Vietnam Year-End Pharmaceutical Market Update

I. Vietnam Economy

Vietnam is a poor, densely populated country that has had to recover from the devastation of war, the loss of financial support from the former Soviet Bloc and the rigidities of a centrally planned economy. Substantial progress has been achieved over the past 10 years in moving forward from an extremely low starting point. Economic growth continued at a strong pace during 1997 with industrial output rising by 12% and real GDP expanding by 8.5%. These positive numbers, however, masked some major difficulties that are emerging in economic performance. Vietnamese authorities continue to move slowly toward implementing the structural reforms needed to revitalize the economy and produce more competitive, export-driven industries. Administrative and legal barriers are causing costly delays for foreign investors and are raising similar doubts about Vietnam’s ability to maintain the inflow of foreign capital. Favor of state intervention and control of the economy is slowing progress toward a more liberalized investment environment.

II. Vietnamese Pharmaceutical Market

While the Vietnamese pharmaceutical market is small (estimated at $350 million in 1998), it continues to gain special attention from foreign producers and exporters. The market has been growing at an incredible 20% every year, faster than any other Asian country. In recent years, growing demand and weak domestic production has resulted in significant import and investment. Domestic production makes up only 30% of the turnover and is rapidly losing ground to imports.

Vietnam has 72 local manufacturers, 43 drug import-export companies and 50 foreign pharmaceutical companies in the market. There are currently 3,500 drugs on sale in the domestic market. The imported pharmaceutical market is accounted for by leading drug producers like France, the U.S., Germany and Canada and over the recent years by India, Japan and South Korea. Besides imports, the pharmaceutical market has attracted foreign investment. U.S. investors are ranked first in licensed projects and investment capital. The pharmaceutical consumption trends in Vietnam are changing. Attention is payed to quality and brand-names and products from the U.S. are particularly respected, despite higher prices.

III. Drug Registration in Vietnam

All foreign products must enter the country through a state-owned import company that may also act as an importer or distributor. Foreign distributors supervise and track their client’s products through the different channels.

An application for drug approval and registration in Vietnam should include the following: quality control certification, manufacturing formula, a flow chart that included manufacturing directions, specifications and STMs of the active ingredients as well as for the finished product. In process controls and stability data must be included. This report must be signed. Testing should be carried out on 3 lots. Shelf life which must be at least 4 months must also be specified. Preclinical results (toxicology, PK and pharmacodynamics) and clinical results (PK, bioavailibility and a summary of studies) must also be part of the packet. The certificates required are: COFS and GMP. These certificates must be provided by the manufacturer. 3 samples of the smallest pack size must be included. Samples of each flavor are required, but samples of the different size packets are not required. The original COA must match with the samples and COA specifications must match FPS exactly. 2 primary labels, 2 cartons/boxes and inserts that go with the product must also be provided. Color commodities must also be provided. As far as approval times are concerned, NCE drugs take 9-12 months, OTC and generic drugs take 6-9 months and re-registration for drugs takes approximately 3-6 months.

Documents can be provided in English, French or Vietnamese. All documents must be notarized. To prevent any delays, it is recommended that dossiers be completed by a trained doctor or medical practitioner. Each product must be registered at a cost of $2,000 per form. Licenses are generally granted for a particular period of time – typically one year for products that are being produced with a Vietnamese joint venture and three years for imported products that are not produced in significant quantities domestically. A five-year license may be granted for a product that cannot be produced locally and is in demand.

Counterfeiting and knock-offs pose a significant challenge to importers. Successful foreign brands are often copied by state-run facilities and in rural workshops that are free from the regulation of the authorities. While the government has taken steps to stop piracy, progress on this front has been slow.

IV. Conclusion

General recommendations for U.S. companies seeking to sell drugs and pharmaceuticals in Vietnam include the following:

Visit the market and assess the needs, sales and potential distributors. A local representative must be established and they should be responsible for maintaining contact with the relevant buying organizations and Ministries and also be aware of changes in regulations that would affect the entry of the product. A strong marketing program is essential in Vietnam, just as in any other market. Trips to Vietnam should include a visit to key ministries including the Ministry of Public Health, the Ministry of Trade, and the Ministry of Planning and Investment. These meetings should be scheduled at least two weeks prior to the expected appointment date by notifying the appropriate agency and informing them of the purpose of the visit and the nature of the products involved. One should also be patient and flexible and keep in mind that business in Vietnam is conducted very differently from business in the U.S. Bureaucracy and red tape remain abundant and these are major hurdles to overcome.