Systems:

o The pure water treatment system meets FDA standards, automatically operates and
corrects errors when they arise.

o Modern Heating, Ventilating, and Air Conditioning system, controlled by advanced

Building Management System.

o The compressed air supply system for the factory includes 2 oil-free compressed air
machines from Japan (Hitachi and Mitsuiseiki) that operate alternately, are
environmentally friendly and highly efficient.

o Invested in a closed, fully automated production line system from input to output,
meeting strict GMP-EU: Control and data collection system central data (SCADA) to
control all production activities, retrieve production data, analyze trends to assess and
prevent risks in the production process, Isolation technology system (isolator),
Automatic washing and sterilization system (CIP/SIP)

 Degree of alignment

- Internal alignment: Applying IT to business activities:

o Apply SAP-ERP resource management system to production and business activities;

DMS distribution channel management system to sales work.

o Digitize work processes. Build sales processes, customer service, and professional
reporting systems.

 Improve efficiency in sales system management.

- External alignment (customer)

o Diversify products and create values to improve treatment effects

o Products are distributed at suitable prices. Bidiphar's line of cancer treatment drugs is
leading the market in terms of output and gradually replacing imported drugs, providing
70 million pills/year, at a price 40% cheaper than European medicine, 20% lower than
Asian medicine. This opens up great opportunities for people with serious illnesses to
use good drugs made in Vietnam at a reasonable cost but with the same quality as
imported products.

 Strong degree of alignment.

 Sustainability

o Imitation: DBD's core competency is research and development of specialized products

(cancer treatment medicines, dialysis). This product line requires large investment costs
for equipment, technology, and human resources with a long research period, so very
few companies have the potential to implement it.

o Durability: DBD's development field is related to people's health care services. This is
an essential service associated with social development. As society develops and life
improves, health needs always tend to increase. In particular, cancer is predicted to
increase in the future as the living environment becomes increasingly polluted. That
shows the importance of cancer treatment medicines.

2.2.3. Strategy Maps and Generic positions

 Generic strategy

- Product: cancer treatment medicine.

- In ETC channel: *Source-4

o 94.4%: imported from large foreign pharmaceutical enterprises: Roche Diagnostic, F.

Hoffman, Novartis (Switzerland),…

o 5.6%: domestic enterprises (3.1% - DBD).

 Competitive scope within industry: broad.

o There is the largest number of active ingredients for each type of cancer in the hospital
channel with a total of 14 related active ingredients, compared to the average of only 3
- 4 cancer active ingredients per manufacturing enterprise. *Source-4

o Bidiphar provides active ingredients for many types of cancer such as: breast, cervical,
testicular, bone, stomach, lung, prostate, lymphocytic, colon, rectal,... While other
companies specialize in only 3-4 types of cancer. *Source-4

 Source of competitive advantage: uniqueness.

 DBD belongs to the group differentiation.

 Strategy map
- The first dimension: quantity of active cancer treatment ingredients in ETC channels.

- The second dimension: unit price of ETC channel breast cancer treatment medicine.

- The third dimension: market share of cancer treatment medicine in the ETC channel.
2.2.4. Portfolio Planning Matrices (Diversification) and Internationalization

a. Diversification

Table 2.2.4-1: Revenue Structure By Product Group (according to annual report) VND billion
(2014-2022)
Table 2.2.4-2: Revenue Structure By Product Group (according to annual report) VND billion
(2022)

2022

Medicine Medical equipment and supplies Raw materials, packaging, tools

Figure 2.2.4-1: Revenue Structure By Product Group (according to annual report) VND billion
(2022)
Table 2.2.4-3: Revenue Structure By Product Group (according to annual report) VND billion
(2021)

2021

Medicine Medical equipment and supplies Raw materials, packaging, tools

Figure 2.2.4-2: Revenue Structure By Product Group (according to annual report) VND billion
(2021)
Table 2.2.4-4: Revenue Structure By Product Group (according to annual report) VND billion
(2020)

2020

Medicine Medical equipment and supplies Raw materials, packaging, tools

Figure 2.2.4-3: Revenue Structure By Product Group (according to annual report) VND billion
(2020)
 Table 2.2.4-5: Revenue Structure By Product Group (according to annual report) VND billion
(2019)

2019

Medicine Medical equipment and supplies Raw materials, packaging, tools

Figure 2.2.4-4: Revenue Structure By Product Group (according to annual report) VND billion
(2019)

- Main business areas: production, purchase and sale of pharmaceuticals, medicinal

materials, machinery, equipment, tools and supplies for the medical industry.

