Future Consultants

— Team 3

Future-Proof And
Sustainable
Healthcare
Ecosystem Strategy
Project
November
2024
 1 Pharmaceuticals, Which business segments should Long Chau prioritize
Executive 
Vaccination to create a future-proof and sustainable healthcare
ecosystem?
Pharmaceuticals will go first because with physical and non-physical networks it can give other sectors the foundation to grow

Summary  Pharmaceuticals market has the largest market size, CAGR. And currently, it does not meet the 3000-store
target yet. It one achieved, it can be strengthened more
 Vaccination goes after because it is currently operating well and places top 2 in this market so it needs to keep
this momentum
 Moreover, Vaccination can also leverage physical and non-physical networks from pharmacies

2 Diagnostics,
Hospitals
What are the other business segments with potential
strategic fit but not currently under consideration?
 The cost to enter this market is smaller than hospitals, and it can also leverage physical and non-physical networks from the pharmacies like vaccination
 In terms of competitive landscape, it is easy to enter as the market is currently fragmented with outdated technology and has high demand and to this we
can infer the trends
 In addition, finance and non-finance are piece of cake for LC’s capabilities
 In terms of hospitals, it can utitlize assets such as brand reputation, and non-physical network, and largest and diverse products to enter this market

3 Business Models
In relation to competitive landscape, public hospitals dominate the scene with 85% market share, but Long Chau can compete can capture from those
Which business model should Long Chau create to
competitors, because there are some challenges that public hospitals cannot address but Long Chau, such as expert workforce and technology
 Finally, hospitals is easy to enter with strong financial capital from Long Chau
optimize the segments' synergies?
 With Pharmaceuticals, vaccination, and diagnostics stores/centers/clinics we will use shop-in-shop, and side-by-side models to optimize revenue, costs, and brand synergies, these models
only applied for on-site with physical network (stores/centers/clinics – places) will be the focus
 During those models above, we will position our services as integrated care with LC application playing at center of focus. With application, we leverage wide network for faster delivery when
customers purchase online (drugs, supplement, ect in pharmacy only). In terms of vaccination and diagnostics, customers can book telemedicine online on the app, saving time for patients,
more convenient, even at far distance
 In addition, Diagnostics can perform remotely as said above, and when patients need drugs and non-drugs we will leverage retailing abilities from Long Chau Pharmacy to supply products.
Moreover, Diagnostics can be integrated monthly subscription fee, with more beneficial from complementary, discounts from pharmacy (drugs and non-drugs. We choose this model because
more people having high GDP per capita and willing to invest in well-being
McKinsey & Company
18
Prioritizing pharmaceuticals will create a strong base for
expanding into other sectors, ultimately fostering a
comprehensive ecosystem
As the leading pharmacy chain by store count and revenue, Long Chau can leverage its strengths to establish complementary services
near existing pharmacies. This strategy would increase revenue and reduce costs through cross-selling to its large customer base, shared
facilities and human resources, and enhanced brand awareness.

1. Physical Network: Over 1,706 stores as of Q2/2024 with large scale distributed across 63 provinces and

What are more than 600 districts nationwide

2. Pharmacist Workforce: With expertise in specialized knowledge and sales, well-trained via advanced

Long Chau
simulation labs and international certifications
3. Product Portfolio: All products sourced directly from manufacturers, with rigorous quality control procedures,
and are sold at the listed price. Comprehensive selection of insurance-covered and hard-to-find medications, with

Pharmacy’s 24/7 services

4. Customer Base: Over 13 million customers, with more than 9 million are loyal, regular users on the official
account platform.

strengths? 5. Brand Awareness: Out of 100 people, 93 are aware of who Long Chau is, and 70% have purchased products
from Long Chau.

Long Chau Pharmacy has yet to meet its target of 3,000 GPP-certified stores by 2026. Focusing on
this goal will significantly reinforce Long Chau's strengths once achieved
With 3,000 stores, Long Chau could potentially capture 50% of the market, as its monthly revenue per store is
5 to 8 times higher than competitors. This expansion would further solidify its leading position in customers'
minds, increase brand awareness, and boost product usage.
Pharmaceuticals market is the largest market size and CAGR
in the healthcare market, promising the future of business
growth
The market was valued at $8.2 billion in 2023. It's projected to grow at a 9.7% CAGR, reaching $13.2 billion by 2028. In addition, this sector
represent the largest portion of healthcare expenditure, with the figure standing at 48%.

