Herbal medicines and traditional medicines are deeply embedded in Vietnam's healthcare system, representing a market rich with opportunity for foreign investors. A significant portion of the world population relies on herbal remedies for their primary health care and well-being. 

The country's abundant natural resources, competitive labor costs, and a strong government push to standardize quality have created a compelling investment landscape for natural products. However, capitalizing on this potential requires a thorough understanding of Vietnam's multi-layered regulatory framework, which directly impacts investment costs, time-to-market, and export strategies for any herbal medicinal product.

The foundational legal document, the Law on Pharmacy 105/2016/QH13, establishes the core scope of management for herbal materials and traditional herbal medicines, including clear business conditions. 

This legal basis is critical. For any investor, navigating these regulatory frameworks is not just a matter of compliance; it is a strategic necessity. This article analyzes the three central pillars of this regulatory environment for herbal medicine: quality standards, market authorization, and risk management.

Key Takeaways:

• A Multi-Layered but Structured Framework: Vietnam's regulations for herbal medicines are governed by the Law on Pharmacy, supported by specific guidelines on GACP and GMP standards, creating a clear but complex system for investors.
• Quality is Non-Negotiable and Drives Export: Strict adherence to GACP for cultivation and Good Manufacturing Practice for production is mandatory. Meeting these quality standards is the primary factor enabling access to the lucrative global market.
• Market Authorization is a Critical Timeline Factor: The registration process for an herbal product can be lengthy. M&A with already-licensed local companies has become a key strategy to accelerate market entry for their herbal medicinal products but investors must strictly comply with the mandatory Economic Concentration Notification to the National Competition Commission (UBCG) if the transaction meets the thresholds under Vietnam's Competition Law.
• Due Diligence is Essential for Risk Mitigation: Investors must conduct comprehensive due diligence covering technical compliance (GACP/GMP), legal status, and supply chain integrity to manage significant operational and financial risks associated with herbal drug products.
• Government Policy Supports a High-Value Industry: The Vietnamese government is actively promoting the herbal medicine sector, with new regulations aimed at increasing transparency and expanding exports of its medicines.

Legal and Institutional Framework for Herbal Medicines

Vietnam has established a clear legal hierarchy for the governance of herbal and traditional medicines, providing a structured environment. The Law on Pharmacy 105/2016/QH13 serves as the backbone of the entire regulatory framework. 

It provides detailed provisions on the conditions for trading in herbal materials, sets national quality standards, and aims to regulate the entire supply chain. This legislation is similar in intent to the Drugs and Cosmetics Act seen in other countries.

Beneath this law, a series of supporting regulations adds further detail. These include:

• Mandatory standards like GACP (Good Agricultural and Collection Practices) for the cultivation of medicinal plants.
• Good Manufacturing Practice (GMP-WHO) for facilities producing medicines from these materials.
• Additional circulars providing specific guidelines on quality control, testing protocols, and product recalls.

For foreign investors, this multi-layered system presents both clarity and complexity. Unlike the more unified regulatory frameworks in the European Union, managed by bodies like the European Medicines Agency, Vietnam's system requires careful interpretation. 

The specific regulatory requirements for licensing can directly influence project timelines, making expert guidance in regulatory affairs essential. The primary regulatory authority is the Ministry of Health.

Quality and Safety Requirements for Herbal Medicines

The cornerstone of Vietnam's regulatory framework for herbal medicines is an uncompromising focus on quality and safety, enforced at every stage. This is crucial for public health and building trust in traditional herbal medicine.

National Standards for Herbal Materials

Vietnamese law mandates strict quality control from cultivation through to processing and storage of herbs. Cultivation facilities are required to meet GACP standards to ensure the consistency and safety of raw materials derived from plant parts. 

Manufacturing facilities producing traditional medicines must, in turn, comply with GMP standards. Every batch of herbal drug material must meet established criteria.

The regulations also specify rigorous quality assessment protocols, including:

• Evaluation for microbial contamination, heavy metals, and pesticide residues.
• Robust traceability systems to track medicinal plants from origin to final product.
• Strict enforcement of proper packaging and labeling to avoid adverse effects.

For new entrants, these stringent quality requirements translate into a higher initial investment. This has made M&A an attractive alternative. As emphasized by an analysis in the Vietnam Law Magazine (2024), standardizing quality is a critical challenge but is absolutely essential for "efforts needed to help Vietnamese herbs go global." The importance of a thorough safety assessment cannot be overstated.

Registration and Market Authorization Requirements

Gaining legal permission to sell herbal medicinal products in Vietnam involves a detailed registration process overseen by the Ministry of Health. 

To obtain market authorization for a herbal product, companies must submit a comprehensive dossier. This includes data on the product's quality, safety, and efficacy, often requiring scientific evidence and sometimes even clinical trials.

The government is actively working to streamline these procedures. According to an article by Vietnam.vn (2024), Vietnam is "completing regulations on registration and circulation of traditional medicines" to enhance transparency and create a clearer pathway for local products to enter international markets. 

