The Amended Pharmaceutical Law, revising the 2016 version, was approved by the National Assembly on November 21, 2024, and will take effect on July 1, 2025.
1. Promotion of Domestic Pharmaceutical Production and Technology Transfer
This update is emphasized in Article 1.4, which introduces policies to stabilize or reduce prices for pharmaceuticals manufactured in Vietnam through technology transfer.
Additionally, Article 1.5 amends Article 8 of the 2016 Pharmaceutical Law to include investment incentives for pharmaceutical manufacturing projects in Vietnam. Specifically, these incentives apply to projects that have a total investment of 3,000 billion VND or more, and disburse at least 1,000 billion VND within three years from the date of receiving an Investment Certificate or approval of the investment policy.
Eligible projects include:
Detailed guidelines will be issued in subsequent decrees.
2. New regulations on Pharmacy Chains
The Amended Pharmaceutical Law defines and regulates pharmacy chains, a concept mentioned in the 2016 Pharmaceutical Law but previously unaddressed in detail. Pharmacy chains are now recognized as a specific type of pharmaceutical business establishment under Article 1.12, defined as a network of pharmacies operating uniformly under the same trade name of a single organizing entity.
Article 1.13 outlines the requirements for obtaining a Certificate of Eligibility for Pharmaceutical Business for pharmacy chain establishments. These include:
The amended law introduces Article 17a, specifying requirements for the responsible pharmacist of a pharmacy chain establishment. These requirements are consistent with other pharmaceutical business types (e.g., import/export).
The amended law also grants pharmacy chains the right to transfer pharmaceuticals among pharmacies within the chain, and rotate responsible pharmacists across pharmacies in the chain, as stipulated in Articles 1.11 and 1.23.
3. Addition of E-Commerce Regulations for Pharmaceutical Sales
The Amended Pharmaceutical Law introduces guidelines for selling pharmaceuticals via e-commerce platforms, websites, and mobile applications (apps).
Pharmaceuticals eligible for retail through e-commerce channels include non-prescription drugs (OTC). Drugs under special control or on the restricted retail list are excluded from this provision.
Organizations engaged in e-commerce pharmaceutical sales must comply with regulations on electronic transactions and ensure the confidentiality of buyer information, provide complete and accurate information regarding their licenses on their e-commerce platforms, notify the Ministry of Health or its authorized agency of their e-commerce operations, and establish online consultation and guidance services to assist buyers with proper drug usage.
4. Legalization of Rights for Foreign-Invested Pharmaceutical Enterprises (FIEs)
Previously, the rights of foreign-invested pharmaceutical enterprises (FIEs) were outlined only in Decree 54/2017/ND-CP (specifically in Article 91.10). The Amended Pharmaceutical Law of 2024 introduces a new Article 53a to provide a dedicated legal framework for these enterprises.
The FIEs now are allowed to purchase back drugs produced through technology transfer initiated by the FIE itself. They may sell drugs manufactured through contract manufacturing or technology transfer arrangements in Vietnam to wholesale distributors. However, if FIEs wish to import raw materials for supply to contract manufacturers or technology transfer recipients, their licenses must explicitly include the scope of importing such raw materials.
Besides, compared to the limitations under Decree 54 that only permitted FIEs to transport drugs from customs to their own warehouses, the amended law allows FIEs to transport drugs from their warehouses to wholesalers’ warehouses, and deliver and transport drugs under sponsorship and aid programs.
The amended law eliminates the vague and unclear provision in Decree 54 that stated FIEs does not perform “other acts related to drug distribution as prescribed by law.” Moreover, activities such as transportation are now explicitly excluded from the scope of “drug distribution” activities.
5. Potential Impact of the Amended Pharmaceutical Law
The recent amendments to the Pharmaceutical Law are expected to significantly influence the pharmaceutical industry in Vietnam. Key areas of impact include:
Growth of Pharmacy Chains
With clear legal recognition and regulation of pharmacy chains, these entities are likely to grow rapidly. This development will increase competition in the market, potentially driving down drug prices and making medications more affordable for the public.
Encouragement of Technology Transfer and Local Manufacturing
The amendments facilitate and incentivize technology transfer and contract manufacturing. FIEs can now purchase and sell drugs they produce via technology transfer or contract manufacturing in Vietnam, resolving previous challenges. This change may reduce reliance on parent companies abroad, making the local pharmaceutical industry more self-sufficient.
Expansion of E-Commerce in Pharmaceuticals
The clear guidelines for e-commerce pharmaceutical sales present a lucrative opportunity for investors to expand operations through online platforms. With Vietnam’s rapidly growing e-commerce sector, businesses may leverage this channel to enhance profitability and reach a wider customer base.
Logistics Opportunities for FIEs
The amended law clarifies that transportation is no longer considered part of drug distribution activities. This allows FIEs to engage in drug transportation, opening the door for them to explore opportunities in logistics. However, they must ensure compliance with the relevant conditions for logistics operations should they enter this field.
Attraction of Foreign Investment in Local Production
Detailed guidelines for investment incentives, combined with Vietnam’s improving labor quality, financial stability, and market potential, are likely to attract foreign investors to establish manufacturing facilities in the country. These investments could drive technological advancements and boost domestic production capacity.
Read the full article at: https://vir.com.vn/amendments-mean-major-changes-for-local-market-120271.html
Disclaimer: This Legal Update is intended to provide updates on the Laws for information purposes only, and should not be used or interpreted as our advice for business purposes. LNT & Partners shall not be liable for any use or application of the information for any business purpose. For further clarification or advice from the Legal Update, please consult our lawyers: Mr Ngo Thanh Hai at hai.ngo@lntpartners.com
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