GROUP ASSIGNMENT 1

Class: IB17C - Group 03

Lecturer: La Thi Kim Khanh
Subject: IBS301m – International Business Strategy

Members:
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
I. Introduction

II. Analysis

1. Competitor Analysis, and Environmental Analysis

2. Five Forces Analysis
3. Capabilities Analysis
4. Strategy Map
5. SWOT Analysis

III. Synthesis of findings & Recommendation for company strategy

IV. Conclusion

V. Reference list

VI. Appendices

I. Introduction (about company, main activities, important information for your analysis)
About company

- 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.
- DBD has 43 years of operation and development. Mission is "Caring for health - Sharing
joy". Motto is "Quality - Efficiency - Customer Satisfaction"
- 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.

Distribution system in Vietnam

- Bidiphar has 16 branches nationwide and 1 distribution company

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

Main product lines by revenue

- Antibiotics
- Cancer treatment drugs
- Dialysis solution

II. Analysis

1. Competitor Analysis and Environmental Analysis

 Competitor Analysis

 Identify competitors
- According to Vietstock 2023 data, based on net revenue (unit: billion VND)
• Bidiphar JSC (DBD): 1,651
 • Imexpharm JSC (IMP): 1,994
• Traphaco JSC (TRA): 2,296

 Gather intelligence
Performance
Metrics Capabilities Objectives/ Values Strategy
*(Vietstock-2023)
( Net revenue)
 Domestic market
share: Top 1 in  Continuously improve
cancer and top 2 in product quality.
dialysis.  Maintain quality
 Nearly 400 management according to
products - 19 GMP – WHO standards and
treatment groups, gradually upgrade to GMP
supplied to about – EU standards.
 30% cancer market
2,000 medical  Focus on researching
share by 2025.
facilities, more than products with high
 Gain market share in
20,000 pharmacies scientific and technological
the hospital channel
nationwide. content. Cooperate in
in Groups 1-2.
 1,651 billion  17 production lines investment, technology
 Become the most
VND with GMP-WHO. transfer with partners
specialized, most
Bidiphar  ROAA: 13.86  Nearly 40 different (Institutes, Schools, large
comprehensive,
 ROEA: 19.32 cancer treatment pharmaceutical
widest and most
products have the corporations in the world)
diverse
same quality as to produce a number of
pharmaceutical
imported products, special treatment product
company in terms of
reasonable prices. lines with high technology,
distribution
 Vietnam Drug advanced dosage forms.
channels.
Bank, DBD: top 5  Develop current strengths
listed in cancer treatment
pharmaceutical products, invest to world-
enterprises with the class advanced technology
most registration and reputable brands to
medicine numbers: maintain and expand
504, prove of market share.
bioequivalence:16.
Imexphar  1,994 billion  Leading in the  Leading  Take advantage of the
m VND antibiotic market - pharmaceutical highly competitive
 ROAA: 12.83 key products manufacturer strengths of EU-GMP
 ROEA: 15.06 account > 70% of according to products.
value in the European standards,  Dominate market share of
Vietnamese especially in key products. Maintaining
market). technology and the niche market where
 The first unit to sustainable Imexpharm has a
meet GMP- management. competitive advantage,
ASEAN standards, while expanding into other
owns the most EU- market segments.
GMP factories in
 Vietnam (3 factory
clusters, 11
production lines).
 Becoming a
franchised
manufacturing
partner of many of
the world's leading
multinational
pharmaceutical
corporations such
as: Sandoz,
Robison Pharma,
 Improve factory operating
DP Pharma, Galien,
efficiency, boost production
Pharmacience
line output.
Canada, Sanofi -
Aventis.
 326 medicine
registration
numbers, of which
12 registration
numbers have been
granted European
visas, 15 products
with proven
bioequivalence
have been
announced.