This is different from the process for conventional pharmaceuticals or dietary supplements. For most herbal products, demonstrating a history of traditional use is a key part of the evaluation.

Compliance and Risk Management

Vietnam’s legal framework includes strict enforcement mechanisms for non-compliance, making robust risk management a top priority. The law imposes severe penalties for violations.

Investors must watch for several inherent risk factors, including:

• Variable quality of raw materials from medicinal plants.
• Price volatility in the raw materials market.
• The risk that a target company in an M&A deal may not meet the latest quality standards.

Comprehensive due diligence is the most effective tool for mitigating these risks. This must include technical verification of certifications, legal confirmation of all licenses, and a thorough audit of the raw material supply chain. This helps ensure the safety and efficacy of the herbal medicinal products.

Outlook for Herbal Medicine Regulation and Investment

The Vietnamese government's policy direction indicates a strong commitment to transforming the herbal medicine sector into a high-value, export-oriented industry. Future regulation is expected to focus on increasing market transparency, enhancing traceability, and aligning Vietnamese standards with international norms, such as those promoted by the World Health Organization.

This strategy is positioning Vietnam, a key player among developing countries, as a reliable international supplier of GACP-standard herbal materials for the global market, including for developed countries. Investors who move early can gain significant advantages. 

By applying international best practices, foreign-invested enterprises are well-positioned to achieve high quality standards and demonstrate the therapeutic value of their traditional herbal medicinal products through evidence-based research.

Conclusion

Vietnam has developed a comprehensive regulatory framework for herbal medicines and traditional herbal medicine, built on the three core pillars of quality, registration, and compliance. For foreign investors, a deep and nuanced understanding of these regulations is the key to optimizing their investment strategy.

Mastering this regulatory framework allows investors to effectively manage risks and build a sustainable business with strong potential for export. The current guidelines, coupled with supportive government policies, are successfully laying the groundwork for Vietnam to become a highly attractive destination for investment in herbal medicine for the next decade.

Frequently Asked Questions

What are the biggest regulatory challenges for a foreign company entering Vietnam's herbal medicine market?

The primary challenges are navigating the multi-layered legal status and regulations of herbal medicine, managing the lengthy market authorization process for new herbal products, and ensuring a consistent supply of high-quality raw materials. Overcoming these hurdles often requires local expertise and significant investment in quality control.

How long does it typically take to get market authorization for a new herbal product in Vietnam?

The timeline can vary, but it is a lengthy process that can often take between 12 and 24 months. The duration depends on the complexity of the herbal medicinal product, the completeness of the dossier, and the current workload of the regulatory authorities. This is a key reason M&A is often a faster strategy.

Is it better to build a new GACP-certified farm (greenfield) or acquire an existing one (M&A)?

Each strategy has distinct trade-offs. An M&A approach is typically faster, providing immediate access to land, but it requires extensive due diligence to ensure the existing operations truly meet GACP quality standards. A greenfield project offers complete control over quality and safety from the start but involves a longer timeline.

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I'll never forget the relief in our client's voice when we resolved their compliance crisis. They had invested heavily in state-of-the-art manufacturing technology to improve their production quality, but the import permit for the machinery was blocked.

The reason? The automation system was so new that it wasn't explicitly covered under the existing BPOM regulations. This is a growing problem in the global pharmaceutical industry. The drive for pharma innovation is relentless, but it often outpaces the regulatory frameworks designed to govern it. The pharma industry in countries like Indonesia faces a choice: innovate or fall behind. But for our clients, innovation can’t come at the cost of compliance. This article will explore the key trends, challenges, and strategies shaping pharma innovation today.

Key Takeaways:

• A New Era of Treatments: The pharmaceutical industry is experiencing a wave of innovation, with the emergence of gene therapies, advanced biologics, and personalized medicine poised to transform the treatment of chronic illnesses.
• The Regulatory Hurdle: The regulatory framework, led by global agencies, encourages pharma innovation but maintains strict guardrails for validation, data integrity, and safety, creating significant challenges for pharmaceutical companies.
• Technology as a Catalyst: Digital technology, artificial intelligence (AI), and advanced analytics are revolutionizing everything from drug development to manufacturing processes, increasing speed and efficiency.
• The Patient-Centric Approach: A growing trend is the shift towards a patient-centric approach, where the needs of individual patients are at the heart of research and development.
• Global Collaboration is Key: Addressing the complex issues facing the sector, from R&D costs to global access, requires increased collaboration between industry, academia, and regulators across the globe.

Overview of the Global Pharma Industry in 2025

The global pharmaceutical industry is at a critical turning point. The growth outlook is strong, driven by aging populations, the increasing prevalence of chronic illnesses, and the continued rise of emerging markets like China.

However, the industry faces several challenges. The cost of drug development continues to soar, and there is increased pressure from governments and healthcare providers to demonstrate value and control costs.

What I've learned is that this environment demands not just scientific innovation, but also business model innovation. Companies must find new ways to be more efficient, agile, and responsive to the evolving needs of patients and healthcare systems.

