EU pharmaceuticals find appetite with trade deal

European pharmaceuticals are growing more interested in the Vietnamese market, Photo: Le Toan

There have been positive legal reforms to attract foreign direct investment (FDI), leading to strong interest from foreign pharmaceutical companies to further invest in ­Vietnam. The momentum of 2018 will undoubtedly carry on to 2019. Decree 54 and Decree 155 have set up a much clearer framework for Pharma Group members who research and manufacture medicine to ­establish legal entities as ­foreign-invested importers. Some of our members may also make progress on their ­manufacturing plans. Other ­investments like clinical ­research, medical education, and corporate social responsibility will continue as before.

This presents Vietnam with an opportunity to develop a high-value, modern, and self-sustaining healthcare sector. Pharma Group has been ­actively working on several projects aiming to support the Vietnamese government in ­facilitating both direct and ­indirect investment in the ­sector.

One key example is an ongoing study that aims to clarify the clinical, societal, and economical value that the innovative pharmaceutical industry can bring to Vietnam, setting the ground to develop a roadmap enabling Vietnam to become a regional hub for innovative pharmaceutical manufacturing and quality healthcare provision.

Pharma Group welcomes collaboration with stakeholders and experts on this study as well as other fact-based studies to provide concrete data to ­support the government’s ­continued development of ­policies that further incentivise FDI and partnership between foreign and local industry.

Regional hub for innovative manufacturing operations

Our society is facing tremendous healthcare ­challenges, with the incidence of chronic diseases predicted to continue to increase. The ­question is how pharmaceutical companies can help patients who today do not have access to treatment for certain ­diseases. The answer to this is clearly innovation – developing products to help address the unmet medical needs of these patients. Innovative medicines help patients live longer, healthier, and more productive lives.

The innovative pharmaceutical industry is by far the largest investor in research and development (R&D) to address the current and future ­healthcare needs of the ­population. Besides the focus on innovating new drugs, Pharma Group members ­contribute positively to ­technology and knowledge transfer to Vietnam directly through clinical studies, ­continuous medical education, process manufacturing, and ­especially technology transfer to locally manufacture ­innovative drugs.

Importantly, the healthcare sector as a whole is also ­changing. Drug is only one part of the medical solutions needed to treat patients and improve the management of patients, particularly those suffering from chronic diseases.

Pharma solutions are also changing, as the pharmaceutical sector’s value proposition turns from delivering drugs to delivering disease management solutions with drugs and ­beyond. This is a very strong trend in all countries. The ­presence of a strong R&D pharma sector made of Pharma Group companies in Vietnam is essential for the country to be leading these changes. ­Additionally, these changes need an ecosystem around pharma – connected health and digital health, where R&D will play a key role, directly and ­indirectly.

The Ministry of Health has been making efforts to develop legislation that improves ­patient access to innovative medicines and enables foreign companies to establish legal ­entities in Vietnam as foreign-invested enterprises (FIEs). With the recent enabling of ­establishing FIEs in the ­pharmaceutical sector, Pharma Group anticipates an increase of such activities in 2019 and in the near future.

As the Vietnamese healthcare system continues to grow, it is vital to find ways to go ­forward. One way is through public-private partnerships (PPPs). Attracting resources via PPP is a good solution to ­promote the development of the healthcare sector, build ­capabilities, and enable a ­sustainable healthcare financing system. Together with the private sector, the Vietnamese government has invested strongly in infrastructure and health services.

The increase in public and private investment into ­healthcare in turn boosts the pharmaceutical sector, opening up opportunities for global companies as well as local ­partners. Through PPPs in healthcare, financial resources will be mobilised. It will ­leverage experience, expertise, and services management and delivery models from the ­private sector, so that the ­government and private parties can work together to provide quality medical and healthcare services from the central to local level, meeting the public’s needs and expectations.

Having said that, there are in fact a number of challenges in attracting private investment in healthcare: the lack of ­specific regulations, inadequate healthcare resources, and ­autonomy regulations with room for improvement, to name but a few. In particular, when it comes to PPP ­implementation, there is a strong need to increase the number of experts and ­experienced practitioners. There are still limitations with medical service pricing and ­insurance reimbursement. PPP models are largely concentrated in infrastructure and hospital investment, with limited PPPs in capability building, service delivery, and/or local and primary healthcare provision. Pharma Group is looking ­forward to a legal framework that flexibly enables ­service-based PPPs in upcoming ­legislations.

FTA brings ­opportunities

In anticipation of the EVFTA ratification, the ­industry continues to see very positive developments in ­Vietnamese regulations that are in line with many commitments in the EU-Vietnam Free Trade Agreement (EVFTA). Guiding legislations under the Law on Pharmacy 2016 are expected to enable faster and broader ­access to innovative medicines for Vietnamese patients and provide a sustainable legal framework for foreign pharmaceutical companies to operate and further invest in Vietnam.

Pharma Group applauds the continued efforts of the government to develop an attractive investment environment and a top-tier healthcare system for Vietnamese patients, and we remain committed to support the effective and smooth implementation of new regulations.

Vietnam has experienced rapid economic and social transformation over the past years, alongside integration into the global economy. As a fast growing ASEAN economy, Vietnam holds substantial ­potential for international ­companies.

The EVFTA and The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) are therefore widely celebrated by the pharmaceutical industry as they support fair and equal access to the market. Thanks to these trade agreements and Vietnam’s new regulations, foreign companies are establishing legal entities and become long-term partners in Vietnam, therefore, we expect robust future growth. We also expect that those local companies that are ready to partner with Pharma Group members will grow in tandem, whether as suppliers or partners, whether in manufacturing or supply-chain, in line with Vietnam regulations.

Moreover, based on Vietnam’s goal of universal healthcare coverage, increasing incomes, and quality of care, we expect all categories of medicines to grow, including high-quality generics and innovative medicines. Growth momentum is likely to continue for Pharma Group members, since they continue to bring ­innovative medicines that ­enable new treatment options, including cures and vaccines for hitherto difficult to treat or ­untreated diseases.

Moreover, the volume share of Pharma Group members in the public hospital channel is currently only around 4 per cent, which is lower than in most ASEAN countries and global benchmarks.