Can Foreign Owned Company Distribute Pharmaceuticals in Vietnam? 3 Questions!

With the complex developments of the Covid-19 pandemic worldwide and in Vietnam specifically, the research, production, importation, and distribution of Covid-19 vaccines have become topics of great interest for everyone. Beyond domestic companies, foreign companies are also interested in the process to import, transport and to distribute pharmaceuticals in Vietnam.

Can a Foreign-Invested Company Distribute Pharmaceuticals in Vietnam?

Currently, Vietnam law restricts foreign-invested enterprises to distribute pharmaceuticals in Vietnam. Vietnam has reserved the right not to commit to opening the market for drug distribution services and has not committed to doing so under any trade agreements or international conventions up to the present moment because the pharmaceutical sector is sensitive and directly related to people’s access to medicines and public health.

What Does Pharmaceutical Distribution in Vietnam Entail?

According to regulations, pharmaceutical distribution involves the division, movement, and storage of drugs during transportation from the manufacturing facility, imported drugs, or from the distribution center to users or between distribution points, using various means of transportation. Concerning distribution services, the WTO Commitment Schedule explicitly excludes pharmaceutical distribution in Vietnam from its coverage for all supply methods.

Additionally, Appendix 03 to Circular No. 24/2013/TT-BCT announcing the roadmap for implementing trading activities and activities directly related to trading goods by foreign-invested enterprises in Vietnam notes that pharmaceuticals are in the list of goods not allowed for distribution.

How Does Pharmaceutical Distribution in Vietnam Differ from Storage and Transportation of Pharmaceuticals in Vietnam?

Regarding this matter, the Drug Administration expressed the following viewpoint: “The suspension of allowing foreign-invested enterprises in Vietnam to provide drug storage and transportation services aims to prevent the operation of counterfeit drug distribution in Vietnam, contribute to ensuring public health security, and move towards professionalizing the drug distribution system in Vietnam.”

Clause 10, Article 91 of Decree No. 54/2017/ND-CP, effective from May 8, 2017, specifies cases where entities are not allowed to distribute pharmaceuticals in Vietnam:

“10. Facilities with the right to import but are not allowed to exercise the right to distribute drugs and drug materials in Vietnam shall not perform activities directly related to the distribution of drugs and drug materials in Vietnam, except for drugs and drug materials produced by the facility itself in Vietnam, including:

c) Transportation, receipt, and storage of drugs and drug materials.”

According to this content, foreign-invested enterprises in Vietnam are not allowed to transport and store drugs, except for drugs and drug materials produced by the enterprise itself in Vietnam.

It can be seen that restricting the right to distribute drugs for foreign-invested enterprises aims to ensure health security, proactively supply and distribute drugs, work towards professionalizing the domestic drug distribution system, and contribute to better control of drug prices in the market.

Some Information and Opportunities to Distribute Pharmaceuticals in Vietnam

What Makes Pharmaceutical Market in Vietnam Attractive and How Foreign Companies Could Cooperate with Local Entities to Distribute Pharmaceuticals in Vietnam?

The pharmaceutical market in Vietnam has been experiencing significant growth and presents several opportunities that make it attractive for foreign companies to cooperate with local entities to distribute pharmaceuticals in Vietnam. Here are some key aspects of the pharmaceutical market in Vietnam and the factors that contribute to its attractiveness:

1. Rapid Market Growth

Vietnam’s pharmaceutical market has been growing rapidly, driven by factors such as an increasing population, rising income levels, and improved healthcare awareness. The demand for a wide range of pharmaceutical products is on the rise, creating opportunities for companies to enter and expand in the market.

2. Increasing Healthcare Spending

The Vietnamese government has been increasing its investment in healthcare, leading to higher healthcare spending. This includes investments in healthcare infrastructure, facilities, and services. As a result, there is a growing demand for pharmaceuticals to meet the healthcare needs of the population.

3. Disease Patterns and Aging Population

The prevalence of chronic diseases is increasing in Vietnam, attributed to changing lifestyles and an aging population. This has led to a higher demand for pharmaceuticals, including those for the management of chronic conditions, creating a favorable market for various drug categories.

4. Government Initiatives

The Vietnamese government has been implementing initiatives to enhance the pharmaceutical sector, including policies to encourage research and development, investment incentives, and efforts to improve the regulatory environment. These initiatives create a more favorable and supportive ecosystem for pharmaceutical companies.

5. Foreign Direct Investment (FDI) Policies

Vietnam has been actively attracting foreign direct investment, and pharmaceuticals are among the sectors that welcome foreign investment. The government’s openness to foreign investment creates opportunities for international pharmaceutical companies to establish a presence in Vietnam, through setting up company in Vietnam.

6. Changing Regulatory Landscape

The regulatory environment for pharmaceuticals in Vietnam has been evolving to align with international standards. Efforts to streamline registration processes, enhance intellectual property protection, and improve overall regulatory efficiency contribute to a more attractive environment for foreign companies.

7. Consumer Preferences and Demand for Quality

As consumer awareness regarding healthcare and product quality increases, there is a growing demand for high-quality pharmaceutical products. Foreign companies with established reputations for producing safe and effective medications are well-positioned to meet this demand.

8. Strategic Alliances and Partnerships

Collaborations between foreign pharmaceutical companies and local entities, such as partnerships with Vietnamese pharmaceutical manufacturers or distributors, can be strategic in navigating the local market and complying with regulatory requirements.

In conclusion, the pharmaceutical market in Vietnam is attractive for foreign companies due to its growth potential, government support, changing demographics, and evolving regulatory landscape. The increasing demand for high-quality healthcare products and the openness to foreign investment create opportunities for companies looking to enter or expand their presence in the Vietnamese pharmaceutical market.

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