Vietnam Drug Stocks Surging as Foreigners Covet Booming Industry

As Vietnam opens up to more foreign money, the country’s fast-growing pharmaceutical industry is emerging as one of the most attractive prizes for overseas investors.

Domesco Medical Import-Export JSC, the third-biggest listed drugmaker, has shot up 151 percent this year as it got shareholder approval to scrap the 49 percent foreign ownership limit on its stock. DHG Pharmaceutical JSC, the largest, has risen 44 percent, with Japan’s Taisho Pharmaceuticals Holdings Co. buying a 24.5 percent stake last month. Vietnamese health-care companies have returned 46 percent in 2016, the best performance among 10 industry groups on the VN Index.

The government cleared Vietnam Dairy Product JSC, the biggest listed company, to scrap its foreign investment cap in July, driving the VN Index to an eight-year high amid optimism further approvals would follow. Overseas ownership of many local drugmakers is already at or near the limit, creating pent-up demand from money managers seeking to benefit as the nation’s burgeoning middle class spends more on health-care.