Key Trends Driving Pharma Innovation

From our client success experience, several key trends are shaping the future of pharmaceuticals.

The Rise of Advanced and Innovative Treatments

The most significant trend is the move towards highly specialized and innovative treatments. We are seeing a boom in the development of:

• Gene Therapies: These have the potential to offer one-time cures for genetic disorders that were previously untreatable.
• Cell Therapies: For instance, CAR-T therapies are revolutionizing cancer treatment by engineering a patient's own immune cells to fight the disease.
• Personalized Medicine: Advances in genomics and diagnostics are enabling the development of drugs tailored to an individual's genetic makeup, a prime example of a patient-centric approach.

The Impact of Technology on Drug Development

Technology is fundamentally changing how drugs are discovered and developed. The impact of AI, for example, cannot be overstated. AI algorithms can analyze vast datasets to identify new drug targets, predict the efficacy of compounds, and even design new molecules. This has the potential to dramatically accelerate the research process and reduce the high failure rates associated with traditional drug development.

Digital Transformation in Manufacturing

The adoption of technology in pharma production is another key trend. Smart manufacturing, where data flows seamlessly from production to quality assurance, is becoming the new standard. This not only improves efficiency but also enhances compliance with a complex web of global standards. A leading journal in the field, the Pharma Innovation Journal, regularly publishes research on these advancements.

The Regulatory Framework for Pharma Innovation

This is where the legal side becomes manageable, when you understand the regulator's mindset. Global regulatory bodies like the FDA and the European Commission encourage pharma innovation, but their primary mandate is public health and safety.

Navigating Compliance in a Changing World

Regulators are adapting their approaches to keep pace with technology. For example, they are developing new frameworks for approving complex medicinal products like gene therapies. Let me explain this the way I told our client last week: the regulator wants to see that your new automated system is not a "black box." You must be able to prove that the technology enhances quality and safety, not just speed. This requires a deep understanding of regulatory expectations and a commitment to transparency.

In Indonesia, BPOM is also actively building its own regulatory framework for Advanced Therapy Medicinal Products (ATMPs) and streamlining the Clinical Trial approval process.

Challenges in Implementing Pharma Innovation

The path to innovation is not without its obstacles. The challenges are significant and varied.

High Costs and Talent Shortages

The biggest challenge for many companies is the high cost of R&D and of retrofitting older facilities to accommodate new technology. There is also a significant talent shortage in specialized fields like bioinformatics and digital validation. For many leaders in the pharma and bio sector, finding the right expertise is a constant struggle.

Ensuring Access to New Treatments

Another major challenge is ensuring equitable access to innovative treatments. The high price of many new drugs, particularly gene therapies, creates significant hurdles for healthcare systems and patients. This is a complex issue that requires innovative solutions and collaboration between all stakeholders.

Case Studies and Opportunities

Early adopters of innovation are showing the path forward. In the wake of the COVID-19 pandemic, we saw the incredible ability of the industry to respond and develop vaccines at an unprecedented speed. This was a global test of the sector's innovative capacity.

Opportunities for Partnerships and Investment

The complex challenges facing the industry also create opportunities. There is a growing need for strategic partnerships between large pharmaceutical companies, agile biotech firms, and academic institutions. The life sciences sector is a hive of activity, with ideas and innovations emerging from all corners. For investors, this creates a fertile ground to find and support the next wave of healthcare breakthroughs.

Strategic Recommendations for Innovating Safely and Legally

After managing client relationships for 6+ years, I know what works. The pattern I see in every successful project is the integration of innovation and compliance from the very beginning.

A Holistic Approach

First, create a regulatory innovation checklist before you invest in any new technology. Second, embrace a patient-centric approach from the outset. Today, it is not enough to simply develop a drug; you must provide a holistic solution that addresses the broader needs of the people you aim to treat. This requires a deep understanding of the patient journey and a commitment to improving the overall patient experience.

Take our long-term manufacturing client. Their investment value grew 300% over four years. This is the approach you need for pharma innovation, a long-term, systematic plan that builds early relationships with regulators for guidance and validation.

Frequently Asked questions

What is the biggest regulatory challenge when introducing new manufacturing technology?

The biggest challenge is the validation process. Regulators require extensive documentation to prove that any new system is reliable and does not compromise product quality or data integrity, a process that can be both time-consuming and complex.

How are pharmaceutical companies addressing the high cost of drug development?

Companies are using several strategies. These include leveraging AI and data analytics to improve the efficiency of research and development, forming strategic partnerships to share costs and risk, and focusing on therapeutic areas with a higher probability of success.

What is the importance of a patient-centric approach in pharma innovation?

The importance of a patient-centric approach cannot be overstated. By focusing on the real-world needs of patients, companies can develop more effective treatments, improve adherence, and ultimately deliver better healthcare outcomes. This is a key trend that is reshaping the entire pharma industry.

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The Indonesian regulations for pharmaceutical distribution seemed straightforward until we dug deeper for a client. Three months into their market entry plan, we hit an unexpected roadblock: a nuance in the foreign ownership rules that their internal team had missed, which could have invalidated their entire investment structure.

