Opening up the foreign capital flows into healthcare and pharmaceuticals

Challenge from the mechanism

The pharmaceuticals and medical care once again became a "hot" topic discussed by the representatives of many foreign business associations in the recent 2021 annual Vietnam Business Forum (VBF).

Said Mr. Alain Cany, Chairman of the European Chamber of Commerce in Vietnam (EuroCham), that EuroCham and the European business community appreciated the Resolution No. 12/2021/UBTVQH15, dated December 30, 2021 on allowing the implementation of certain mechanisms and policies in the health sector to serve Covid-19 epidemic prevention and control, including a regulation: “For the drug registration certificate, medicinal ingredients are expiry the period from the effective date of this Resolution to before December 31, 2022, but they are not possible to promptly complete the sale registration extension procedures due to the impact of Covid-19 epidemic, they can continue to be used by the end of December 31, 2022 to ensure medical examination and treatment."

“We hope to be supported from the National Assembly and the Government in directing to obtain the common consensus among the relevant agencies to implement immediately and apply to all drugs, including Covid-19 medicine," said Mr. Alain Cany.

The EuroCham President also expressed his hope that the Government would soon amend the relevant regulations, including the Law on Pharmacy, in order to completely eliminate the extension procedure for drug sale registration certificates in 2022.

Meanwhile, the representative of the American Chamber of Commerce in Vietnam (AmCham) proposed for amending the Decree No. 54/2017/ND-CP guiding the application of the Law on Pharmacy to allow foreign-invested companies to continue engaging in the storage and transportation of pharmaceutical products, providing the necessary assistance to meet the hospitals and patients’s increased demand during the pandemic; amending the Circular No. 32/2018/TT-BYT to ensure the appropriate adjustments for the registration and sale of the new and existing products.

Experts say that the legal barrier is one of the reasons that make the investment picture in Vietnam's healthcare and pharmaceutical industries still not as "bright" as expected and not commensurate with its potential. Accordingly, it is necessary to further improve the legality in order to open up the private and foreign investment in this field in the coming time.

Foreign capital potential

Since the Law on Pharmacy (2016), the Decree No. 54/2017/ND-CP and the Circular No. 36/2018/TT-BYT took effect, foreign-invested enterprises have been allowed to expand their business activities when they are allowed to directly import and export pharmaceutical products (drugs, vaccines) after they are granted eligibility licenses for pharmacy business.

Foreign capital has been flowing into the pharmaceutical and medical fields. On February 15, Sri Avantika Contractor Ltd., SMS Pharmaceuticals Ltd. (India) and Dai An Urban - Industrial Zone Development Corporation Joint Stock Company (Hai Duong, Vietnam) signed a decision on investment cooperation in Vietnam - India International Pharmaceutical Park Project in Hai Duong province.

This is one of the biggest pharmaceutical projects in Vietnam with an area of 960 hectares, which will be invested by two Indian enterprises with a total capital of up to 10 - USD 12 billion.

Said Ramesh Babu, Chairman of SMS Group, the successful implementation of this pharmaceutical park project will be a "strategic lever" to bring Vietnam into a research and development, leading pharmaceutical manufacturing base of Southeast Asia and the world.

In addition to SMS, Sri Avantika Contractor also finds the great potential of the Vietnamese pharmaceutical market. To exploit the market's growth potential, many multinational pharmaceutical corporations such as AstraZeneca, Sanofi, Raphael Labs, Nipro Pharma Vietnam, Daiichi Sankyo have recently decided to continue financing funds to increase their presence in Vietnam.

By the end of 2021, within the framework of visiting and working in a few European countries on the occasion of Prime Minister Pham Minh Chinh's attendance at COP26 Summit, in the UK, and with the witness of Prime Minister Pham Minh Chinh, AstraZeneca announced they would invest about VND 2,000 billion (USD 90 million) to help Vietnam improve their domestic pharmaceutical production capacity. This package follows AstraZeneca's VND 5,000 billion (USD 220 million) investment in Vietnam for the period of 2020-2024, announced in 2019.

Meanwhile, Vingroup and Raphael Labs Company (UK) have agreed to cooperate in developing, investing, testing, and transferring technology for manufacturing medicines to prevent Covid-19 and respiratory diseases. T&T Group, Hanoi Medical University and Hipra Group (Spain) awarded an agreement on cooperation in building a Vaccine Research Center in Vietnam and training human resources.

Besides European investors, such "giants" of the pharmaceutical industry from Asia as Taisho, Nipro Pharma, Daiichi Sankyo... are also stepping up their activities in Vietnam.

Mr. Hiroaki Sasaki, the Manager of General Administration Department of Nipro Pharma Vietnam told a reporter of Investment Newspaper: “We are also focusing on creating jobs for workers in Vietnam by expanding our pharmaceutical manufacturing businesses in a sustainable way.”

Daiichi Sankyo, Japanese pharmaceutical manufacturer has just signed an agreement with Mitsubishi Tanabe Pharma Corporation to market Radicava products in Vietnam. This is one of many business plans to be carried out by Daiichi Sankyo in Vietnam.

Future Trends

Said experts, the sustainable development investment - business trend of pharmaceutical and medical enterprises in Vietnam will be remote medical examination and treatment; importing and producing vaccines; technology transfer and medicine processing orders; investment in the renovation and modernization of the hospital system, medical examination and treatment facilities, and training institutes by the public-private partnership (PPP) method.

Facing the complicated and prolonged developments of Covid-19 pandemic with many new strains, the demand for vaccines is still very high. Currently, Vietnamese law has allowed enterprises, including foreign-invested enterprises, to apply for licenses of vaccine import.

Besides, technology transfer and vaccine outsourcing is also a profitable field. The investment in a medicine manufacturing plant meeting GMP standards requires a great capital and takes a lot of time to build and operate initially. Therefore, for the technology transferors or the outsourcing customers, the medicines are manufactured in Vietnam, helping to save costs of production and transportation...

Said Mr. Ngo Thanh Hai, LNT Law Firm and Partners’ lawyer specializing in research in the field of medicine and pharmaceuticals, PPP method is encouraged by the Government to be applied in such many fields as healthcare finance, development of medical and medical force, research and development (R&D), provision of health care services, forecast to attract many foreign-invested and private-invested enterprises.

“Vietnamese market potential is highly appreciated by international investors and will certainly bring them more opportunities when barriers are removed thanks to the Investment Law on PPP method and related decrees, thereof PPP projects can be implemented and in consistent with the international standards", said lawyer Ngo Thanh Hai.

Source : Baodautu