Good Signal for Drug Distributors

 

Preferential policies
Tax reduction is the first preferential treatment offered by Vietnam. The country will gradually reduce import taxes on pharmaceuticals and cosmetics. Under the commitment in the pharmaceutical field, the import tax will be 0-5 per cent instead of the current 0-10 per cent. The average duties will be 2.5 per cent after five years Vietnam officially joins the WTO. The import duties on cosmetics will be slashed to 17.9 per cent from 44 per cent.

 

Secondly, foreign companies can open branches in Vietnam and foreign-invested firms in Vietnam can directly import and export drugs. Under the plan, after Vietnam is officially admitted to the WTO, foreign-invested companies and branches of foreign drug firms in Vietnam will be allowed to directly import pharmaceuticals. However, foreign drug companies will not be permitted to distribute drugs in Vietnam. The distribution will be carried out by Vietnamese firms. Or in other words, imported medicines will be sold to Vietnamese distributors.

 

Thirdly, the Vietnamese Government will strictly implement intellectual property protection. On September 30, 2006, the Minister of Health signed Decision No. 30/2006/QD-BYT to issue the Data Security Regulation on Medicine Registration Document. This legal document takes special concerns of multinational medicine research and production firms. The Ministry of Health pledges to give preferential treatments to foreign pharmaceutical companies which will manufacture drugs in Vietnam, especially those using modern technologies and using medicinal materials in Vietnam.

 

Finally, the Foreign Investment Department under the Ministry of Planning and Investment also affirmed its favourable business environment for any companies investing in Vietnam, especially favours in business registration procedures.

 

However, the State organs will tightly control the quality of medicines and cosmetics imported by foreign firms into Vietnam. Imported items are mainly in the best-selling groups. The quality of drugs supplied by foreign companies for the Vietnamese market has been improved significantly in recent years. Nonetheless, in the first nine months of 2009, State authorities found 19 substandard drug samples. Substandard medicines mainly imported from South Korea and India, which are the largest drug suppliers in Vietnam.

 

According to the Vietnam Drug Administration (VDA), Vietnam spent US$396 million on medicine import in the first eight months of this year ending in August, an increase of 26.7 per cent on year. Vietnam is estimated to spend US$710 million to import drugs.

 

By the end of September 2006, a total of 312 foreign-invested drug companies have registered for operation in Vietnam, an increase of 64 companies compared with the number in June 2005. Most of them are manufacturers of drugs and traders of materials and finished products. Only about 4.8 per cent of companies registered for trading raw materials. Combined revenues of foreign companies account for 29.7 per cent of the country's total turnover. India has the largest number of pharmaceutical firms in Vietnam with 67, followed by South Korea 38 companies, France 26 companies, China 22 companies and Germany 16 companies.

 

According to the statistics from the Vietnam Drug Administration, at present, 38 foreign companies are registered to invest in the Vietnamese pharmaceutical industry with a combined capital of us$255 million.