Vietnam removes bottlenecks to attract FDI in pharmaceutical industry

The Ministry of Health said that 2024 is a key year, with the review and amendment of important laws and regulations to shape the operations of the pharmaceutical industry in the next decade, thus contributing to the development of a sustainable healthcare system and creating a favourable ecosystem for promoting innovation.

An important content being implemented by the Ministry of Health is to complete the draft Law amending and supplementing a number of articles of the 2016 Law on Pharmacy to submit to the National Assembly for consideration and approval in the session this October.

The amendment of the Law on Pharmacy is aimed at creating a legal corridor to resolve bottlenecks of the past and avoiding shortages of preventive and curative drugs.

Five new points have been proposed: institutionalising all special and specific policy mechanisms related to the pharmaceutical sector during the COVID-19 pandemic; promoting the development of the pharmaceutical industry; diversifying the system and methods of trading and distributing drugs and pharmaceutical ingredients; simplifying administrative procedures on the order and procedures for granting drug circulation registration certificates; and adding solutions to strictly manage drug prices.

One of the new points of the draft law is changing the "strategy" for the pharmaceutical industry.

Accordingly, shifting from producing generic drugs to developing technology research and development activities, manufacturing or transferring technology to produce pharmaceutical substances, new drugs, branded drugs, rare drugs, high-tech drugs, vaccines, and biological products to serve the domestic market and export to advanced markets.

The programme for developing the pharmaceutical industry and domestically produced medicinal materials to 2030, with a vision to 2045, and the national strategy for developing Vietnam’s pharmaceutical industry until 2030, with a clear vision extending to 2045, as issued by the Prime Minister, are expected to create a big push for the Vietnamese pharmaceutical industry to achieve its set goal, which is to become a centre for producing high-value pharmaceuticals in the region.

An important solution to realise the goal is to promote attracting foreign investment (FDI) into the pharmaceutical industry.

Currently, there are only 159 foreign companies investing in the pharmaceutical industry in Vietnam, with total investment capital of about 1.8 billion USD — a rather modest number, or in other words, very small compared to the total figure of about 500 billion USD in registered capital after 35 years of attracting foreign investment in Vietnam.

With the FDI projects that have been implemented, there is also a lack of leading enterprises that lead the development of the world's pharmaceutical industry.

As such, ministries and sectors need to take measures to remove obstacles and reform the law to create a more attractive foreign investment environment for the pharmaceutical industry.

Vietnam can continue to attract investment by providing preferential tax policies and simplifying the licensing process for technology transfer drugs.

In addition, cutting administrative procedures can attract more specialised investment from multinational companies and in the long term will promote the strong development of the domestic pharmaceutical manufacturing industry in parallel with maintaining the global supply chain.

Representatives of foreign pharmaceutical enterprises said that a new Law on Pharmacy needs to be passed to resolve the bottlenecks in drug registration and circulation renewal experienced in past years.

At the same time, sub-law documents (decrees, circulars) should be immediately issued so that there are no legal gaps in the implementation process. In the context of increasing competition from countries in the region, Vietnam needs to quickly increase its efforts in attracting FDI and innovation.

There are three keys areas that Vietnam should focus on. Firstly, creating a more favourable business and investment environment through clear policies to encourage companies to bring the most advanced therapies to Vietnam and commit to long-term investments.

This includes a strong commitment to a streamlined, strict management process, ensuring compliance with deadlines for administrative procedures, approvals, and the completion of intellectual property protection regulations.

Secondly, Vietnam should introduce incentive policies that prioritise innovation and invention, such as establishing research and development centres, encouraging investment in the early stages of product development like clinical trials, and enhancing manufacturing capabilities.

Thirdly, Vietnam needs to effectively implement the National Strategy for Pharmaceutical Industry Development.