This is where most market entry strategies fail. With over 270 million consumers and expanding healthcare access, Indonesia is a pharma goldmine, but it's also full of legal landmines for those who don’t have on-the-ground experience.

This guide is for foreign investors who want to learn how to navigate this complex market, establishing a business that is not only profitable but also compliant and sustainable for the long term.

Key Takeaways:

• Understand the System: Indonesia’s tiered distribution system is the foundational legal and operational framework that all foreign investors must understand. It dictates how pharmaceutical products move through the supply chain.
• Ownership is Open: 100% Foreign Direct Investment (FDI) is now permitted for wholesale pharmaceutical distribution. However, establishing a PT PMA requires a substantial minimum investment plan (approx. IDR 10 billion) mandated by BPKM.
• Licensing Takes Time: Acquiring the necessary licenses, especially from the National Agency of Drug and Food Control (BPOM), is a complex process that can take 9-18 months.
• Structure is Critical: Your legal business structure (PT PMA vs. Joint Venture) is the most critical decision, directly impacting timelines, tax, and licensing eligibility for your operations.
• Compliance is a Daily Commitment: Post-incorporation compliance, including BPOM audits and pharmacovigilance, is as crucial as the initial setup for long-term operational success.

Overview of Indonesia’s Pharmaceutical Distribution Ecosystem

In my 15 years guiding companies through ASEAN market entry, I’ve learned that you cannot succeed without first understanding the local ecosystem. In Indonesia, the pharmaceutical supply chain is built on a tiered distribution system, which is fundamentally different from the more consolidated markets in Europe or the UK.

The Role of Pharmaceutical Wholesalers

In Indonesia, pharmaceutical wholesalers are the critical intermediaries between manufacturers and healthcare providers. These distributors are responsible for the safe and efficient flow of medicines, medical devices, and other medical supplies. There are primary distributors, who often have national reach and buy in large volumes, and secondary distributors, who cover specific regions, ensuring that pharmacies, hospitals, and clinics have the stock they need.

Unlike in Europe, where a giant like Alliance Healthcare can streamline much of the market, Indonesia relies on many wholesalers of varying sizes. Top players are a mix of local family-owned enterprises and larger companies. Foreign players often face higher barriers to entry but bring advantages in technology, quality control, and access to a wider range of pharmaceutical products, from innovative brand name medications to cost-effective generic drugs. Their ultimate mission is to provide these essential products to the customers and, ultimately, the patients who need them.

Can Foreign Companies Own Wholesale Pharmacies in Indonesia?

This is the most critical question, and the answer is complex. From a regulatory perspective, what really determines success is a clear understanding of the foreign ownership limits. The Indonesian government maintains a Negative Investment List (DNI), which was revised by the Omnibus Law. According to an analysis by Herbert Smith Freehills (2021), these reforms opened up many sectors, but healthcare and pharmaceutical wholesalers remain tightly regulated.

While some areas of the healthcare sector now permit up to 100% foreign ownership, pharmaceutical distribution generally has specific equity caps. The possibility of 100% ownership often depends on the scale of the investment, the type of products being distributed (e.g., medical devices vs. medicines), and whether special licenses or exemptions can be secured. This is where our government relations work becomes key; we can clarify the practical application of these rules, which often differs from the written text.

Legal Requirements to Establish a Wholesale Pharmacy Business

From our work with over 3,000 consulting projects, we know that a fast setup that fails compliance is worthless. The licensing process for a wholesale pharmacy in Indonesia is not fast. It requires a series of permits, starting with general business licenses and then moving to highly specific pharma licenses from BPOM and the Ministry of Health.

Here's what that experience taught us: you must plan for a 9 to 18-month timeline. This includes securing a suitable warehouse that meets Good Distribution Practice (GDP) standards, including cold chain compliance for sensitive pharmaceutical supplies, which is a prerequisite for activating your licenses. Rushing this process is the surest way to face delays and rejections. Strict adherence to these standards is non-negotiable.

Structuring Your Business Legally and Strategically

The difference between successful and failed ASEAN market entries often comes down to the initial legal structure. The decision you make at this stage will impact your business for years to come.

PT PMA vs. Joint Venture

For foreign investors, the primary vehicle is a foreign-owned limited liability company, known as a PT PMA. The choice is often between a 100% owned PT PMA (if permissible) or a joint venture with a local partner. A joint venture, or partnership, can provide immediate access to local knowledge, licenses, and distribution networks. However, it requires intensive due diligence. You must choose a partner who shares your commitment to quality and compliance.

The FacCo project taught us something crucial about timeline expectations and structuring. Our strategic approach reduced their establishment time by 89%, from 3 months to just 10 days. This same level of strategic legal structuring is essential in the wholesale pharmacy business to optimize operations and avoid pitfalls. Avoid nominee structures; they are a major compliance violation and can put your entire investment at risk.

