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CompaniePartnership opens up business opportunitiess active in the same industry often fight each other for a larger market share; however, it is not true for every case. The local pharmaceutical market has witnessed a brand acquisition, in which both seller and buyer promise to work together for stronger business development in the years to come.

Thai-based company Mega Lifesciences (Mega WeCare) signed an agreement with DHG Pharmaceutical Joint Stock Company (DHG) on December 12 to acquire the Eugica brand from the Vietnamese partner, taking a further step into the local pharmaceutical market where it has been operational since 1993.

“We have never bought any brand in the world, and this is the first time Mega WeCare has bought a brand in Vietnam because we see a good partnership,” said Vivek Dhawan, chief executive officer of Mega WeCare.

The agreement allows Mega WeCare to legally own the Eugica brand in Vietnam and in the world market. Under the partnership, DHG continues to develop, distribute and sell the product in Vietnam, while Mega WeCare will do marketing activities and introduce the brand to some 25 countries besides Vietnam.

Dhawan described DHG’s Eugica as the number one brand in the category of natural herbal cough product. That is among the reasons making Mega WeCare to take over the brand, and to work with DHG on plans to grow the brand and make it better known.

Both companies declined to reveal the value of the deal, saying there are some regulatory procedures to be done with the local Ministry of Health. However, DHG says as a listed company, it will announce the value of the deal soon.

Asked why DHG decided to sell the brand to Mega WeCare, Pham Thi Viet Nga, board chairperson of DHG, said the company’s strategy is to export products to other countries. Therefore, the deal is part of its strategy in exporting products, rather than merely a merger and acquisition activity.

Nga said DHG set a target of export growth of some 25 – 30% from the current total of US$1.5 million. To promote the brand outside Vietnam, it will take time because DHG has no representative office in other countries like Mega WeCare.

“We have fewer experiences than Mega WeCare in exporting products to other markets. Mega WeCare is a big company and now we walk hand in hand with them,” she said.

DHG set a total revenue target of VND220 billion for the Eugica brand for this year, and the company has by now realized the target, according to the top leader of the company.

Nga expected after the deal her partner will invest more in marketing activities for the brand from 2013 so as to make the brand stronger in the local market and then to step by step get the brand known in other markets around the world.

Dhawan revealed that Mega WeCare will invest millions of U.S. dollars for the marketing plan over the next three years, focusing not only on Eugica but on other brands as well. The company will work with its local partner to market the brand in such countries as Myanmar, Cambodia, the Philippines and Indonesia to name but a few, where it already has sales marketing teams.

“We have strengths elsewhere while DHG has its strength in covering the local market. We put our strengths together, and you will see Eugica made by DHG to be sold in many countries in the next two or three years,” the chief executive officer said.

Dhawan said new products in the forms of candy, capsule and syrup are under development, and new formulations for the Eugica brand are another expansion. “I think by the second half next year we will have one or two more products launched.”

Talking about the potential of Vietnam’s market, he said the per capita consumption in Southeast Asia remains low, and thus this offers business opportunities to drugs companies. The challenge is how to ensure the quality of products as the market is very competitive.

“By partnership, we do not have to fight each other but to grow together. There is room for growth,” Dhawan said, adding Vietnam is a very important market for Mega WeCare, which accounts for over 20% of Mega brand business.

Dhawan said Mega WeCare’s objective is to grow by between 10% and 15% every year, but for the new Eugica brand the company set a growth target of 20%.

The company has three factories in Thailand and one in Australia, and it has no plan to set up a factory in Vietnam.

(The Saigon Times Daily)

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