- Bidiphar has a low level of diversification across industries, but a high level of
diversification within the pharmaceutical industry. Bidiphar is not dependent on certain
medicines, its drug list and production line are very diverse: DBD is manufacturing and
circulating nearly 400 products nationwide, divided into 19 treatment groups. Revenue
from the medical equipment - supplies, raw materials, packaging, tools industry
accounts for a very small proportion.
- Packaging field: member units provide about 20-30% of products and services to
member units in the system.

- Rubber & mineral sector => Accounts for a very small part, not yet profitable.

- Rubber industry: Bidiphar Rubber JSC (charter capital: VND 212,800,000,000). DBD
owns 33.58% (~ VND >71 billion). The rubber growing and processing industry in Laos
currently exploits about 50% of garden output =>Purpose: financial resources to
support investment back into the pharmaceutical research field.

- Mineral industry: divestment of investment at Biotan Minerals JSC. Bidiphar sell all of
its investment capital in Biotan (2020), with the amount of 405,000 shares, ~13.5% of
Biotan's charter capital. Estimated transfer value is VND 13 billion.

 Dominant Business.
 DBD works effectively.

- Reasons for low diversification between industries:

o Prioritize profits: focus on manufacturing and distributing drugs to optimize profits.

o Research and development (R&D) of the pharmaceutical industry requires large

investments and long periods of time.

o This industry faces strict regulations and censorship from government agencies, so
diversification is complicated.

o Build brands around specific medicinal products. Diversification distracts from the
brand and makes it difficult to reach the market.

- Diversification Matrices:

o Pharmaceutical industry: Build.

o Medical equipment and supplies industry: Hold.

o Raw materials, packaging, tools industry: Hold.

o Rubber industry: Hold.

o Mineral industry: Harvest.

b. Internationalization

 Patterns of Internationalization

- Foreign direct investment:

o According to IQVIA Institute, Vietnam is ranked among the 17 countries with the
highest pharmaceutical industry growth in the world. This is an industry with large
investment needs, but FDI capital into Vietnam for the pharmaceutical and medical
sectors is still very low.

o According to Mr. Do Van Su, Deputy Director of the Foreign Investment Department:
if divided by industry, agriculture is currently the field attracting the lowest FDI capital,
(~ <4% of the total amount of FDI capital in Vietnam). But if calculated by sub-sector,
the pharmaceutical and medical sectors are even lower, only USD 5.5 billion in 341
projects, (~1.3% of the total amount of FDI in Vietnam).

 FDI is low.
- International trade:

Table 2.2.4-6: Vietnam's pharmaceutical export value from 2011-2022 (Annual International
Trade Statistics by Country - HS).

Export pharmaceutical products of Vietnam

300,000,000 60.00%
50.00%
250,000,000
40.00%
200,000,000
30.00%
150,000,000 20.00%
10.00%
100,000,000
0.00%
50,000,000
-10.00%
0 -20.00%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Export Value (USD) Export Value Growth, YoY (%)

Figure 2.2.4-5: Vietnam's pharmaceutical export value from 2011-2022 (Annual

International Trade Statistics by Country - HS).
Table 2.2.4-7: Vietnam's pharmaceutical import value from 2011-2022 (Annual International
Trade Statistics by Country - HS).

Import pharmaceutical products of Vietnam

4,500,000,000 25.00%
4,000,000,000 20.00%
3,500,000,000 15.00%
3,000,000,000
10.00%
2,500,000,000
5.00%
2,000,000,000
0.00%
1,500,000,000
1,000,000,000 -5.00%

500,000,000 -10.00%
0 -15.00%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Import Value (USD) Import Value Growth, YoY (%)

Figure 2.2.4-6: Vietnam's pharmaceutical import value from 2011-2022 (Annual

International Trade Statistics by Country - HS).
o Export value over the past 10 years has grown but not high, compared to imports it is
very low. Export value only accounts for 5.7% of import value.

o There are no "Vietnamese drug brands" on the world market.

o According to DAV: There are 59 pharmaceutical companies exporting drugs &

medicinal ingredients (worth USD 261 million - 2022). Of which, companies with
FDI: > USD 180 million (81%), the remaining 33 domestic manufacturers account for
more than USD 39,38 million (19%) (and of which Stellapharm & Danapha account
for USD 30,5 million, 31 domestic enterprises remaining nearly USD 10 million).

