Predictability being created for foreign investment in pharma

January 20, 2025 | 10:00
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The amended Law on Pharmacy is a significant step in modernising Vietnam’s drug regulatory system and will positively affect the nation’s pharmaceutical industry.

The amended law has simplified procedures for issuing drug registration certificates to improve timely access of medicines while still ensuring quality, safety, and efficacy, in line with international standards. Specifically, the amendments reduce the number of documents required for the renewal, modification, or supplementing of drug registration certificates and active pharmaceutical ingredient registrations.

Predictability being created for foreign investment in pharma
Bui Thi Viet Lam, country representative, USABC

Additionally, the revised law allows for the continued use of such certificates after expiration, provided that the application for renewal has been submitted as per regulation, until the certificate is renewed or the Ministry of Health (MoH) issues a relevant notice. This provision ensures the continuous supply of medicines and active pharmaceutical ingredients to the market, helping to prevent disruptions in supply chains.

It also eliminates the requirement for the dossier evaluation and consultation by the Advisory Council when processing the issuance of drug registration certificates and active ingredient registrations. Streamlining the procedures will help businesses quickly bring products to market, save time and costs, increase operational efficiency, and free up resources for investment in other areas.

The new law has explicitly defined the rights and responsibilities of foreign-invested enterprises (FIEs) within the law itself, ensuring greater transparency and clarity in state management. Before the official amendment of the Law on Pharmacy 2016, the business rights of FIEs were primarily governed by subordinate legal documents, which resulted in a lack of stability and transparency.

FIEs’ rights to distribute medicines and pharmaceutical ingredients were also limited, making it difficult for them to deeply integrate into the domestic supply chain and reducing their incentives to invest in local production.

The recognition and expansion of FIEs’ rights in the revised law, therefore, should be seen as a significant step forward for the domestic legal framework in the industry, marking an important shift towards a more open and predictable environment for foreign investment.

The council and our member companies welcomed the amended law. We appreciate the commitment and efforts made by the Vietnamese government, especially the Ministry of Health, in modernising its drug regulatory system and ensuring the development of the pharmaceutical industry.

We believe the amended will fasten the drug registration process that has been acting as a barrier to access to new medicines and partnerships with global companies. As many pointed out, with the previous procedures, it could take years for a new medicine approved in Europe or the US to be available in Vietnam. These delays discourage global partners from seeking to introduce new products to Vietnam, as they will prefer countries that allow them to access the market faster.

That said, the amended law serves as an encouragement for our member companies to expand their operation in Vietnam. They all consider Vietnam one of the most important markets in ASEAN countries.

The amended also provides important incentives for FIEs and our member companies to implement long-term projects. For example, the amendments allow FIEs to directly distribute medicines that they produce, contract manufacture, or transfer technology in Vietnam. The expansion of FIEs’ distribution rights, though still not comprehensive, is crucial in motivating FIEs to invest in the industry.

The amendments reflect alignment with the demands of international integration and development, particularly in terms of encouraging foreign investment and enhancing competitiveness. Most notably, the revised law accepts the reference mechanism in the pharmaceutical industry, which has been a standard international practice.

Specifically, the amendment mentions that when drug registration uses the reference results of a registration dossier appraised by other authorities (including Stringent Regulatory Authorities and those recognised by the MoH based on World Health Organization classification), the appraisal period will be nine months. In comparison, it is 12 months for a normal dossier.

The legalisation of the scope of business activities for foreign-invested pharma enterprises in the Vietnamese market marks a significant step forward, creating a more transparent and stable environment. However, some limitations remain, such as the fact that the distribution rights of FIEs have not been fully expanded, administrative procedures are still complex, and there is a lack of supportive policies for domestic enterprises to compete fairly with FIEs.

To achieve long-term goals, improvement of legal regulations is necessary, including streamlining administrative procedures and developing mechanisms to support domestic enterprises without undermining the rights of FIEs. At the same time, it is essential to strengthen collaboration between domestic companies and FIEs to optimise the benefits of foreign investment, contributing to the development of a modern, sustainable, and competitive pharmaceutical industry in Vietnam.

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By Bui Thi Viet Lam

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