Regulatory Compliance Post-Incorporation

Securing your license is just the beginning. The biggest lesson from our government relations work is that staying compliant is an ongoing, every-day process. BPOM conducts regular audits, and wholesale pharma firms must maintain impeccable records. This includes pharmacovigilance, adverse event reporting, and strict documentation for all pharmaceutical supplies.

There are also stringent controls on the purchasing, importing, repackaging, and labeling of medicines. Furthermore, key employees must be properly licensed. One failure during a surprise inspection can lead to a suspension of operations. This constant commitment to compliance is essential to reduce risk and maintain your brand's reputation.

Common Legal and Operational Pitfalls in Indonesia’s Wholesale Pharma Sector

Having navigated regulatory frameworks from Hanoi to Jakarta, I’ve seen where foreign investors get into trouble. In Indonesia, a major pitfall is underestimating the role of provincial-level licensing. Another significant risk is exposure to counterfeit products entering your supply chain, which can have severe consequences.

Many foreign investors also face challenges with documentation gaps that stall their license renewals. The reality in Southeast Asian markets is that you must be proactive, working to conduct regular internal compliance audits. This aligns with the investment trends noted by ASEAN Briefing's 2023 mid-year report, which points to a complex but rewarding environment for diligent investors.

Strategic Advice for Successful Market Entry

After seeing this approach work across multiple ASEAN markets, my advice is to prioritize legal foresight and partner alignment. Don't plan your go-to-market strategy and then ask the legal team to make it work; build your plan around the legal and regulatory timeline.

A recent industry report from Permata Bank (2024) confirms the steady growth of the pharmaceutical sector. For new investors, it's often wiser to start with a narrow geographic or product focus, achieve regulatory stability, and then scale. Perhaps you initially focus on distributing medical equipment or even high-margin beauty products before expanding into a full range of medications. Your ability to secure good deals and offer competitive prices will benefit from this focused approach.

When Concentrix-Synnex approached us for their multi-country expansion, the goal was to build sustainable compliance structures for long-term operations. That principle is even more critical in the highly regulated wholesale pharmacy sector.

Frequently Asked Questions

What is the single biggest mistake foreign investors make when setting up a wholesale pharmacy in Indonesia?

The biggest mistake is underestimating the time and complexity of securing BPOM (National Agency of Drug and Food Control) licenses. Many investors create business plans based on a 6-month timeline, but from my experience with over 3,000 projects, the realistic timeframe from start to full operational licensing is closer to 9-18 months.

How much capital is required to establish a foreign-owned wholesale pharmacy in Indonesia?

While the exact amount varies, a foreign-owned company (PT PMA) typically requires a minimum investment plan of over IDR 10 billion (approximately US$650,000). This is a statutory requirement to ensure the business is well-capitalized, separate from your actual operational costs for warehousing and stock for the pharmaceutical products you plan to sell.

Is it better to have a local partner or aim for 100% foreign ownership?

From a strategic perspective, the best path depends on your goals. A local partner can accelerate market entry by providing existing licenses and networks, making it easier to purchase medications and establish a foothold. However, it requires sacrificing some control. Aiming for 100% ownership gives you full control over operations, quality standards, and the ability to provide direct support to your customers, but it requires a longer, more complex process.

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Vietnam’s markets for pharmaceuticals and dietary supplements are expanding rapidly, attracting significant investment focused on health and wellness. However, this growth comes with substantial quality-related risks. 

For investors, a lapse in product quality is not just a compliance issue; it’s a direct threat to financial performance, market reputation, and consumer safety. Understanding the distinct responsibilities of each stakeholder in managing drug and supplement quality is critical for mitigating these risks. Many consumers rely on these products to stay healthy, making robust quality control essential for overall health.

With a track record supporting multinational corporations, our team has seen how robust compliance frameworks reduce financial losses and streamline licensing. 

Navigating Vietnam’s key governing regulations, including the Vietnamese Pharmacy Law, is the foundation of a successful investment strategy for any supplement company. 

Key Takeaways:

• Regulatory Oversight is Multi-Layered: Investors must engage with several authorities, including the Ministry of Health (MOH) and Vietnam Food Administration (VFA), each with specific mandates for drugs and dietary supplements.
• Manufacturer and Importer Liability is Absolute: Companies are responsible to adhere to GMP standards, including mandatory batch testing, raw material verification, and maintaining comprehensive quality documentation.
• Supply Chain Integrity is Non-Negotiable: Distributors and retailers share responsibility for quality, requiring strict compliance with storage standards, anti-counterfeiting measures, and traceability to protect investors from downstream risks.
• A Dual-Track Compliance Model is Essential: Drugs and health supplements are governed by different regulations in Vietnam, demanding separate compliance strategies to manage risk effectively.
• Proactive Compliance is a Financial Strategy: Viewing quality control as a core financial strategy, rather than just a legal requirement, allows supplement companies to prevent costly recalls and reputational damage.

Understanding the Responsibilities of Regulatory Authorities

Navigating Vietnam’s regulatory environment requires a clear understanding of how different agencies coordinate. The local regulatory requirements can be complex. Our experience has shown that proactive communication with these bodies can significantly reduce project delays.

