Economic growth and demographic changes are driving demand for healthcare services throughout Vietnam. With the COVID-19 outbreak, health stands firmly as the top priority and concern for both the Vietnamese people and the government. According to FitchSolutions, in 2019 Vietnam’s healthcare expenditure approximated $17 billion in 2019, representing 6.6 percent of the country’s GDP. However, since local companies lack the technology to produce advanced medical devices, the country heavily relies on importation of medical goods and equipment. This article will guide you through the market of medical goods, its regulations, and the registration process for importation in Vietnam.
Regulations of Medical goods in Vietnam
First, it is important to understand governmental regulations of medical goods in Vietnam, as the health sector is heavily regulated under the authority of the Ministry of Health (MOH). Under the MOH, the Department of Medical Equipment and Health Works (DMEHW) has jurisdiction over the import of medical devices. The Drug Administration of Vietnam (DAV) and Vietnam Food Administration (VFA) regulate pharmaceuticals and food supplements.
- Medical equipment
Imported medical equipment has low import duties and no quota restrictions due to encouraged importation of medical equipment by the government. However, medical devices are subject to regulation and licensing requirements set by the Ministry of Health. Only companies with a legal business entity registered in Vietnam along with an import license are eligible to distribute medical equipment. (See below on How to distribute medical goods in Vietnam)
The importation of used and refurbished medical equipment is strictly controlled by the Ministry of Health. Decision 2019/1997/QD-BKHCNMT holds that the Ministry of Technology and Science must inspect and certify all imports of used medical equipment.
Decree 169 is the most updated legal document on the management of medical equipment, which is scheduled to come into effect in December 2020. Under this decree, all medical devices imported into Vietnam are required to register for marketing authorization (MA) licenses.
Vietnam’s pharmaceutical market has tremendous potential for foreign exporters and investors. Although the government aims to increase the share of locally produced pharmaceuticals to 80 percent, an average of 55 percent of medicines in Vietnam are imported every year. One of the reasons for Vietnam’s reliance on imports is that most domestic companies lack research and development capabilities and do not meet the European Union Good Manufacturing Practice (EU-GMP) or Pharmaceutical Inspection Co-operation Scheme Good Manufacturing Practice (PIC/S-GMP) standards required to manufacture high-quality generic drugs. And with the closure of many Chinese factories due to environmental concerns, from which Vietnam imports more than 90 percent of its drug inputs, the market is looking for exporters from other countries.
The implementation of the EVFTA will remove tariffs for pharmaceutical products from the EU, and allow foreign companies to import and sell pharmaceuticals to Vietnamese distributors and wholesalers.
At the moment, 70 percent of drugs in Vietnam are sold through hospitals, while the remaining 30 percent comes from pharmacies. Only two multinational companies – Sanofi-Aventis (France) and AstraZeneca (Britain-Sweden) have medicine import licenses. However, with a growing number of private hospitals and increasing demand created by the COVID-19 pandemic, the demand for pharmaceuticals in Vietnam is rising rapidly.
Nevertheless, it is important to note that domestic policies in recent years are making it more challenging to enter the market. Vietnam’s 2016 Law on Pharmacy, which entered into force on January 1, 2017, is the primary legal framework governing the pharmaceutical sector, including registration, sale, and distribution of pharmaceuticals. In addition, the MOH has released Circular No. 07/2018/TT-BYT, under which Representative Offices can no longer house medical representatives who provide drug information to doctors and hospital administrators. Many pharmaceutical companies have expressed concern that the Law creates uncertainties about the rights and responsibilities of Representative Offices, especially whether such offices can directly or indirectly (through third parties) provide drug information to health care providers and employ representatives to perform these activities.
How to attain an import permit?
Step 1: Check for banned products
If the product is not listed under prohibited imports and exports under Decree No. 69/2018 / ND-CP, it can be imported into Vietnam.
Step 2: Check for products that require a Medical Equipment Import Permit.
If the product is under list of appendix 1- Circular 30/2015/TT-BYT, It needs to attain a medical equipment import Permit. If not, it can be imported following normal importation regulations.
Step 3: Apply for Import Permit
A dossier for new issue of Medical Equipment Import Permit includes:
- Written request for issuance of the permit
- Certificate of free sale
- ISO certification
- Letter of authorization
- Catalogue describing the functions and technical parameters
- Clinical assessment material or manual of the manufacturer
- Report on the result of equipment
The dossier will be addressed to the Ministry of Health (Department of Medical Equipment and Health Facilities) and they will review the completeness and validity of dossier within 05 working days. In case the dossier is complete and valid, a meeting of its consultation Council for issuance of medical equipment import permit will be held to review. The import permit will only be issued if there is no more requirement for modification or addition from the Council.
Step 4: Attaining other licenses:
If you are planning on distributing or selling healthcare equipment in Vietnam, you will most likely need to register your medical products by securing licenses such as Marketing authorization before any devices can enter the market.
How to distribute medical goods in Vietnam
Under the Law of Vietnam, only businesses registered in Vietnam with an import license will be able to distribute medical devices legally in Vietnam. Therefore, foreign medical device suppliers are required to set up a local office or appoint local distributors. Most often, foreign medical device suppliers opt for selling their medical devices through local distributors.
For foreign medical device providers and distributors, their local offices should be responsible for medical equipment licenses application. If foreign companies do not hold representative offices in Vietnam, it is possible for them to appoint a distributor or a partner company.
It is also important that local distributors comply with Vietnam laws such as:
- Business establishments must satisfy the requirements on techniques, equipment, facilities, business process, location and other standards prescribed by law;
- Managerial and technical staff and employees personally engaged in the sale and purchase of goods, and employees personally engaged in the provision of services must satisfy the requirements on professional qualifications and experience and be physically fit according to the provisions of law;
- Business traders must have certificates of satisfaction of business conditions in cases where such certificates are required by law to be reviewed by competent agencies
In short, even though healthcare industry in Vietnam holds great potential for foreign companies, heavy domestic regulations can create many hurdles along the way. When challenges arise, our Viettonkin FDI experts and legal team are ready to assist you with the venture.