Conditions for foreign-invested enterprises to manufacture and distribute drugs in Viet Nam

In the last 8 to 10 years, Vietnam’s pharmaceutical industry has become one of the highest growth markets in the region thanks to increasing economic growth, rising income per capita, and an aging population. Vietnam’s pharmaceutical market was valued at around USD 7.7 billion in 2021 and this figure may reach USD 16.1 billion by 2026 (according to the market research of IBM). As a result, Vietnam’s pharmaceutical industry offers a promising market for foreign investment in drug manufacturing and distribution.

Vietnamese law strictly regulates the conditions that foreign-invested enterprises (“FIEs”) must comply in order to manufacture and distribute drugs in Vietnam, specifically as follows:

 

  1. Conditions for FIEs to manufacture drugs in Vietnam

In order to conduct the manufacture of drugs in Vietnam, FIEs must comply with the following conditions:

  • Obtaining the Certificate of Eligibility for Pharmaceutical Business (“CEFB”) for drug manufacturing 

Pursuant to Law on Pharmacy 2016, to obtain the CEPB for drug manufacturing, FIE manufacturing establishments must meet the following requirements:

  • Requirements on infrastructure, technology and personnel

Having premises, factory, laboratory, storage of drugs, auxiliary systems, equipment, machinery for manufacture, testing, storage of drugs, quality control system, technical documents and personnel that satisfy the criteria in the Good Manufacturing Practice standard.

  • Requirements on Pharmaceutical Practice Certificate:

The pharmaceutical professional managers and quality assurance managers must have the appropriate Pharmaceutical Practice Certificates required for the manufacturing establishment.

  • Obtaining the GMP Certificate

Pursuant to Circular No. 35/2018/TT-BYT stipulating good manufacturing practices for drugs and medicinal ingredients (“Circular 35”), Good Manufacturing Practice (“GMP”) is a set of principles and standards for manufacture of drugs, medicinal ingredients to ensure that drugs and medicinal ingredients are consistently manufactured and controlled to the quality standards appropriate to their intended use and as required by the certificate of drugs and medicinal ingredients registration.

The application dossier for the CEPB for drug manufacturing is also the basis for valuation of GMP compliance. Thus, the GMP Certificate will be granted to the FIE concurrently with the CEPB for drug manufacturing.

 

  1. Conditions for FIEs to distribute drugs in Vietnam

Pursuant to Circular No. 03/2018/TT-BYT on Good Distribution Practice for drugs and medicinal ingredients (“Circular 03”), “drug distribution” means the division, transportation and storage of drugs from the warehouse of the drug manufacturing and importing facilities or from distribution facilities to the end user or to a distribution point or between distribution points by means of various transport methods.

Regarding distribution service, Vietnam’s WTO Commitments on Services have stipulated that distribution services for pharmaceutical products and drugs are excluded from the commitments for all means of supply. Additionally, Appendix 03 of Circular No. 34/2013/TT-BCT publicizing roadmaps for goods trading and directly related activities of FIEs in Vietnam (“Circular 34”) also classifies pharmaceutical products in the list of goods which are not allowed to exercise distribution rights for FIEs.

Pursuant to Decree No. 54/2017/ND-CP on providing guidelines for implementation of the Law on Pharmacy (“Decree 54”), FIE importers not entitled to exercise drug distribution rights in Vietnam are not allowed to conduct activities directly related to drugs distribution, except for the following cases:

(i)  FIEs distribute drugs manufactured by themself; or

(ii) FIEs importing drugs into Vietnam is allowed to distribute to drug wholesalers, but not to health facilities, retailers, individuals, organizations other than drug wholesalers. 

Consequently, to distribute drugs in Vietnam in accordance with above regulations, FIEs must comply with the following conditions:

(a)  Conditions for distributing self-manufactured drugs

  • For wholesale activities

FIE wholesalers must obtain CEPB in wholesale distribution of drugs. 

Pursuant to Law on Pharmacy 2016, to obtain CEPB for wholesale distribution, FIE wholesalers must meet the following requirements:

  • Requirements on infrastructure, technology and personnel:

Having premises, drug storage warehouse, preservation equipment, means of transportation, quality control system, technical documents and personnel that satisfy the criteria in Good Distribution Practice (“GDP”) standard.

  • Requirements on Pharmaceutical Practice Certificate:

The pharmaceutical professional managers must have the appropriate Pharmaceutical Practice Certificates required for the drug wholesalers.

  • For retail activities

FIE retailers must obtain CEPB in retail distribution of drugs. 

Pursuant to Law on Pharmacy 2016, to obtain CEPB for retail distribution, FIE retailers must meet the following requirements:

  • Requirements on infrastructure, technology and personnel:

Having premises, preservation area, preservation equipment, technical documents and personnel that satisfy the criteria in Good Pharmacy Practice (“GPP”) standard.

  • Requirements on Pharmaceutical Practice Certificate:

The pharmaceutical professional managers must have the appropriate Pharmaceutical Practice Certificates required for the drug retailers.

(b)  Conditions for distributing imported drugs in Vietnam

  • Obtaining the CEPB for importation of drugs 

In order to import drugs into Vietnam, FIE importers must obtain CEPB in importation of drugs.

Pursuant to the Law on Pharmacy 2016, to obtain the CEPB for importation of drugs, the FIE importers retailers must meet the following requirements:

  • Requirements on infrastructure, technology and personnel:

Having premises, drug storage warehouse, preservation equipment, means of transportation, quality control system, technical documents and personnel that satisfy the criteria in Good Storage Practice (“GSP”) standard.

  • Requirements on Pharmaceutical Practice Certificate:

The pharmaceutical professional managers must have the appropriate Pharmaceutical Practice Certificates required for the drug importing establishments.

  • Submitting written notice to the Ministry of Health prior conducting wholesale distribution

Under Decree 54, FIE importers not entitled to exercise drug distribution rights in Vietnam are required to notify in writing to the Ministry of Health the wholesaler establishments that shall distribute the imported drugs before selling these drugs to such wholesalers.

 

Worthy of note, the assessment of infrastructures, equipment and personnel under the CEPBs shall be carried out every 03 years or on an ad hoc basis in accordance with regulations of the Minister of Health or international treaties to which Vietnam is a signatory.

 

Legal basis:

  1. Law on Pharmacy No. 105/2016/QH13 dated 06 April 2016 of the National Assembly;
  2. Decree No. 54/2017/ND-CP dated 08 May 2017 of the Government detailing some articles of and guiding the implementation of the Law on Pharmacy;
  3. Circular No. 03/2018/TT-BYT dated 09 February 2018 of the Ministry of Health regulating the Good Distribution Practice for drugs and medicinal ingredients;
  4. Circular No. 35/2018/TT-BYT dated 22 November 2018 of the Ministry of Health regulating the Good Manufacturing Practice for drugs and medicinal ingredients;
  5. Circular No. 34/2013/TT-BCT dated 24 December 2013 of the Ministry of Industry and Trade publicizing roadmaps for goods trading and directly related activities of FIEs in Vietnam; and

Note: This article is provided for reference purposes only and does not constitute legal advice. Depending on each specific matter from time to time, the content presented above may no longer be appropriate. For detailed advice, please contact LMP Lawyers.

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