Ministry of Health (MOH) and Drug Administration of Vietnam (DAV)

The MOH and its executive body, the DAV, are the primary regulators for pharmaceuticals. They oversee market authorization and set quality standards. According to an analysis by Viet An Law (2024), the Law on Pharmacy 2016 (as amended by Law No. 44/2024/QH15) streamlines registration procedures to improve patient access to medicines while maintaining stringent quality controls. These regulations determine the approval lifecycle for all medications.

Vietnam Food Administration (VFA) for Supplements

The VFA is the key authority for dietary supplements, with a role similar to the Food and Drug Administration (FDA) in other countries. It focuses on post-marketing surveillance, product claims, and contaminant standards for foods and supplements. According to a Tilleke & Gibbins report (2024), the recently issued QCVN 20-1:2024/BYT is Vietnam’s first national technical regulation setting limits for contaminants like heavy metals in health supplements. The VFA is vigilant about label claims, and investors should be aware that marketing violations are a high risk.

General Department of Market Surveillance (GDMS)

Often overlooked, the GDMS plays a vital role in protecting market integrity. This body is responsible for enforcement against counterfeit and substandard products, including dietary supplements that could be potentially dangerous. Its activities are crucial for maintaining a level playing field for legitimate manufacturers.

Provincial Departments of Health (DOH)

Provincial DOH teams are the on-the-ground enforcers, conducting on-site inspections and sample testing. They coordinate with other agencies for escalated cases. Proactive engagement with these teams helps ensure compliance.

Manufacturer and Importer Responsibilities for Quality Compliance

Legal standards must be translated into actionable investor checklists. Foreign investors must ensure their targets and operations meet Vietnam's stringent quality compliance mandates for any dietary supplement.

Adherence to GMP, GLP, GSP, and Testing Protocols

Manufacturers must comply with Good Manufacturing Practices (GMP). As detailed in a key guidance document, Circular 30/2025/TT-BYT, the entire manufacturing process must be validated. An analysis by LuatVietnam (2025) highlights that this circular enforces strict guidelines for the testing of drugs and medicinal materials. For due diligence, investors should demand to see all quality control reports.

Raw Material Quality Control

For dietary supplements, controlling the quality of each dietary ingredient is paramount. This includes verifying the purity of vitamins like Vitamin C and Vitamin D, minerals such as calcium, and other nutrients like amino acids. 

Supplement manufacturers must ensure no raw materials contain harmful levels of contaminants. The chemical makeup of all supplement ingredients must be thoroughly tested.

Importer-Specific Obligations

Importers carry the responsibility of verifying that each dietary supplement conforms to registered specifications. This includes checking the active ingredients listed on the product label. Any discrepancy can trigger forced recalls and financial penalties.

Governance and Reporting for M&A Due Diligence

During M&A, investors must scrutinize a target’s compliance maturity. Critical documents include recall histories and GMP inspection results from facilities. Research from bodies like the National Institutes of Health can provide context on the benefits and risks of certain supplement ingredients.

Distributor and Retailer Responsibilities in the Quality Chain

Quality control does not end at the factory gate. The supplement industry relies on a secure supply chain.

Storage and Distribution Compliance

Distributors must adhere to Good Distribution Practices. A compliance failure can render a high-quality supplement unsafe, exposing investors to reputational and financial damage.

Anti-Counterfeit and Traceability Measures

To combat counterfeit products, robust traceability systems are needed. Before investing, a thorough evaluation of a target’s supply chain integrity is essential to ensure products are secure.

Retailer Responsibilities

Retailers are the final guardians of product quality. They are required to avoid misleading marketing claims on any dietary supplement label and sell only products with a lawful origin. 

They should not treat a supplement as a cure for conditions like heart disease without proper evidence. A consumer should always consult their doctor before taking high doses of any new vitamin or mineral.

An Action Plan for Investors

Successfully navigating Vietnam’s quality landscape requires a proactive stance that integrates quality management into core financial and strategic planning.

Transformative Insight 1: Quality Compliance is a Financial Strategy

Viewing compliance as a cost center is a mistake. The upfront investment in robust testing and supplier audits is minimal compared to the staggering costs of a recall. The goal is to ensure compliance with all food and drug regulations.

Transformative Insight 2: Vietnam Requires a Dual-Track Compliance Model

Drugs and health supplements operate under distinct regulatory frameworks. Successful investors structure their compliance teams to reflect this reality, drawing on principles from global standards, such as those that influenced the Dietary Supplement Health and Education Act.

Investor-Focused Compliance Checklist

• For M&A: Evaluate the target's recall history and CAPA system. For products making strong health claims, review any supporting clinical trials.
• For Greenfield Projects: Design GMP-compatible infrastructure from day one to streamline the manufacturing of supplements.
• For Distribution Networks: Assess risk by tiering distributors based on their compliance maturity and ability to handle various product form factors.

What Investors Should Do Next

In Vietnam's health sector, understanding these responsibilities is a decisive strategic advantage. Investors who master this landscape are better positioned to protect their capital and achieve sustainable growth in the dietary supplements market.

