Ben Mandjak: You have been with Grindeks for more than 6 years, you spent most of that time in China. Why has Grindeks decided to come to Vietnam, and why now?
Aleksandrs Parfjonovs: As much as I felt comfortable in China, in terms of business we had almost no operations there. But in Vietnam, we started to have more and more. We made the decision to move to Vietnam because, you can only follow regulations if you are willing to be here physically. The pharmaceutical business is the most regulated in the world, which means each country has its own regulations. Not only the regulations are complicated in China and Vietnam, but they tend to change quickly as well.
I also came here because I wanted to understand this market, I wanted to be here. I want to spend 80% of my time focused on Vietnam, because it is the most important market in Southeast Asia for Grindeks. By now we have submitted all our product portfolio for registration in Vietnam. We are waiting for the registration process; we will have firm turnover in 1-2 years’ time when it will really start running. But already this year, our sales increased 100% compared to the previous year. My plan is to do more next year.
Ben Mandjak: What have been your experiences with Grindeks in Vietnam?
Aleksandrs Parfjonovs: I think I made one of my best decisions when I joined the CEEC, and it’s not just to advertise the Chamber. Through the CEEC I became a member of EuroCham and I started to meet different people. This led me to join the International Quality Medicines-Generic & Biosimilar Sector Committee (IQMED). IQMED is chaired by another CEEC member, Magdalena Krakowiak (Adamed Pharma). I am now the vice chairman of IQMED. We also have other companies like Sandoz, Baxter, Aguettant, many big players.
This allowed me not only to understand better local regulations, but to try to improve the regulation. This is not only beneficial to our own business, but we are striving to bring more high-quality medicines from Europe to Vietnamese patients. Here, compared to other countries like China, we do have a word. For example, we had some issues recently with Circular 32 regarding drug registrations. Another member of the CEEC, Nguyen Hai Minh (Mazars), helped to arrange a meeting with Minister Mai Tien Dung and his colleagues to discuss this issue and we were able to negotiate with the government.
While being here, I try to be the bridge between my company and our partners, to explain that not the whole world operates in the way we think. There is no black and white, I do not want to say which is better or worse, but I cannot deny the fact that Vietnam is one of the fastest growing economies, similar to China, so perhaps it will work out. And last, I enjoy living in Vietnam, simple as that.
Ben Mandjak: What does Grindeks in Vietnam look like in 5 years?
Aleksandrs Parfjonovs: I see a huge company! The Vietnamese pharmaceutical market is around 20 billion USD now, out of it, around 50% are imported drugs. As we are a representative office, we have to use a lot of outsourcing, local partners, however the situation is moving towards local manufacturing. I think there will be a lot of opportunities to grow besides just adding new products. We have a lot of products in our portfolio right now which we will be working on increasing our sales. I have ambitious goals, 3-digit growth every year. It is hard to make a 5 year prediction, as Vietnam is a very changing environment. The pharmaceutical industry is very regulated everywhere, especially here. However, laws keep changing. Being part of IQMED, I am very happy to work with the government, and the government is actually open to discuss improvements, how to do things more efficiently.
I think it is also our role to make things better. There are many pharmaceutical companies that are not here, and thus not able to capitalize on this market. We are here, part of CEEC, EuroCham, IQMED, we are not just following everything. I am personally involved, and it is voluntary job, and I do really enjoy it. I see positive changes; it is the fastest growing pharmaceutical market in Southeast Asia.
Ben Mandjak: You have extensive business experience in China and you have been in Vietnam for 2 years. What has been your experience working with Vietnamese partners and how does it differ from your experiences in China?
Aleksandrs Parfjonovs: Right now, Vietnam is very strong in manpower, it is one of the reasons why many factories are coming here. China 10 years ago was strong in manpower and in manufacturing, but China in the last 5 years has changed a lot. The life quality requirements of Chinese people increased, and there was a point when these employees started to become less competitive. When China reached this point, they switched to technologies. Vietnam will be facing similar issues soon. The government is aware of this, and open to discussing with the CEEC, with our Chambers, how to do it more efficiently, in terms of pharmaceuticals, how to bring new drugs manufactured here, how to attract investment. There is a lot of investment coming, so they are on the right path, even though it is very difficult. However, if they manage it, it will be a major step in Vietnam becoming a developed country, which in my opinion, China already is.
In terms of people, business relationships, it is more or less the same. In China, I was much more skeptical towards organizations such as chambers of commerce, because there, I didn’t see much added value from them, people seemed to be less motivated there. In Vietnam, it has become part of my routine to work with these organizations.
Ben Mandjak: We have multiple pharmaceutical companies in the CEEC, do you think that Central and Eastern European pharma companies have a specific competitive advantage in Vietnam?
Aleksandrs Parfjonovs: Absolutely. Most of the Western European big companies are already here, and their pricing is high, even compared to other European companies. CEE companies have an advantage in terms of price, however, because the EU has the same regulations to oversee manufacturing, products manufactured in Latvia or Germany will have the same quality requirements, while CEE companies remain more competitive on pricing.
CEE countries used to be less focused on Southeast Asian markets, as these markets are very far away. However, now we have CEE investment coming into Vietnam. Adamed, for example, acquired facilities here, and I expect this trend to continue.
There will be more and more pharmaceutical members of the CEEC soon because our countries are starting to pay attention to Vietnam. If foreign businesses want to start here, it is a great first step to make to enter the business environment. It is difficult to start a business from zero here. You should not come here with the mindset that you will change the whole of Vietnam. You may change some parts; you should work on the improvements. You should come in with a mindset of working together with this environment, and maybe try to make this environment better.
Ben Mandjak: How confident are you in the future of Vietnam on a scale of 1-10?
Aleksandrs Parfjonovs: 10/10, otherwise, I would not be here. It is the fastest growing market, with a lot of potential. Vietnam resembles the Chinese economical model which made a great leap, maybe Vietnam can make an even greater leap. Vietnam should be the gateway to other Southeast Asian markets for pharmaceutical companies. Other markets are less attractive compared to Vietnam. I am very confident, of course there are many issues that need to be worked on through the CEEC, EuroCham, and other channels. I hope there will be more and more dialogue opportunities with business and government.