Vietnam’s pharmaceutical industry: a lesson from Golden Star balm

It is interesting to see that Golden Star balm (Cao Sao Vang), a product usually associated with the pre-Doi Moi period, has become a smash hit in nearly 20 countries around the world.

Vietnam’s pharmaceutical industry has yet to take advantage of its existing manufacturing facilities.
Vietnam’s pharmaceutical industry has yet to take advantage of its existing manufacturing facilities.

This Vietnamese-made ointment has a special history and can provide a useful example for the pharmaceutical industry and other businesses in Vietnam.

‘Out of stock’ and similar phrases are the messages usually displayed on famous online retailers such as eBay and Amazon, as well as online pharmaceutical shops in many countries such as the UK, the US and Australia when users search for Golden Star balm.

Research and production of this product began post-1954. This small balm tin became indispensable for many Vietnamese people and one of Vietnam’s key exports to the former Soviet Union and many countries in Eastern Europe. But after the Eastern bloc collapsed, Golden Star balm also virtually disappeared, even in the domestic market.

But since 2013, this Vietnamese-made cream has been selling like hot cakes in many countries at a price of around VND40,000 a tin, excluding shipping fees.

The story of Golden Star balm is nothing particular as more and more companies are exporting products made of natural ingredients employing traditional Vietnamese medicine methods.

The journey of the Golden Star balm tin reminds us of how Thomas Friedman got his inspiration to write about globalisation in his 1999 book ‘The Lexus and the Olive Tree’. He once heard a Japanese girl who arrived in Los Angeles, look around and said to her mother: ''Look, mom, they have McDonald's here too.'' The famous American journalist and columnist was startled and began to look for the most satisfying answer possible for what is the position of each individual and country in a globalised world.

Golden Star balm

The Golden Star balm maker saw success returning to the market because they had promoted their product in a way that retained the Vietnamese identity, while still meeting the demand of the widely varied world consumption. But it’s not all success and there is still room for improvement. Foreign consumers were very interested in the portable size of the balm tin and its attractive label but on the contrary found it very difficult to open it. This led to a bigger story. If domestic enterprises want to compete globally, they have to put more efforts into product design, in addition to quality.
Can Vietnam’s pharmaceutical industry, which experts say will be significantly affected in a negative way by trade agreements, find its own path and pull through like how the Golden Star balm tin positioned itself? And can Vietnam fare well in a niche market and become a producer and exporter of macrobiotic and functional food made of natural ingredients? This can only happen when the entire policy system takes action.

Vietnam adopted the Law on Pharmacy in 2005 but after ten years, it is no exaggeration to compare the pharmaceutical industry to a man limping on crutches. When debating amendments to the Law on Pharmacy, many National Assembly deputies expressed the need to change the mechanism to remove the obstacles to development.

Vietnam has up to 180 pharmaceutical plants, of which more than two thirds meet global manufacturing practices but only run at half of their capacity. Medicinal herbs are also diverse and plentiful but Vietnam has yet to be able to answer the questions of which segment of pharmaceutical products to focus on and which type of medicinal herbs to prioritise. It is not feasible to employ a strategy known as “jackfruit” under which all sectors are priority sectors, much the same as all the prickles on the jackfruit’s skin. It is also not sensible to imitate what other countries are doing. A new law is being drawn up and whether Vietnam’s pharmaceutical industry will be make or break remains a question.