Legal reform can be key to pharma innovation bonanza

Phan Duc Hieu - Standing member National Assembly Economic Committee

The Ministry of Industry and Trade is currently developing the law on the advancement of spearhead industries and breakthrough technologies. This move, coupled with the existing pharmaceutical law, provides a legal framework that can help shape the future of the country’s industrial landscape.

However, it is crucial that the policies introduced align with the needs and wants of investors, rather than solely reflecting the government’s objectives. Many foreign investors prioritise aspects such as protection and risk management before considering tax incentives. Therefore, the government needs to ensure that these concerns are addressed in its legislative efforts.

I see that the competition within the region is fierce. While Vietnam has its advantages, other countries in the region have their own unique strengths as well. As such, the country needs to strategically position itself to compete more effectively. This will require a different and more potent approach to change.

Moreover, stronger multi-stakeholder collaboration is also needed. The government, private sector, and academic institutions must work together to create an environment that fosters growth and innovation. This opportunity should also be extended to Vietnamese enterprises, allowing them to play a more significant role in the country’s industrial development.

Nguyen Thi Bich Ngoc - Deputy Minister of Planning and Investment

In recent times, the Ministry of Planning and Investment (MPI) has worked with many large-scale pharma groups in Vietnam, and see that they are interested in developing a specialised industrial park for the pharmaceutical sector.

The MPI evaluates that it is a good idea because if we can develop specialised industrial clusters and parks for this industry, they will be a foundation to lure more capital inflow, creating momentum to take Vietnam to become a hub of the region in producing pharmaceuticals.

Based on this spirit, the MPI is looking forward to receiving opinions about the feasibility of these projects, as well as proposals relating to incentive mechanisms and policies.

Besides that, Vietnam’s pharma and healthcare sector has much potential for development, however, it has yet to match the potential as well as the government’s expectations. Thus, the MPI expects to listen to opinions from experts, investors, and manufacturers in order for the pharma sector to have better conditions to diversify the portfolio of pharmaceutical products, receive international technology, and lure in more investment.

Nguyen Manh Cuong - Deputy director Institute of Natural Products Chemistry Vietnam Academy of Science and Technology

The workforce is the most important resource that determines the success of innovation. In 2022, Vietnam ranked 48th in the global innovation index, and 60th in terms of training and full-time scientists.

Currently, Vietnam has two universities ranked at the top of the list for training human resources for innovation. This number is very modest compared to the rest of the world. The nation only invested 0.5 per cent of its total budget expenditure on technology R&D in 2019.

By 2025, the total national budget for science and technology investment will increase to 0.8-1.2 per cent. By 2030, the number will reach 1.2-1.5 per cent. It is clear that our investment is too low in this field. We do not have enough manpower and financial resources.

The government plays an essential role in promoting innovation. The state needs to come up with a comprehensive and synchronous policy with specific actions and criteria in a short time. Vietnam could set up an innovation-related government agency to guide specific policymaking. In particular, there needs to be a strategy to invest in life sciences and biotech to create new drugs, especially drugs using local medicine materials.

Ingo Brandenburg - Managing director Bayer Vietnam

Vietnam’s pharmaceutical market has significant potential. With a population of around 100 million, of which, people aged from 65 and over account for 11.9 per cent, the need for patient access to medicines is anticipated to grow at a stronger pace.

Considering the rising healthcare burden related to an ageing population, investing in innovative medicines and technologies has become more important than ever. Innovative medicines can put healthcare systems on a more sustainable path by reducing inefficiencies and costs, such as reducing hospitalisations, physician visits, or other expensive procedures and surgeries, as well as supporting the caregivers on the better treatment outcomes of patients who rely on them.

Additionally, further adoption of private supplemental health insurance can help ease the government’s budget constraints in the short- and mid-term. As an innovative pharmaceutical company operating in Vietnam, Bayer has taken many meaningful steps to help accelerate industry development and bridge the gap through expanded patient access support and collaboration initiatives. Collaboration of multidisciplinary stakeholders from public and private sectors is needed in improving access and adoption of innovative medicines.

At the same time, the government and healthcare systems play a crucial role in developing policies that can keep pace with innovation, enabling speedier approvals and timely access and adoption of innovative therapies and technologies. By working together, different stakeholders can jointly identify opportunities and remove barriers through innovative approaches to achieve the best outcomes for patients and society.

Bui Duc Hanh - Founder and CEO chothuoctot.vn

The challenges faced by the local pharmaceutical industry here in Vietnam include the ability to access loans, impediments with relevant legal systems, and high transportation costs.

To remove difficulties and create conditions for pharmaceutical businesses, the state should encourage and give incentives to projects on digital transformation for the entire industry.

The projects will help bolster competitiveness of local pharmaceutical firms as well as help reduce drug costs for users as currently, the cost of using drugs for patients is very high over the production costs.

Our desire is that leveraging current technology platforms, our business in companion with our partners helps create an ecosystem in the healthcare industry where patients can easily access the system, and receive more dedicated care at the best cost.

Luke Treloar - Head of Strategy KPMG Vietnam

In a recent KPMG report, we looked at what could be the social, economic, and industrial value of a productive, innovative life sciences sector in Vietnam. We looked at how other countries have developed around the world, take comparable models, and then make policy recommendations for what it could do to reach those goals.

We looked at things like intellectual property rights development, localisation of technology, and encouragement of technology localisation through incentives to tax incentives, some countries give direct cash incentives for localisation of technology. Furthermore, we provide three case studies of exciting markets like Ireland, South Korea, and Singapore of how those three markets became life sciences hubs.

Each of those markets uses different policies. South Korea uses governments and academic partnerships to form ecosystems and develop their industry, Singapore used infrastructure, developing perfect, cheap, and widely available infrastructure for the life sciences sector. And Ireland uses tax reductions to draw in intellectual properties.

Vietnam most certainly can become a life sciences hub for Southeast Asia. We recently conducted a lot of research looking into how it could do that, and where it should focus. But Vietnam is not alone and neighbours other countries that are highly competitive and motivated to become a life science hub for Southeast Asia.

We have identified three key areas that Vietnam should explore in more detail. The first one is the localisation of manufacturing of life sciences, the second is digital health, and the third is the localisation of research and development (R&D) into Vietnam started in clinical trials. There are numerous opportunities in Vietnam to localise clinical trials.

The global pharmaceutical industry has spent $1 trillion on R&D for their industry. If just a fraction of that value were localised to Vietnam, it could have retable benefits to the domestic economy.

Furthermore, the global pharmaceutical industry spends $1 trillion on developing intellectual property. If a company can’t protect its intellectual property, it’s not going to make an investment. Vietnam needs to put intellectual property at the core of its industry; otherwise, the industry won’t develop. As we’ve seen in other countries like South Korea or Singapore that once had challenges with their intellectual property, domestic companies also develop intellectual property becomes a much more imperative matter.