Vietnam Pharmacy yet to be Ready for WTO Accession

Firstly, most local pharmaceutical enterprises have yet to be able to manufacture specific medicines. Instead, the local pharmacy has met 39 per cent of demand of hospitals, providing mainly common and cheap medicines. Local enterprises have concentrated on manufacturing and their products overlap each other. As a result, locally-prepared medicines account for 48.3 per cent prices of the market, reaching around VND 8,000 billion, but have ensured 652 out of 1563 substances. Among 174 pharmaceutical establishments, only 59 reaching the good manufacturing practice (GMP) standard with a total revenues of VND 5,369 billion. The 115 remaining establishments, which have not met the GMP standard, earn only VND 874 billion.

 

Secondly, there are many weaknesses in the distribution system of local pharmaceutical enterprises. With 897 enterprises, specialising in importing and distributing medicines with over 57,000 retail shops, the Vietnamese market lacks a distributor with high professionalism and modern technology, as well as perfect post-sale service. Meanwhile, foreign enterprises have actively operated within the existing regulations of Vietnam. Also, they have prepared for changes in Vietnam’s policies on managing medicines in the future.

 

Thirdly, in the past, foreign enterprises mandated local enterprises to import medicines to Vietnam. From January, 1, 2007, according to commitments signed by the Ministry of Trade with partners, foreign companies and branches of foreign-invested companies in Vietnam have right to direct import. Vietnam committed that when it joins WTO it would apply a tax rate of between 0 and five per cent for pharmaceutical products, instead of between 0 and ten per cent as at present. Also, the average tax rate will be put at 2.5 per cent five years after Vietnam’s WTO accession. Also, the average tax of cosmetic products will be cut from 44 per cent to 17.9 per cent when Vietnam has to implement fully its WTO accession commitments. It is expected that local manufacturers and importers will compete fiercely.

 

Fourthly, most enterprises lack information and knowledge about the international law. In this context, enterprises are facing a risk of going bankrupt if they are involved in any court case. For example, a pharmaceutical company lost US$47,000 due to pirating the brand of an emergent birth control product in foreign countries.

 

China’s lesson shows that after the country joined WTO, thousands of enterprises have gone bankrupt. In Vietnam, the preparation for WTO accession is not as good as China, so reports at the conference stated that the local pharmacy has yet to be ready for WTO accession.

 

Tran Thi Trung Chien, minister of public health, asked enterprises to promote their investment in expanding production and increasing the quality of products, retraining human resources, promoting co-operation with universities, enterprises and hospitals in their research and manufacturing activities. Chien stated the following solutions:

 

Firstly, pharmaceutical enterprises should be allied. Secondly, there should be distribution groups in the local market to reorganise around 40,000 retail shops, which operate in a fragmented manner and an unfair competition.

 

Under the draft master plan for the Vietnamese pharmacy throughout 2010 and vision 2015, developed by the Pharmaceutical Management Department, the local pharmacy will be restructured in a manner of expanding production of medicines, which are frequently-used but still imported. Also, modern production line will be invested to manufacture specific medicines for cancer, heart disease and diabetes treatment, striving for a target that locally-manufactured medicines will meet 60 per cent of the demand in 2010.

 

In the 2006-2010 period, there will be eight projects for the pharmacy with a total investment capital of US$241million. Accordingly, four factories will be built for manufacturing medicines, one for manufacturing excipients, a hi-tech institute and two utility research centres. Four factories will also be upgraded to meet the GMP standard. The target for 2015 is that locally-made medicines can meet 80 per cent of local people’s demand.

Tens of foreign firms have suited Vietnamese enterprises for pirating their brands. In the meantime, State management agencies, such as the Pharmaceutical Management Department and the Vietnam Intellectual Property Agency, do not have information and accept enterprises’ registration. For similar cases, if Vietnamese enterprises do not change brands, they will be suited and face many difficulties.

 

Common and base medicines will certainly see their prices down after January1, 2007. However, not all medicines will see their prices down as prices of rare and base medicines for specific treatment, which have been manufactured in Vietnam yet, will reduce when multinational groups want to cut them. In preparation for entering a new playground, the Central Pharmaceutical Material Joint stock Company N⁰ 1, has shifted partly to manufacturing activities. Accordingly, the company inaugurated a factory, meeting GMP standard in Vinh Phuc province.

 

In the latest inspection in March 2006, we found that it is quite common that pharmaceutical representatives offer bribes to doctors who advise hospitals buy medicines. Let alone import orders which are sold to companies, distorting the demand, causing troubles for the local pharmaceutical market.

 

It is difficult to sell medicines in the local market as to sell them to foreign markets. Many enterprises have invested much but they fail to increase their sales as Vietnamese prefer foreign-manufactured medicines. Traphaco has concentrated on finding new markets. Fortunately, the world has turned to the using medicines made of natural substances and Vietnam is reach in materials. Our products are suitable with East European countries and Australia, so we have found a foothold in the markets.