The next steps are clear. Investors should conduct a thorough regulatory review, develop a dual-track testing strategy for their supplements, and rigorously evaluate all suppliers. As a trusted advisory firm, we encourage investors to prioritize a proactive and deeply informed compliance strategy to unlock the full potential of this dynamic market.

Frequently Asked Questions

What are the biggest compliance risks for foreign investors in Vietnam's supplement market?

The most significant risks are misleading label claims and failing to meet contaminant limits in dietary supplements. The Vietnam Food Administration (VFA) actively penalizes companies for making unsubstantiated health claims on packaging. A supplement found with potentially dangerous contaminants can lead to forced recalls.

How long does it typically take to get a new drug registered under the updated Pharmacy Law?

While the revised law aims to streamline processes, timelines vary. For standard applications, the process can take 12-24 months. It is intended to ensure all medications are safe and effective. An applicant must adhere to all regulatory requirements.

For an M&A deal, what are the top three red flags in a target company's quality management system?

The top three red flags are an incomplete recall history, a weak Corrective and Preventive Action (CAPA) system, and inconsistent quality control records. A missing recall history suggests a lack of transparency, and messy audit logs point to a weak compliance culture, posing significant post-acquisition risks. Any reputable dietary supplement manufacturer, such as those certified by NSF International, will have these records in order.

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Vietnam's National Assembly has taken a significant step to accelerate the nation's digital economy and foster economic growth by passing the revised Corporate Income Tax (CIT) Law (or Law No. 67/2025/QH15). 

This updated legal framework introduces breakthrough tax incentives for science and technology development. For all enterprises, from large FDI corporations to innovative science and technology enterprises, understanding and leveraging these incentives is crucial for building a competitive edge within the country's growing innovation ecosystem.

At Viettonkin Consulting, we see this as a pivotal moment. The new legislation provides direct financial support to businesses committed to innovation and technological development. This guide will provide clarity on the key CIT incentives, how they work, the opportunities for investment, and the compliance risks to navigate.

Key Takeaways:

• Enhanced R&D Deductions: Businesses can claim more than 100% of their actual research and development (R&D) costs as deductible expenses, directly reducing their payable tax.
• Flexible Accounting for Long-Term Projects: The law eases the "matching principle," allowing deductible expenses for scientific research to be claimed even before projects generate income.
• Dedicated Innovation Funding: Enterprises can allocate up to 20% of their taxable income to establish powerful, in-house technology development funds.
• Credit for Digital Transformation: Costs for digital transformation are now officially recognized, expanding the benefit to non-tech firms investing in technology.
• Critical Compliance Risks: Failure to meet strict documentation or fund utilization rules can lead to severe tax clawbacks, so a clear strategy is essential.

Key Tax Incentives under the New Corporate Income Tax CIT Law

The CIT Law 2025 is designed to transform Vietnam's innovation landscape by providing tangible financial support for science and technology activities. This government initiative aims to stimulate private sector investment in crucial areas.

Additional deductions for R&D and innovation expenditures

One of the most transformative changes is the provision for additional deductions on R&D expenses. According to PwC Vietnam (2025), costs related to scientific research and technological development now qualify for extra tax deductions. This "super-deduction", which comes with some documentation requirements, allows companies to lower their taxable income significantly, making ambitious technological research projects more financially viable.

Relaxation of the matching principle for R&D activities

The new legislation addresses a long-standing challenge for long-term research and technological development. It relaxes the strict accounting principle that requires expenses to match income in the same tax period. This change is critical for enterprises in sectors with prolonged development cycles, such as biotech, renewable energy, and high technology.

Incentives tied to the Science and Technology Development Fund

Enterprises can establish their own in-house technology development funds. As detailed by LuatVietnam's summary of the 2025 law, this powerful tool for internal funding allows businesses to:

• Allocate Capital: Appropriate up to 20% of annual taxable income to the fund.
• Fund Key Activities: Use the capital for R&D, technology development, and workforce training.
• Manage Risk: Be aware that if less than 70% of the fund is used within five years, the tax exemption is reversed, and the enterprise must repay the amount plus interest.

Opportunities for Enterprises

These new incentives open strategic pathways for businesses to reduce costs, accelerate innovation, and build a sustainable competitive advantage across many sectors.

Substantial cost reduction for R&D-intensive firms

The enhanced deductions directly translate into a lower effective tax burden. This is a major benefit for any science and technology enterprise, especially those in high technology sectors like:

• Artificial Intelligence and Data Centers
• Automobile Manufacturing and advanced materials
• Information Technology and software development

Accelerated digital transformation under incentive support

The recognition of digital transformation spending as eligible for CIT incentives creates massive opportunities. This support makes it more affordable for medium sized enterprises to adopt digital tools, while larger enterprises can undertake massive projects, like implementing AI-driven analytics, at a reduced net cost.

Leveraging internal funds for sustainable innovation and new investment projects

The internal S&T fund allows companies to create a dedicated pool of capital. This turns tax savings into a predictable innovation pipeline, enabling enterprises to fund new investment projects, protect intellectual property, and explore commercializing strategic technologies through technology transfer.

