The Future of Vietnam’s Pharmaceutical Industry: Unpacked
As a result of Vietnamese consumers having more money to spend on their healthcare, Vietnam’s pharmaceutical industry is booming. Here’s how Vietnam plans to manage that boom between now and 2030, and where it might be by 2045.
In October, the Prime Minister of Vietnam issued Decision NO. 1165/QD-TTg approving the ‘National Strategy for Development of Vietnam’s Pharmaceutical Industry to 2030’ with a Vision to 2045. This is part of a wider push toward developing the pharmaceuticals industry as Vietnam’s middle class expands and, along with it, healthcare spending.
But pharmaceuticals can be a complicated business. Pharmaceuticals need to be of the highest quality to ensure the safety of Vietnam’s consumers. This means extensive monitoring and regulation will be needed as the industry develops, and this means a myriad of opportunities for foreign expertise.
Not only that, but investment opportunities are also likely as next-generation free trade agreements remove market entry barriers into the pharmaceutical industry. In particular,, when the European Union Vietnam Free Trade Agreement (EVFTA) came into force more than half of the tariffs on pharmaceutical imports from the EU were removed.
That said, for both new and old foreign firms that operate in the pharmaceutical industry in Vietnam, a keen understanding of the direction of the industry may be crucial. In this light, the Vietnam Briefing unpacks Vietnam’s pharmaceutical industry development roadmap.
Vietnam’s pharmaceutical industry objectives
Vietnam’s National Strategy for Development of Vietnam’s Pharmaceutical Industry to 2030 lays out several broad, core objectives for the industry. These serve as guiding principles for the plan and form the framework around which it has been developed. These include:
- Ensuring Vietnamese have access to the medicines they need at reasonable prices.
- To improve the country’s research capacity and to produce original brand-name drugs.
- To become a regional center for manufacturing, processing, and the development of brand-name drugs.
- To develop the country’s pharmaceutical regulatory system to Maturity Level 4 (operating at an advanced level of performance and continuous improvement) according to the World Health Organisation benchmarking.
- To use medicinal herbs, drugs, and products to develop high-quality and high-value goods.
- To promote the production of medicinal raw materials.
- To optimize the use of medication.
Set targets for Vietnam’s pharmaceutical industry
The aforementioned objectives can be further broken down into the following specific targets:
- To have 100 percent of drugs provided proactively and promptly for disease prevention and treatment needs.
- To manufacture 80 percent of the drugs consumed domestically in Vietnam and for those drugs to account for 70 percent of the market value of all drugs sold in Vietnam.
- To produce 20 percent of the raw materials needed for domestic drug production.
- To produce enough vaccines to meet 100 percent of the demand for expanded vaccination and 30 percent of the demand for service vaccination.
- To produce at least 100 original brand-name drugs, vaccines, and/or biological products.
- To have eight areas designated for the sustainable exploitation of natural medicinal herbs as well as between two and five areas for large-scale medicinal herb production.
- Completely standardize medicinal ingredients for domestic drug production including extracts, essential oils, and medicinal powders.
- Achieve WHO Maturity Level 3 (a stable well-functioning and integrated regulatory system) or higher.
- For 100 percent of drug trading establishments to meet good practice standards.
- For 100 percent of drug testing, vaccine, and biological product testing facilities to meet good laboratory practice (GLP) standards.
- For at least 20 percent of drug manufacturing facilities to meet EU-GMP, PICs-GMP, or equivalent standards.
- For all of the drugs in the market to be fully monitored and managed for effectiveness and safety according to Ministry of Health regulations.
- For the ratio of people working in clinical pharmacy to reach 1 person per 100 inpatient beds and two people per 1,000 prescriptions dispensed to outpatients with insurance cards.
- The complete digital transformation of the pharmaceutical industry.
- The digitization of all of the information and data on drugs licensed for circulation that are still valid in Vietnam, and added to the Pharmaceutical Industry Data Bank.
- For 100 percent of drug manufacturing, wholesale, import-export, and retail establishments nationwide to be interconnected.
- To deploy artificial intelligence in pharmaceutical industry activities.
- To achieve a ratio of 4 pharmacists per 10,000 people, of which pharmacists trained in clinical pharmacy constitute at least 20 percent.
With these goals in mind, it is estimated that Vietnam’s pharmaceutical industry will be worth US$20 billion by 2045, and that drug testing, distribution, and clinical pharmacy will be as advanced as any other country in the world.
Foreign firms in Vietnam’s pharmaceutical industry development
To meet the objectives of Vietnam’s pharmaceutical industry development plan, it’s anticipated that foreign firms will play a key role.
Vietnam is looking to boost cooperation with multinational pharmaceutical corporations and source their support with respect to R&D and technology transfers. This will be fundamental in facilitating the development of domestic brand-name drugs.
Vietnam also intends to take advantage of resources and professional and technical support from countries and international organizations. This includes programs and projects to improve the capacity and efficiency of the state agencies in charge of pharmaceutical management. Furthermore, support from foreign organizations will be required to assist Vietnam in meeting its international obligations—especially, those outlined in the free trade agreements the country has signed on to.
There will also be a role for foreign organizations with respect to the management of pharmaceutical information databases. Vietnam plans to push for the harmonization of records, processes, and procedures—aiming to reach international standards.
Funding for Vietnam’s pharmaceutical industry development
Bringing Vietnam’s pharmaceutical industry up to international standards will require huge amounts of investment. Whereas the pharmaceutical development plan to 2030 sees the state contributing, foreign donors like the WHO may also play a role, as well as domestic and foreign businesses.
Some headway is already being made with respect to foreign firms entering the marketplace. The EVFTA has opened up Vietnam’s pharmaceuticals market for European firms, allowing EU member states to establish 100 percent foreign-owned companies to import pharmaceutical products and sell them to local distributors (in the past they had to partner with local firms).
Vietnam’s pharmaceutical industry holds a wealth of promise for domestic and foreign pharmaceutical manufacturing firms. With the 2030 plan in place, there is now a framework around which to grow and strengthen the industry. That said, the plan will still require further guidance from impacted government departments. This should be forthcoming in the not-too-distant future. In this light, firms that wish to stay up to date with the latest developments in Vietnam’s pharmaceutical industry should subscribe to the Vietnam Briefing.
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