Vietnam’s pharmaceutical market is among the fastest growing in Asia. With a population of over 100 million, rising healthcare expenditure, an expanding middle class, and an increasingly sophisticated regulatory framework, Vietnam offers substantial opportunities for foreign pharmaceutical manufacturers and distributors.
However, market entry and distribution are tightly regulated. The applicable framework is shaped not only by domestic legislation—primarily the Law on Pharmacy and its guiding decrees and circulars—but also by Vietnam’s commitments under the WTO, the EU–Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
Understanding how these layers interact is essential for structuring a compliant and commercially viable market entry strategy.
- The Regulatory Architecture: A Structured Overview
Foreign pharmaceutical companies must navigate three key regulatory pillars:
- Market access rights (What activities are legally permitted?)
- Pharmaceutical product registration (Can the product be lawfully marketed?)
- Importation and distribution structure (How is the product brought into and circulated within Vietnam?)
Each of these is influenced by Vietnam’s international treaty commitments.
- WTO Commitments – Baseline Market Access
Vietnam acceded to the WTO in 2007. Its WTO Schedule of Commitments established the baseline for foreign participation in the pharmaceutical sector.
- Distribution Services Commitments
Under its WTO commitments, Vietnam opened distribution services to foreign investors, but with important limitations:
- Foreign-invested enterprises (FIEs) may engage in importation and distribution of most goods.
- Pharmaceutical products remain a sensitive sector.
- Foreign-invested companies are generally not permitted to distribute pharmaceutical products directly to retail outlets or consumers.
- Distribution at the retail level is reserved for Vietnamese-owned enterprises or entities meeting strict pharmacy licensing requirements.
In practice, this means:
- A foreign pharmaceutical company may establish a wholly foreign-owned enterprise (WFOE) to import pharmaceuticals.
- However, physical distribution to hospitals, clinics, and pharmacies must be conducted by licensed Vietnamese pharmaceutical distributors or through compliant structures under the Law on Pharmacy.
- Commercial Presence
WTO commitments allow:
- 100% foreign-owned enterprises for importation of pharmaceuticals.
- Establishment of representative offices for market research and liaison purposes (but no revenue-generating activity).
The WTO framework therefore opened the door but left the core distribution function heavily regulated.
III. EVFTA Commitments – Deepened Market Access for EU Companies
The EU–Vietnam Free Trade Agreement, effective since August 2020, significantly enhanced market access conditions for EU pharmaceutical companies.
- Tariff Elimination
- Almost all pharmaceutical products originating from the EU are subject to immediate or phased tariff elimination.
- This has improved price competitiveness for EU-manufactured medicines.
- Regulatory Transparency and Cooperation
The EVFTA contains strong commitments regarding:
- Transparency in regulatory procedures
- Publication of pharmaceutical pricing and reimbursement rules
- Fair and objective criteria for marketing authorization
- Protection of confidential business information
These provisions are particularly relevant during product registration and public procurement.
- Government Procurement Access
Under the EVFTA:
- EU companies gain improved access to public procurement markets, including certain central-level healthcare institutions.
- This is critical, as public hospital tenders account for a substantial portion of pharmaceutical sales in Vietnam.
- Intellectual Property and Data Protection
The EVFTA strengthens:
- Data exclusivity for pharmaceutical products.
- Patent term adjustments in certain circumstances.
- Enforcement mechanisms against infringement.
For innovative pharmaceutical companies, these protections are commercially significant.
- CPTPP Commitments – Regional Integration and Standards
Vietnam’s participation in the CPTPP further reinforces its integration into high-standard trade frameworks.
- Market Access
The CPTPP consolidates and, in some areas, improves upon WTO commitments:
- Greater transparency in pharmaceutical approval processes.
- Commitments regarding non-discriminatory treatment of foreign suppliers.
- Regulatory Coherence
CPTPP encourages:
- Good Regulatory Practices (GRP).
- Science-based decision-making.
- Clear administrative timelines.
While CPTPP does not radically alter distribution restrictions, it strengthens procedural fairness and predictability.
- Domestic Legal Framework – The Law on Pharmacy
Beyond treaty commitments, the Law on Pharmacy (2016, as amended) and implementing regulations govern:
- Marketing authorization
- Import licensing
- Distribution
- Storage (GDP compliance)
- Manufacturing (GMP compliance)
Foreign companies must strictly align their structure with domestic law, regardless of treaty entitlements.