Pharmacist workforce is a crucial part of successfully

opening other centers
“Skilled sales abilities, the upcoming
vaccination centers will have more than 50%
of customers coming for vaccinations based
on pharmacist recommendations”
— Bach Diep CEO, FPT Retail
Vaccination will be the next strategic focus, leveraging Long
Chau Pharmacy's strengths to build trust and boost customer
satisfaction
Top 3 factors influencing consumers to Leveraging its Physical Network, Workforce, and
choose private over public vaccination Product Portfolio to address the 3 key factors
centers: 1. Physical Network: With the widest physical network, customers can conveniently
access healthcare services, even at the commune level.
1. Convenience and Accessibility: Nearly 80% of urban Vietnamese
consumers prefer private clinics for vaccinations due to convenient scheduling • Real Case: Approximately 80% of Long Chau vaccination centers operate
and shorter wait times compared to overcrowded public healthcare centers. with a shop-in-shop model, and 12% are side-by-side with existing
pharmacies. Only about 8% of vaccination centers are located at
2. Perceived Quality and Trust: Over 60% of Vietnamese consumers trust
independent sites.
private providers for vaccinations, perceiving them to have superior facilities
and customer service. This aligns with the overall high trust in private clinics for 2. Pharmacist Workforce: With simulation labs and international certifications during
advanced healthcare services. training to ensure its pharmacists are well-equipped in terms of both knowledge and
sales capabilities.
3. Affordability and Financial Support Options: While private vaccinations are
costlier, 45% of Vietnamese consumers are influenced by flexible payment 3. Product Portfolio: The largest pharmacy chain by SKUs
options, family discounts, or bundled packages. Financial support is crucial, • Widest selection of vaccines: Offering approximately 50 unique SKUs with
especially for vaccines not covered by national insurance. comprehensive selection of insurance-covered.
• Vaccine prices: 2%-7% lower than at VNVC and Nhi Dong 315.
• Long Chau app: Allows customers to accumulate points for vaccinations,
redeemable for pharmacy products - a unique feature among private
vaccination centers.

Moreover, with LC Pharmacy's diverse customer base and the wide range of products—mainly prescription
drugs and supplements (70-80%)— it can facilitate effective cross-selling. For example, post-vaccination
periods see increased demand for immune-boosting supplements like multivitamins
Building on trust, customer satisfaction, and EHRs from
vaccination services, Long Chau's next step is entering the
diagnostics market
Vaccination procedure requires customers to complete How EHRs help doctors in
two mandatory steps to create Electronic Healthcare diagnostics?
Records: • Improve accuracy
1. Health screening: The doctor will perform a health screening to assess health condition.
• Facilitate quick access
2. Information sharing: Inform the doctor about
• Unify patient data
• Medical history, pre-existing conditions, and current medications
• History of allergies, allergic reactions to food or medication
• Predictive insights for prevention

High •demand
Vaccines
ofreceived
advancedwithintechnology,
the past month including EHRs:

• The Ministry of Health sets out targets to digitize the healthcare sector from 2019 to 2025, including
building a smart healthcare environment, introducing EHRs and electronic payments.
• Vietnam's digital health market is projected to reach $905.8 million by 2024, with a 7.71% CAGR
(2024-2028) leading to $1.219 billion by 2028. Key areas include Electronic Health Records (EHR),
telemedicine, AI for diagnosis, and smart wearables for health monitoring.
• Vietnamese labs adopt AI and ML to boost diagnostic precision. These technologies reduce errors by
analyzing large data volumes quickly, including EHRs.

So what? It is easy for Long Chau to enter this market with its strengths

• Vietnam's diagnostics market is fragmented, with many small labs using outdated tech. Companies offering scalable, advanced diagnostic
networks can potentially gain market share and attract investors, following trends in India and China.

• Opening one clinic costs $500,000, just 6.32% of Long Chau Pharmacy's $7.9 million EBITDA.

• With the advantages of AI and data analysis, FPT Corp can help Long Chau analyze the large number of EHRs for accuracy and
efficiency in diagnostics, saving time for doctors and patients and facilitating further treatments in hospitals.
Opportunities to capture the share of hospitals market,
starting from diagnostics sector
With strong focus on diagnostics, we can partly capture the share of other hospital-serviced providers and
resolve overcrowding issues
Private hospitals are mainly in large cities, often targeting high-end markets:
• While they handle only 6.3% of inpatient care, they provide 32.2% of outpatient services in major cities. Common private healthcare offerings include dental care,
diagnostics, and imaging services.
Waiting time is one of the top factors making customer dissatisfied:
• Departmental inefficiencies: Internal medicine departments were associated with longer waiting times, suggesting potential understaffing or process issues in these
areas.
• Time-consuming procedures: Undergoing blood tests significantly increased waiting times, indicating a need for streamlined diagnostic processes.

Why focusing on diagnostics is important than hospitals?

1. Advancements in precise, early detection and diagnosis of disease will serve to minimize treatment costs in hospitals
2. Today, the number of younger patients requiring cardiovascular intervention has risen sharply. Many of these patients suffer from severe complications, with some even
resulting in death. By 2045, over 6 million people aged 20-79 are expected to have diabetes, rising from 5 million (6% of population) to 7-8 million by 2025.
With its established brand reputation of trustworthiness and
transparency, hospitals will be the final market entry
When patients diagnosed as under diseases, hospitals will play as treatment place
• Non-communicable diseases (NCDs) account for 74% of total deaths in Vietnam. Heart disease is the leading cause of death in Vietnam, with over 200,000
annual deaths, surpassing cancer. Coronary artery disease and strokes are primary contributors. This figure has been increasing over the period, showing that
more people need long-term care in hospitals.

