Further expectations about legal changes for FIEs

How can the draft amended Law on Pharmacy make impacts on foreign-invested enterprises (FIEs) operations in Vietnam?

Darrell Oh, chairman of the Pharma Group

The significant progress for FIEs under the Law on Pharmacy (LoP) and its guiding regulations cannot be denied. These provisions enabled multinational pharmaceutical companies that have been in Vietnam for decades to further their commitments and footprint by establishing legal entities as FIEs, transitioning from representative office models.

For Pharma Group’s 21 members, innovative pharmaceutical companies from Europe, the US, and Japan, the current law enabled us to invest in the FIE model and directly import medicines our members researched, developed, and manufactured to supply to the Vietnamese market.

After operating this new model for several years, we observed multiple challenges and inefficiencies, which highlight the need for improvements in the legal framework, especially to enable partnerships with local partners in areas like technology transfer and clinical trials.

The LoP 2016 is also very comprehensive, with strict regulations covering various aspects of the sector. This aligns with international commitments and has helped to ensure the quality and safety of medicines for patients. On the other hand, there are still significant administrative burdens, especially for the registration and maintenance of medicines’ marketing authorisations validity, which result in delays and hinder patient access to new medicines and vaccines.

The industry has high expectations for the revised LoP, expecting it to not only address these bottlenecks but also accelerate approval times for new medicines and vaccines, and drive breakthroughs in the development of the pharmaceutical sector. We support the new policies included in the draft amendments to the LoP. It is clear that the drafting committee has put considerable effort in researching, assessing impacts and considering stakeholders’ recommendations over the past many months. Significant improvements such as simplification of marketing authorisation (MA) renewal to ensure supply continuity, regulatory reliance to speed up patient access to new medicines, and additional incentives to attract investments in the sector, are overall very positive.

What further expectations does the industry have for the revised LoP?

We support the revised LoP and remain optimistic about its positive progress and timely ratification in 2024. The drug registration provisions taking effect from 2025 are particularly exciting and critical for us.

With thousands of MAs of essential medicines and vaccines expiring by the end of 2024, a well-aligned implementation plan for applying the new MA renewal provisions is crucial to ensure our organisations are able to maintain supply to patients.

This plan should be established in advance and requires collaboration among all stakeholders, including the Ministry of Health, relevant agencies such as customs, and businesses. Multinational companies also need to plan for supply allocation, manufacturing, and importation to Vietnam six months or more in advance. Such preparedness will mitigate potential disruptions to drug supply during the transition period.

We acknowledge the positive changes to gradually expand the rights of FIEs. Regarding the responsibilities of FIEs, to thoroughly resolve the practical difficulties today, we hope to continue accompanying the drafting committee in the process of completing the draft law to ensure the language is clear, easy to understand, and easy to implement.

Besides that, the draft law is packed with exciting incentives to boost sector development. To make these a reality for investors, clear regulations in guiding documents will be crucial. This will provide the predictability needed for current projects and send a clearer, more positive signal to potential investors, both domestic and foreign.

The revised LoP is expected to catalyse the development of Vietnam’s pharmaceutical industry towards a high-value orientation. From the innovative pharma industry’s perspective, what are the key factors driving this aspiration?

In today’s globalised world, besides ensuring a stable, secured supply of medicines, countries are competing to be an integral part of the global supply chain. Vietnam also has ambitious goals for the pharmaceutical sector, and a great opportunity via the LoP revision to position the country as a key player in the global pharmaceutical landscape.

The draft LoP introduces a range of incentives such as prioritisation for drug registration, inclusion in the national drug reimbursement list, and taxation to draw in investment in various areas, including research and development and local manufacturing.

To fully integrate into the global pharmaceutical value chain, we need to strategically target and prioritise specific stages within the product life cycle that offer significant value to the economy, creating new jobs, accelerate innovation, and improve patient care.

These could include Phase 3 and Phase 2 clinical trials, or technology transfer of innovative drugs, vaccines, and biologics. We are eager to see more specific, special incentives for these high-value-added investment in guiding regulations.

As a long-standing partner in Vietnam’s pharmaceutical sector for over 25 years, we stand ready to contribute our expertise to support pharmaceutical industry development, towards the effective implementation of these policies.

The LoP revision this year and its guiding regulations provide a fantastic opportunity to create breakthroughs in policies that propel Vietnam’s pharmaceutical industry forward. Ultimately, this will enhance patient access to high-quality medicines and vaccines, contributing to Vietnam’s social and economic growth.

Potential FIE impacts through Law on Pharmacy adjustments The newest amendment draft of the Law on Pharmacy (LoP), proposing changes to 44 out of 116 articles from the current law, has been published for feedback and is expected to be adopted soon.