 International trade is low.

 Because international trade & FDI is low, so Vietnam’s pharmaceutical industry

belong to Sheltered Industries.

 The internationalization of Bidiphar

- Export market: main focus in Asia and Africa markets (Laos. Mongolia. Yemen,
Somilia).

- Form of market penetration of the enterprise: export.

- 2022, export value: reaching over 1 million USD, accounting for a very small value in
total revenue (tinhanhanhchungkhoan.vn).

 Bidiphar's ability to internationalize is low.

3. Synthesis of findings and evaluation of alternative strategies

3.1.SWOT

 Strengths

- Leading in domestic market share of cancer medicines and dialysis solutions. The
product has the same quality as imported products at a suitable price.

- Own a diverse pharmaceutical portfolio. Have a competitive advantage in the ETC

channel.

- Number of active ingredients and cancer treatment products is the highest compared to
both domestic and foreign enterprises.

- Has the advantage of first-mover. Having a leading foundation of scientific research,

reaching international standards soon. Many achievements of the first enterprise
researching and manufacturing in Vietnam.

- The business model works effectively.

- The pharmaceutical-medical equipment market has many opportunities and

development potential.

 Weaknesses

- Not self-sufficient in supply, raw material sources are largely dependent on imports,
with high price and there is no alternative supply source.

- WHO-GMP standards are no longer consistent with development trends and difficult to
create advantages.

- Lack of highly qualified human resources.

- Lack of supporting industries such as pharmaceutical chemicals and machinery-

equipment.

- FDI capital into the pharmaceutical industry in general and pharmaceutical companies
in particular is low. Technology transfer with developed countries is low.

- There are not many overseas markets.

 Opportunities

- Project about specialized cancer drug production line according to European standards
GMP PICs/EU. The upcoming GMP-EU standard cancer treatment product line will be
a launching pad for Bidiphar to make a strong breakthrough.

- Vietnam's pharmaceutical industry is near level 3 in the WHO classification scale 4,

mainly generic drugs (drugs with expired patents) =>The market is not saturated, there
is a lot of space for development.

- The market for drugs with high scientific content is still new.

- The state has many policies to support the pharmaceutical industry.

 Threat

- Supply is easily interrupted and affected by world events (exchange rate, Covid19).

- The market share of drugs with scientific content in general and cancer-dialysis
solutions medicines in particular may be threatened by imports.

3.2.Different scenarios of future (business environment and company capabilities)

- Developing health care products and functional foods: Bidiphar is planning to focus
on developing CHC products - health care products and functional foods and aims to
make this a strategic product group in future.

- Market expansion: Currently, Bidiphar is present in all 63 provinces and cities,

supplying more than 1,550 hospitals and more than 15,000 pharmacies nationwide. In
the future, Bidiphar can expand its market, increase the number of customers and points
of sale.

- Enhance research and development: Bidiphar has chosen a different direction by

focusing on investing in technology and scientific research to develop specialized
pharmaceuticals. In the future, Bidiphar can increase research and development
activities, create new products and improve current products.
- Invest in building many raw material growing areas and find many other suppliers
to reduce dependence on imported fuel sources in the future. Vietnam's climate is
favorable for implementation.

- Revenue growth: Bidiphar sets a revenue target of VND 2,000 billion in 2024. With
the current development strategy, Bidiphar can achieve this goal and continue to grow
in the future.

- Exporting products: Currently, Bidiphar has exported more than 70 products to more
than 10 countries around the world. In the future, Bidiphar can expand its export market,
bringing its products to more countries.

3.3.Evaluate strategic options and alternatives for each scenario

- Developing health care products and functional foods: high feasibility and potential.

- Market expansion: necessary.

- Enhance research and development: most suitable and necessary, should focus the
most.