 Number 1 position
in oriental medicine
(liver and brain
tonic group).  "Maintain and
 Green supply chain maintain the number  Continue to separate
platform from raw 1 position in oriental medicine - non-
material sources to Oriental Medicine - oriental medicine
clean production focus on investment throughout the system.
 2,296 billion technology, and development  Carry out technology
VND distribution outside of Oriental transfer activities, issue
Traphaco
 ROAA: 13.65 systems, and Medicine". new registration numbers
 ROEA: 18.37 environmentally  By 2025, be the No. and deploy new products
friendly services. 1 pharmaceutical into production, research
 Artichoke growing enterprise in and upgrade production
and harvesting Vietnam in terms of lines according to GMP-EU
areas, and tea revenue and profit standards.
medicinal herbs growth rate.
harvesting areas
(main material)
meet GACP-WHO.
  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).

 Environmental 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 2021 the urban
population will reach about 36.6 million people.

 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.

 Technological Developments
- Pharmaceutical R&D activities still lack serious investment. The country's capacity is still
limited in generic drugs (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).

 Macroeconomic Impacts
- Vietnam depends heavily on imported pharmaceutical raw materials, of which sources
from China and India account for more than 85%. As a result, when the 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.

 Political-Legal Pressures
- Vietnam Pharmaceutical Administration 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 drug 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 drugs is allowed in Vietnam, but advertising prescription

drugs is illegal. Advertising to end users or medical professionals is strictly prohibited.
- Register for drug advertising through the Drug Administration of Vietnam (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.
- Imported medicinal ingredients will be reduced to 0%.
- Registered medicinal products are valid for circulation for 5 years.
- Vietnam commits to protecting inventions for 20 years.
- 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

- 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).
- 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.

2. Five Forces Analysis

 Intensity of Rivalry
- By 2022, the country has 228 pharmaceutical enterprises that meet GMP-WHO. 17
enterprises meet high standards (PICs, GMP-Japan, GMP-EU), excluding Bidiphar (DBD
is on the roadmap to upgrade to GMP-EU standards). => High competitive intensity.

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

DOMESCO Pharmaceutical, Imexpharm (whose main product line is antibiotics)
 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.
 DHG has the largest production scale among Vietnamese pharmaceutical
companies, meeting 80% of the demand for antibiotics on the market.
 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.
 94.4% of the market share belongs to imported drugs, 5.6% belongs to domestic
enterprises (of which DBD - 3.1%)
 High competitive

- Dialysis solution:
  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.
 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.
- Cost to research and produce a new specific drug: 13 years, 8 million USD. 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).
 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).
 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
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:

 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

3. Capabilities Analysis

 Value chain
Raw material supply Research and Production operations Finished Sales and
activities Development product Distribution

 Main input  GACP-  2 manufacturing Pharmaceutical  Domestic

materials: active WHO factories GMP-WHO: revenue
drug medicinal factory No.1 at Quy structure (2021): ETC channel: mainly
manufacturing herb Nhon headquarters bidding for cancer
ingredients (API), garden and Nhon Hoi high-  Antibiotics drugs and
excipients, other consists of tech factory. (24%) antibiotics (~60%/
ingredients 2 parts:  10 production plant:  Cancer pharmaceutical
(packaging). Research Betalactam, Non- medicines revenue - 2022)
center, Betalactam, (15%)
 Mainly imported
Medicinal lyophilized-sterile,  Dialysis OTC channel:
from Europe,
herbs soft capsule-protein, (10%) selling products
America, China, processing, cream-ointment-
India.  Vitamins, directly to
medicinal liquid, probiotic pharmacies (36%/
 Input material antipyretic
herb powder. pharmaceutical
costs account for farming  17 production lines: (12%)
a large proportion  Digestive, revenue-2022)
area. cancer
(~50%) in the medicines/antibiotics nervous,
production cost hormonal,  Export:
in injection form &
structure. respiratory accounts for
pill form,…
(18%) 0.6% of
 Other drugs pharmaceutical
(21%) revenue (Laos,
Cambodia,...)
 Isolate the core set of capabilities

 Processes:

- 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 350 billion VND.
- 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

- The pure water treatment system meets FDA standards, automatically operates and
corrects errors when they arise.
- Modern Heating, Ventilating, and Air Conditioning system, controlled by advanced
Building Management System.
- 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.
- 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:
 Apply SAP-ERP resource management system to production and business
activities; DMS distribution channel management system to sales work.
 Digitize work processes. Build sales processes, customer service, and professional
reporting systems.
 Improve efficiency in sales system management.
  External alignment (customer)
- Diversify products and create values to improve treatment effects
- 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
 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.

