Upcoming draft report puts pressure on Zuellig

The Ministry of Health has been in talks with Zuellig over suspicious activities, Photo: Le Toan

A source from the Ministry of Health (MoH) told VIR that they are close to completing a draft report on the case following a number of meetings with Zuellig Pharma Vietnam (ZPV), a unit of Zuellig Pharma, Asia’s leading provider of healthcare services.

“The next steps could be made in the upcoming days,” the source said.

ZPV is one of several foreign-invested enterprises (FIEs) who are being inspected by the MoH’s over possible violations.

Although no conclusions have been reached yet, strict punishments for violators are expected to be handed out in order to deter others who could be planning to do the same.

Nguyen Huy Quang, director of the MoH’s Legal Department, once stated that FIEs who use clandestine activities to illegally distribute drugs in Vietnam would be strictly punished.

The MoH’s Drug Administration of Vietnam (DAV) raised concerns in a recently released document over the illegal distribution of drugs through such activities by FIEs, which could cause problems for local patients.

“Some FIEs investing in storage facilities and drug preserving services in Vietnam took advantage of the warehousing and logistics systems to illegally distribute pharmaceuticals and benefit from it. ZPV is a prime example. The company registered to do business in drug preserving services, but now holds a major market share in the distribution of imported drugs in Vietnam,” the DAV previously stated.

With the country’s total spending on pharmaceuticals per capita rising by 10.6 per cent on-year to $53.54, the nation’s drug market is growing increasingly attractive to multinationals. More FIEs are seeking business opportunities to cash in on the growing local demand and to be in a position to benefit from the EU-Vietnam Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

In order to get over statutory restrictions on foreign ownership limits in the pharmaceutical distribution business, foreign pharmaceutical companies can follow a double-holding structure or multi-layer structure to invest in drug distribution.

Established in Vietnam in 1999, ZPV has become a national success story.

Marketwatch said that alongside DKSH, Zuellig dominates drug distribution in emerging Asian markets. For decades, the two have been major distributors for large pharmaceutical producers in the region. They have both built up workforces with thousands of employees and together rake in $15 billion in sales annually from the pharma industry.