- Invest in building many raw material growing areas and find many other suppliers
to reduce dependence on imported fuel sources in the future: necessary in the distant
future with a sustainable development strategy.

- Revenue growth: can be achieved, possible.

- Exporting products: It is not urgent in the near future because there is no Vietnamese
medicines brand on the world market, it takes a long time to build and develop the
Bidiphar medicine brand from Vietnam. But in the near future, can consider exporting
to the UK&Europe, in the more distant future, can consider exporting to Japan.

UK-Europe, Reason:

o Included in the trade agreement of the Vietnam - UK Free Trade Agreement (UKVFTA),
Vietnam - EU Free Trade Agreement (EVFTA).

o There is a factory located in a high-tech park that is upgrading from GMP-WHO to

GMP-EU.
 Japanese market requires trying to achieve Japan GMP certification. Reason:

o Bidiphar is a trusted partner of the Japanese pharmaceutical corporation Kyorin

Rimedio, a member of KYORIN Holdings - a corporation specializing in research,
production, distribution of pharmaceuticals and medical and health care services
established from in 1923 with annual revenue of about USD 1.1 billion. Kyorin
Rimedio signed a licensing agreement with Bidiphar Vietnam Company on technology
to prepare generic drugs - Generic drugs will have a cheaper price but still have the
same quality when compared to brand-name drugs.

o Currently, Japan is the country accounting for the largest proportion of Vietnam's
pharmaceutical exports (18% - 2022 - US dollars 47 million).

o The Japanese market is the second largest pharmaceutical consuming country in the
world. Despite its large production capacity, this country is still importing more than
30% of the total market to meet domestic demand. However, Japan's pharmaceutical
management system is relatively strict. Any drug that wants to enter Japan must pass
the technical barrier of the Pharmaceutical and Medical Devices Agency (PMDA).

4. Conclusion

4.1.Valuable competitive position

Bidiphar has a valuable competitive position thanks to its unique business strategy and
investment in technology and scientific research:

- Specialty products: Bidiphar focuses on developing specialty pharmaceuticals, such as

cancer medicines, dialysis solutions. Because it requires large investment costs and long
research time, very few companies in Vietnam can develop.

- Leading position in the field of cancer treatment: Bidiphar is currently ranked No. 1 in
Vietnam in terms of the number of active cancer treatment ingredients bidding in
hospitals. They are also the leading enterprise providing dialysis solutions products at
medical facilities.

- Unique business strategy: Bidiphar has chosen a different direction by expanding

distribution scale and applying digital transformation to system administration. In just
about 10 months in 2021, Bidiphar has quickly increased the number of customers by
3 times with 15,000 points of sale, revenue growing by 16% compared to 2020.
- Investing in technology and scientific research: Bidiphar has invested in technology
and scientific research to develop specialized products. They have become the first
enterprise in Vietnam to successfully produce this special pharmaceutical.

4.2.Chosen strategic options: Internationalization? Diversification?

- The strategic option of diversifying the drug portfolio and treatment groups will be
more suitable for the company's current situation. DBD should focus mainly on the
domestic market.

- This focus on R&D will help Bidiphar have a first mover advantage, gain a lot of market
share, and strengthen the brand in a context where the pharmaceutical industry is still
quite new and on the rise.