 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.

4. Strategy Map

 Generic strategy
 Product: cancer treatment medicine.
 In ETC channel:
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.
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 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.

5. SWOT Analysis
 Bidiphar
 Strengths
- Leading in domestic market share of cancer drugs and dialysis solutions. The product has
the same quality as imported products at a suitable price.
- Number of active ingredients and cancer treatment products is the highest compared to
both domestic and foreign enterprises.
- Having a leading foundation of scientific research, reaching international standards soon.
Many achievements of the first enterprise researching and manufacturing in Vietnam.

 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.

 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.

 Threat
- Supply is easily interrupted and affected by world events (exchange rate, Covid19).
- Cancer medicine market share may be threatened by imports.

 Imexpharm
 Strengths
- Imexpharm has the EU-GMP factory system with the largest number of lines in Vietnam,
modern facilities and equipment (SAP, DMS, BASE).
- The advantage in antibiotic production is that it also has the largest market share among
the treatment groups.
- The brand has a good reputation.

 Weaknesses
- The OTC portfolio is not yet diverse in products.
- The speed of bringing new products to market is still slow.
- The distribution system is not evenly covered and not strong in the North.

 Opportunities
- Product portfolio of IMP4 factory put into operation: lots of potential and suitable for
treatment needs.
- The ETC market has since recovered, accelerating sales based on EU-GMP products in
the near term.
- Dong Thap Pharmaceutical Industrial Park project is a condition to develop scale, sales,
and human resources.

 Threat
- Pharmaceutical companies are investing in upgrading EU-GMP, so Imexpharm's
competitive advantage thanks to pioneering investment faces challenges in the medium
term.
- Fierce price competition in bidding, both for domestic goods and cheap imported goods.

III. Synthesis of findings & Recommendation for company strategy

 Synthesis of findings
- Vietnam's pharmaceutical market is in the development stage, mainly generic drugs
(drugs with expired patents) => has large development space.
- Bidiphar currently has many advantages in scientific research.
 - The cancer medicines and dialysis markets have few domestic competitors.
 Recommendation
- Focusing on research and development of cancer treatment medicines and dialysis to
consolidate and expand market share.
- 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.
- Build a team of highly qualified human resources.
- Focus on scientific research to create a first-mover competitive advantage in the future.
Continue to focus on research and development of special treatment product lines with
high technology and advanced dosage forms. These product lines will make a difference
for Bidiphar.

IV. Conclusion

The market for high-tech drug production and bioequivalent drugs in Vietnam is facing many
challenges (poor infrastructure, poor human resources, not strong enough product research and
development). But with 43 years of experience and always pioneering in scientific research,
DBD has many advantages to succeed with special treatment product lines that require high
technology.

V. Reference list

https://www.vietnam-briefing.com/news/the-future-of-vietnams-pharmaceutical-industry-
unpacked.html/

https://kirincapital.vn/wp-content/uploads/2023/11/Bao-cao-nganh-duoc-pham-VN.pdf

Báo cáo thực trạng ngành dược Việt Nam năm 2022 (gmp.com.vn)

https://bidiphar.com/wp-content/uploads/2023/08/ban-tin-nha-dau-tu-quy-2-nam-2023-
1691145181.pdf

https://tuoitre.vn/bidiphar-dinh-vi-thuong-hieu-tu-chat-luong-san-pham-
20210721102003428.htm

https://drive.google.com/file/d/1i0DHqJ1ziS_QBXGSSEZ4lIq-0ZfIOeDc/view

https://bidiphar.com/wp-content/uploads/2023/02/tai-lieu-gioi-thieu-doanh-nghiep-
1684315046.pdf

https://www.bsc.com.vn/Report/ReportFile/3902838

https://gmp.com.vn/bao-cao-tong-quan-thi-truong-san-xuat-duoc-pham-tai-viet-nam-n.html

https://binhdinh.gov.vn/tin-tuc/tin-tu-so-ban-nganh/viet-nam-co-nha-may-san-xuat-thuoc-dieu-
tri-ung-thu-dau-tien.html
https://baobinhdinh.vn/566/2003/8/5302/

VI. Appendices