The document discusses recent Vietnamese laws and regulations regarding the pharmaceutical industry and their impact on foreign invested enterprises (FIEs). Key points include: 1. FIEs can manufacture drugs domestically through new enterprises, joint ventures, or contracts but domestic products are prioritized in government tenders. 2. FIEs can import drugs but are restricted to selling only to wholesalers. Wholesalers must be able to distribute products without FIE involvement. 3. The new decree prohibits various distribution activities by FIEs like selling directly to retailers. FIEs with past licenses for restricted activities will need to change their business objectives.

1. Vietnamese pharmaceutical Law and regulations
FIEs impact
Law on Pharmacy 2016 come in force on 01 Jan 2017 (Law);
Decree No. 54/2017/ND-CP come in force on 01 july 2017 (new Degree).
Foreign investment Enterprises (FIEs) relating:
1. Manufacturing
Foreign investors have right to establish new enterprise, 100% foreign owner or
joint venture or through business cooperation contract, to do business in
manufacturing drugs/medicine ingredients.
The Law and new Degree clearly shows that national prioritizes the purchase of
domestically produced products also a prefer treatment for domestic produced
drugs than imported drugs. When domestic drugs satisfy Ministry of Health (MoH)
requirements on medical treatment, price, and supply, the tender organisations are
not allowed to offer imported drugs. That is, the foreign investor should consider to
the option of being “local”.
For licensing, manufacturers must have the premises, factory, laboratory, storage
of drugs/medicinal ingredients, auxiliary systems, equipment, machinery for
manufacture, testing, storage of drugs, quality control system, technical documents
and personnel meeting Good Manufacture Practice (GMP) requirements;
Manufacture of drugs as soon as the patent expires, vaccines, biologicals, herbal
ingredients, herbal drugs, traditional drugs, rare drugs, the manufacturers shall
receive prioritized policy complying with law of investment and others regulation

2. Vietnamese pharmaceutical Law and regulations
FIEs impact
as: (i) newly set up enterprises operating in healthcare are entitled to tax exemption
for no more than four years and a 50% reduction of payable tax amounts for no
more than nine subsequent years; (ii) Five years exemption from import duties on
raw materials, supplies and components.
2. Importing bussiness
FIEs are allowed to directly import pharmaceutical products but not allowed to
distribute pharmaceutical products. According Law and new Degree, the FIEs with
import right are allowed to sell importing products to wholesalers only. New
Degree requires that wholesalers must have capacity to directly organise the
distribution of products purchased from FIEs with no intervention from or control
by seller.
Looking to another regulation of Ministry of Industry and Trade, FIEs already
licensed for right to import but not yet licensed for right to distribute are entitled to
directly sell import products for Vietnamese traders having business registration or
right to export, right to distribute such products.
In present, that mean wholesalers purchasing drugs from FIEs having import right
must not have some technical requirements of MoH as equipment, infrastructure,
personnel, GSP. A new set up FIEs with importing business may wait for a new
guideline or a directly official document from MoH.
Due to continuing policy focus on control and protection domestic pharmaceutical
industry, a new guideline for FIEs import right shall have tend unclear or more
tightly.

3. Vietnamese pharmaceutical Law and regulations
FIEs impact
3. New regulation has been continue narrowing the door for FIEs to
approach domestic pharmaceutical market.
Therefore, importantly the new Degree prohibits FIEs conducting any activities
which are considerable to influence to distribution activities:
Selling drugs to, or accepting purchase orders of, drug retailers/pharmacies,
hospitals and clinics and other organisations or individuals which are not
wholesalers;
Transportation of drugs and provision of drugs storage services;
Determining or fixing the sale prices of drugs distributed by other companies;
Deciding the distribution strategy or business policy or drugs distributed by other
companies;
Making drugs supply plans for hospitals and clinics in Vietnam;
Providing financial support to it purchasers in order to control or intervene in their
distribution activities;
Conducting other activities related to drug distribution.
In the past, to approach retail market, FIEs registered to business transportation of
drugs and provision storage services then entrusted import to Vietnamese
pharmacy companies. With current regulation, FIEs might look for other legal
ways to join market.
FIEs reached license for Transportation of drugs and provision of drugs storage
services before this rule shall have to do procedure to chance project objective
following investment regulations.

4. Vietnamese pharmaceutical Law and regulations
FIEs impact
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Information given in this article based on Vietnamese current Law and regulation
and made by my own subjective judgment. However, I am not assured of its
accurating and sufficient.
Whom concerning to use this above information is responsible to his determining.
Vu Thi Thinh
Trainee Lawyer
0985.992.472
thinh.vuthi123@gmail.com