5. References

- *Source-1: https://www.tinnhanhchungkhoan.vn/sau-tai-cau-truc-bidiphar-dbd-tang-
truong-manh-me-muc-tieu-doanh-thu-3000-ty-dong-nam-2026-post319670.html
- *Source-2: https://bidiphar.com/gioi-thieu/
- *Source-3: tai-lieu-gioi-thieu-doanh-nghiep-1684315046.pdf (bidiphar.com)
- *Source-4: 3902838 (bsc.com.vn)
- *Source-5: https://bidiphar.com/bidiphar-dat-muc-tieu-doanh-thu-2-000-ty-trong-nam-
2024/
- *Source-6: https://www.vietnam-briefing.com/news/vietnams-growing-
pharmaceutical-industry.html/
- *Source-7:
https://dav.gov.vn/upload_images/files/6_%20Tham%20lu%E1%BA%ADn%20T%E
1%BB%95ng%20c%C3%B4ng%20ty%20D%C6%B0%E1%BB%A3c%20Vi%E1%
BB%87t%20Nam.pdf
- *Source-8: https://www.tuyengiao.vn/duoc-lieu-viet-nam-thuc-trang-va-chinh-sach-de-
phat-trien-151877
- *Source-9: https://www.vietnam-briefing.com/news/qa-pharmaceuticals-evfta-how-
foreign-investors-can-qualify-preferential-tariffs.html/
- *Source-10: http://maika.com.vn/k/nguyen-lieu-duoc-chiu-thue-gtgt-5-khi-nhap-
khau.html
- *Source-11: https://thuvienphapluat.vn/chinh-sach-phap-luat-moi/vn/thoi-su-phap-
luat/tu-van-phap-luat/54840/thoi-han-hieu-luc-cua-giay-dang-ky-luu-hanh-thuoc-la-
bao-lau#google_vignette
- *Source-12: http://vietthink.vn/vi/tu-van-so-huu-tri-tue.nd/bao-ho-sang-che-duoc-
pham-va-van-de-gia-thuoc-chua-benh.html
- *Source-13: https://gmp.com.vn/danh-sach-nha-may-dat-eu-gmp-o-viet-nam-f.html
- *Source-14: https://www.imexpharm.com/tin-tuc/chien-luoc-phat-trien-nha-may-dat-
chuan-eu-gmp-cua-imexpharm
- *Source-15: file:///C:/Users/Quynh/Downloads/DHG_150508.pdf
- *Source-16: file:///C:/Users/Quynh/Downloads/VCBS+-
+B%C3%A1o+c%C3%A1o+ph%C3%A2n+t%C3%ADch+ng%C3%A0nh+D%C6%
B0%E1%BB%A3c+Vi%E1%BB%87t+nam+05-2008.pdf
- *Source-17: https://bidiphar.com/wp-content/uploads/2023/04/bao-cao-thuong-nien-
2022-1681829766.pdf

6. Appendices

** List of tables:
- Table 2.2.4-1: Revenue Structure By Product Group (according to annual report) billion VND
(2014-2022)…………………………………………………………………………………………….26
- Table 2.2.4-2: Revenue Structure By Product Group (according to annual report) billion VND
(2022)……………………………………………………………………………………………………27
- Table 2.2.4-3: Revenue Structure By Product Group (according to annual report) billion VND
(2021)……………………………………………………………………………………………………28
- Table 2.2.4-4: Revenue Structure By Product Group (according to annual report) billion VND
(2020)……………………………………………………………………………………………………29
- Table 2.2.4-5: Revenue Structure By Product Group (according to annual report) billion VND
(2019)……………………………………………………………………………………………………30
- Table 2.2.4-6: Vietnam's pharmaceutical export value from 2011-2022 (Annual International
- Trade Statistics by Country - HS)……………………………………………………………………33
- Table 2.2.4-7: Vietnam's pharmaceutical import value from 2011-2022 (Annual International
- Trade Statistics by Country - HS)……………………………………………………………………34

** List of figures:

- Figure 2.2.4-1: Revenue Structure By Product Group (according to annual report) billion VND
(2022)……………………………………………………………………………………………………27
- Figure 2.2.4-2: Revenue Structure By Product Group (according to annual report) billion VND
(2021) …………………………………………………………………………………………………..28
- Figure 2.2.4-3: Revenue Structure By Product Group (according to annual report) billion VND
(2020) …………………………………………………………………………………………………..29
- Figure 2.2.4-4: Revenue Structure By Product Group (according to annual report) billion VND
(2019) …………………………………………………………………………………………………..30
- Figure 2.2.4-5: Vietnam's pharmaceutical export value from 2011-2022 (Annual International
- Trade Statistics by Country - HS).……………………………………………………………………33
- Figure 2.2.4-6: Vietnam's pharmaceutical import value from 2011-2022 (Annual International
- Trade Statistics by Country - HS).…………………………………………………………………...34

**

**Reasons why FDI capital in the pharmaceutical industry is low

**
 Antibiotics's Revenue
250

200

150

100

50

0
2019 2020 2021 2022
Revenue 161 206 146.39 201.65

Cancer treatment medicines's Revenue

350

300

250

200

150

100

50

0
2019 2020 2021 2022
Revenue 110 128 177.89 290.69

******