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Company SpecificsFounded: 1999
Global Headquarters: 15 Stanhope Gate, W1K 1LN, London, England
Local Headquarters: 5th floor, Suite 503 Sun Wah Tower, 115 Nguyen Hue Boulevard, District 1, Ho Chi Minh City, Vietnam
Product/service: AstraZeneca is a multinational pharmaceutical company with major R&D centers in 4 countries and additional offices in over 100 countries. In 2007 it had $5.6 million in profit on $29.6 million in revenue. It has over 50 products covering diverse areas such as antibiotics, cardiovascular health, oncology, neurological health, and respiratory disease.
Customers: Health care professionals, hospitals, and patients all over the world.
HostMr. Binh Thai, Marketing Manager
OverviewThe AstraZeneca office in Vietnam is solely a sales office. It is a subsidiary of AstraZeneca Singapore because wholly owned subsidiaries are not currently allowed under Vietnamese law. Direct-to-consumer marketing of pharmaceuticals is prohibited in Vietnam, as in many parts of the world. Therefore, there AstraZeneca markets primarily to individual doctors. This is done using a system of office visits to recommend products, called detailing, which is very similar to the traditional sales process in the US. In the Vietnamese market all sales representatives must be medically trained as a doctor or a pharmacist. This has led to a shortage of qualified sales reps. Because Vietnam is a Communist country, the overwhelming majority of AstraZeneca’s sales are to state-employed doctors and hospitals.
Vietnam does not have the ability to evaluate new therapeutics as they are developed. Instead, a drug must show safety and efficacy by having been marketed for 5 years in the EU, US, or Japanese markets. This means that the Vietnamese market experiences a significant lag in seeing new therapies.
Key TakeawaysThere are unique challenges when detailing a product to Vietnamese doctors
New drugs are approved in Vietnam only after they have established a safety record in the EU, US, or Japanese markets. Regulators in these markets do not have any requirements about the specific populations used in clinical trials. However, Vietnamese doctors are interested in proof that the medications are efficacious specifically in Asian populations.
Multinational pharmaceutical companies have developed technologies such as e-detailing and doctor profiling to assist sales representatives in addressing the concerns of individual doctors. E-detailing involves the use of a multimedia presentation to provide a richer and more detailed sales experience. Doctor profiling is the practice of tracking specifically what types of information each individual doctor prefers. The sales rep is then able to better customize the sales presentation. However, due to the low technology adoption rate within the Vietnamese medical profession, neither of these tactics can be used. This means that detailing in Vietnam requires more capital and labor than it might elsewhere.
The government-run Vietnamese health care system is inefficient and difficult to navigate
The majority of AstraZeneca’s Vietnamese sales are to the government. These sales are tender-based. In 2006 the government health care system ran out of money and simply stopped buying medications. This means that AstraZeneca Vietnam cannot count on a steady revenue stream from what is essentially its only customer. Most Vietnamese hospitals do not know their annual budget, obstructing them from forecasting or investing in long term development
Those Vietnamese lucky enough to have medical insurance usually receive it from the state. In addition to the 5 years of foreign safety data required prior to Vietnamese approval for a drug, there is 2 year wait, post Vietnamese approval, before a drug will even be considered for state-sponsored insurance reimbursement. Then there are additional waits of 6 to 12 months before the drug will be moved into the most favorable reimbursement category. This leaves a very short span of time for AstraZeneca to sell its therapeutics before the drug faces competition from generics.
The rural markets are extremely underserved by the medical profession
As mentioned, the majority of Vietnamese covered by an insurance policy live in an urban setting, specifically Hanoi and Ho Chi Minh City. The rural population also has a much lower per capita income than city-dwellers. This means that AstraZeneca’s products, which typically cost 20 to 80 percent more than the competition, do not have much of a market in rural Vietnam. The problem of medical coverage in rural areas extends far beyond just AstraZeneca’s products. Rural infrastructure is underdeveloped, leading to difficulties for all parts of the medical industry. The relatively low medical salaries in rural areas also leads to a scarcity of doctors.
Posted by: S. Byers
The class settled in prior to the presentation.
Professor Toppel introduced our host Mr. Binh Thai, an SCU business school alumnus.
Mr. Thai and the General Manager fielded question from the class.