- Step-by-Step Market Entry – Best Practice Approach
A compliant and efficient market entry typically follows a structured pathway:
Step 1: Strategic Structuring Decision
Foreign pharmaceutical companies must determine:
- Representative office?
- Wholly foreign-owned import company?
- Joint venture with Vietnamese distributor?
- Contract-based distribution model?
Best practice:
Most foreign manufacturers choose either:
- A wholly foreign-owned import company combined with licensed local distributors; or
- A strong Vietnamese distribution partner with nationwide coverage.
The choice depends on long-term control objectives and operational scale.
Step 2: Establish Legal Presence
Options include:
Representative Office
- Market research and regulatory liaison only.
- No direct commercial activity.
Wholly Foreign-Owned Enterprise
- Licensed for importation of pharmaceuticals.
- Must obtain:
- Investment Registration Certificate (IRC)
- Enterprise Registration Certificate (ERC)
- Business license for pharmaceutical trading
- Eligibility certificate for pharmaceutical business
Step 3: Marketing Authorization (Drug Registration)
No pharmaceutical product may be marketed without a valid Marketing Authorization (MA).
Key requirements include:
- Dossier submission to the Drug Administration of Vietnam (DAV).
- Technical documentation (quality, safety, efficacy).
- Certificate of Pharmaceutical Product (CPP).
- GMP compliance of manufacturing site.
- Product samples (where required).
Timelines can be lengthy. Early preparation is critical.
Best practice:
Engage experienced regulatory advisors and ensure dossier consistency across jurisdictions to avoid delay.
Step 4: Import Licensing
Each shipment requires:
- Import authorization referencing the valid MA.
- Customs clearance documentation.
- Compliance with labeling requirements in Vietnamese.
Temperature-controlled logistics must comply with Good Distribution Practice (GDP).
Step 5: Distribution Model Implementation
Foreign companies cannot freely retail pharmaceutical products.
Typical structure:
- Import via licensed entity.
- Transfer to:
- Licensed Vietnamese distributors; or
- Hospitals through tender process; or
- Wholesalers compliant with GDP.
Retail pharmacy operations require separate pharmacy licenses and pharmacist supervision.
Step 6: Participation in Public Tenders
Hospital tenders are a key sales channel.
Important considerations:
- Product classification (innovative vs. generic).
- Pricing registration.
- Compliance with tender documentation.
- Competitive bidding strategy.
EVFTA and CPTPP transparency provisions enhance procedural fairness, but local compliance remains decisive.
Step 7: Ongoing Compliance
Continuous obligations include:
- Pharmacovigilance reporting.
- Advertising approval for pharmaceuticals.
- Periodic license renewals.
- Pricing declaration requirements.
- Inspection readiness.
Regulatory scrutiny in the pharmaceutical sector is intensive.
VII. Recommended Market Entry Structure
A feasible and workable structure for most foreign pharmaceutical companies is:
- Establish a wholly foreign-owned import company.
- Secure product registrations under the company’s name.
- Conclude distribution agreements with 2–3 strong local distributors (regional diversification).
- Build internal regulatory and compliance oversight capacity.
- Maintain direct engagement with key hospitals and medical opinion leaders through compliant channels.
This structure ensures:
- Control over product registration.
- Protection of intellectual property.
- Diversified distribution risk.
- Long-term scalability.
For EU-based companies, leveraging EVFTA procurement access and tariff advantages provides additional competitive positioning.
VIII. Key Risks and Practical Pitfalls
- Underestimating registration timelines.
- Structuring distribution contrary to Law on Pharmacy restrictions.
- Inadequate GDP/GMP documentation.
- Weak tender strategy.
- Insufficient local compliance oversight.
Regulatory errors in pharmaceuticals carry significant financial and reputational risk.
- Conclusion
Vietnam offers substantial growth potential for foreign pharmaceutical companies. WTO commitments created the foundation; the EVFTA and CPTPP have deepened transparency, improved intellectual property protection, and enhanced procurement access.
Yet market access remains structured and compliance driven. Successful entry requires careful legal structuring, meticulous regulatory preparation, and disciplined distribution management.
Those who approach Vietnam with strategic planning, regulatory rigor, and a long-term commitment to compliance will find a dynamic and rewarding market—one that continues to evolve in sophistication and opportunity.
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Please do not hesitate to contact Dr. Oliver Massmann under [email protected] if you have any questions or want to know more details on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.