Long Chau can leverage the current partnership with IHH Healthcare specializing in treatment
of NCDs to hire foreign experts, delivering best treatments, this can also resolve some
challenges in Vietnam
• Workforce challenges: Brain drain impacts care quality. Emphasis needed on training, education, and retention through compensation and career opportunities.
• Foreign medical staffs: Vietnam faces healthcare distribution challenges, with only 30% of the population in cities. Vietnam increasingly relies on foreign doctors to
address these gaps.
• Knowledge exchange: Foreign medical practitioners enhance Vietnam's healthcare workforce by bringing specialized skills and knowledge.
Long Chau can capitalize on favorable conditions when it
later enters the hospital market
• The government has implemented favorable regulations to boost private sector
healthcare involvement. The 2024 Healthcare Master Plan aims for 35 hospital beds,
19 doctors, and 33 nurses per 10,000 people by 2030, with private hospitals targeting
a 15% share.
• Investment incentives for private healthcare include four-year tax exemptions and
50% reductions for the following nine years for new providers, leading to a rapid
increase in private hospitals.
Some established business models that are emerging trends
and appropriate for the Vietnamese healthcare market
Shop-in-shop and side-by-side: These can help optimize cost, revenue, intangible synergies.
Long Chau Pharmacy can establish vaccination centers and diagnostic clinics inside the pharmacy, so that the pharmacy can share facilities, human resources,
and products for cross-selling. This can help Long Chau Pharmacy can optimize revenue, costs, intangible synergies.
For example, Long Chau pharmacy, vaccination center, and diagnostic clinics can share the same rented space or lease additional space from the same
landlord, maximizing fixed assets, minimizing overall operational costs and boosting brand awareness. If landlords lack sufficient rental space, we can establish
additional centers and clinics in adjacent locations.
Revenue synergy:
Cost synergy:
Intangible synergy:

Remote and on-site diagnostics with subscription fee:

Real successful examples:
• K Hospitals from Japan: The K Hospital in Hanoi received a USD 110 million upgrade in 2017 (based on
Vietnam’s Ministry of Health). Recently, T-Matsuoka Medical Centre and Fujifilm Corporation from Japan
introduced AI technology to enhance early disease detection at a reasonable cost for Vietnamese people.
This partnership, supported by remote diagnostic experts, ensures efficient health checks, highlighting
foreign assistance in improving Vietnam’s healthcare system
• Amazon Pharmacy with One Medical:
Some established business models that are emerging trends
and appropriate for the Vietnamese healthcare market
Shop-in-shop and side-by-side: These can help optimize cost, revenue, intangible synergies.
Long Chau Pharmacy can establish vaccination centers and diagnostic clinics inside the pharmacy, so that the pharmacy can share facilities, human resources,
and products for cross-selling. This can help Long Chau Pharmacy can optimize revenue, costs, intangible synergies.
For example, Long Chau pharmacy, vaccination center, and diagnostic clinics can share the same rented space or lease additional space from the same
landlord, maximizing fixed assets, minimizing overall operational costs and boosting brand awareness. If landlords lack sufficient rental space, we can establish
additional centers and clinics in adjacent locations.
Revenue synergy:
Cost synergy:
Intangible synergy:

Remote and on-site diagnostics with subscription fee:

Real successful examples:
• K Hospitals from Japan: The K Hospital in Hanoi received a USD 110 million upgrade in 2017 (based on
Vietnam’s Ministry of Health). Recently, T-Matsuoka Medical Centre and Fujifilm Corporation from Japan
introduced AI technology to enhance early disease detection at a reasonable cost for Vietnamese people.
This partnership, supported by remote diagnostic experts, ensures efficient health checks, highlighting
foreign assistance in improving Vietnam’s healthcare system
• Amazon Pharmacy with One Medical:

Remote and on-site diagnostics with subscription fee (Omnichannel,

integrated care)? Digital?:
Real successful examples:
• K Hospitals from Japan:
• Amazon Pharmacy with One Medical:
Real Cases: K Hospitals, and Amazon Pharmacy with One
Medical
For remote diagnostics
• The government has invested in upgrading oncology centers. The K Hospital in Hanoi received a USD 110 million upgrade in 2017 (based on Vietnam’s
Ministry of Health). Recently, T-Matsuoka Medical Centre and Fujifilm Corporation from Japan introduced AI technology to enhance early disease detection at
a reasonable cost for Vietnamese people. This partnership, supported by remote diagnostic experts, ensures efficient health checks, highlighting foreign
assistance in improving Vietnam’s healthcare system (according to Vietnam Social Security Office).

For long-term care with subscription fee

• The government has invested in upgrading oncology centers. The K Hospital in Hanoi received a USD 110 million upgrade in 2017 (based on Vietnam’s
Ministry of Health). Recently, T-Matsuoka Medical Centre and Fujifilm Corporation from Japan introduced AI technology to enhance early disease detection at
a reasonable cost for Vietnamese people. This partnership, supported by remote diagnostic experts, ensures efficient health checks, highlighting foreign
assistance in improving Vietnam’s healthcare system (according to Vietnam Social Security Office).
THE PROJECT November 2024
DART
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