Compliance Risks and Challenges

While the incentives are attractive, navigating the compliance requirements is critical to avoid financial penalties.

Documentation requirements for R&D deductions

To claim R&D deductions, businesses must maintain meticulous records for all research projects. Tax authorities require clear proof that claimed expenses are directly related to eligible scientific and technological activities.

Distinguishing R&D from digitalization or operational expenses

One of the biggest compliance challenges is correctly distinguishing between genuine scientific research and routine operational costs. Enterprises must be careful not to misclassify standard software upgrades or quality control as technological research.

Risks associated with the Science and Technology Fund

The 70% utilization rule is a critical hurdle. Businesses must establish stringent internal controls and clear funding plans to avoid clawbacks with interest.

Strategies to Maximize Tax Incentives

A proactive and structured approach is necessary to harness the full potential of these tax incentives.

Establishing in-house R&D or innovation units

Formalizing research efforts by establishing dedicated innovation units significantly enhances eligibility. This structure streamlines expense tracking and demonstrates a clear commitment to innovation.

Partnering with universities and scientific institutions

Collaborating with academic and scientific institutions strengthens eligibility. Joint ventures and sponsored research agreements provide third-party validation and can accelerate technological development.

Developing long-term fund utilization plans for compliance and ROI

To avoid clawback risk, develop a long-term utilization plan. This strategic document should outline specific projects, detailed budgets, and KPIs to measure the return on investment.

Long-Term Strategic Implications

These tax incentives are more than short-term measures; they are strategic tools for shaping your business's future.

Building stronger enterprise competitiveness through innovation

By easing the financial burden of R&D, these incentives accelerate innovation cycles. According to a report from Saigon Giai Phong (SGGP) English (2025), the policy is designed to encourage robust R&D investment. This helps companies improve everything from manufacturing products to launching new digital services.

Alignment with national science and technology objectives

Enterprise-level investment spurred by these incentives contributes directly to Vietnam's national science goals. By fostering a strong R&D culture, companies help accelerate Vietnam's transition to a knowledge-based economy focused on high technology and environmental protection.

Strengthening Vietnam’s position as a regional R&D hub

Enhanced tax policies make Vietnam more attractive for foreign direct investment. This helps attract R&D centers from multinationals and encourages investment projects in high-tech zones.

Conclusion

The CIT Law 2025 brings transformative tax incentives for science and technology development, opening significant opportunities for forward-thinking enterprises. Capitalizing on these benefits requires a deep understanding of the rules, meticulous strategic planning, and a commitment to rigorous compliance.

At Viettonkin Consulting, we specialize in guiding enterprises through the complexities of tax incentive optimization and cross-border investment structuring. The firms that adopt early, structured approaches to R&D investment will lead the innovation wave.

Frequently Asked Questions

What kind of special incentives are available for new investment projects in high-tech zones?

New investment projects in designated high-tech zones often qualify for special incentives, which may include extended periods of CIT exemption or reduction, and potentially import duty relief for scientific equipment. To receive these benefits, projects typically need to be in prioritized sectors and have their granted certificates of investment.

How do these tax incentives apply to a technology enterprise focused on software services?

A technology enterprise developing software services can benefit significantly. The costs of scientific research and technological development for creating new algorithms or platforms are eligible for the enhanced deductions. Further, establishing technology development funds can provide ongoing funding for feature enhancements and new product development.

Besides CIT incentives, what other forms of financial support are available for science and technology enterprises?

While corporate income tax CIT relief is a primary tool, the government also offers other support. This can include credit incentives (preferential loans), direct grants for strategic technologies, and support for technology transfer. These programs work alongside the tax system to build a comprehensive innovation ecosystem.

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Vietnam's pharmaceutical market, a fertile ground brimming with potential, is on the cusp of a significant legal transformation. This change is set to reshape the investment environment for foreign investors. 

For years, the primary barrier for multinational pharmaceutical companies has been the regulation preventing foreign-invested enterprises (FIEs) from directly distributing drugs in Vietnam. This created considerable challenges in market access and supply chain optimization for many companies.

However, with new government policies and a clear national strategy for developing Vietnam's pharmaceutical industry, a new chapter is unfolding. 

This new landscape presents both unique opportunities and challenges that demand a carefully planned, effective market entry strategy from any prospective international investors. The focus is now on attracting quality foreign investment to elevate the entire pharmaceutical sector.

Key Takeaways:

• Regulatory Shift: The amended Law on Pharmacy, effective July 1, 2025, grants FIE importers new rights related to logistics, improving the handling of pharmaceuticals.
• Core Barrier Remains: FIEs are still restricted from direct distribution, in detail foreign invested companies are not allowed to distribute pharmaceuticals in Vietnam (Circular 34/2013/TT-BCT). It is necessitating the establishment of a Vietnamese enterprise for the distribution.
• New Investment Incentives: The Vietnamese government is actively promoting local pharmaceutical production, technology transfer, and the development of world-class research and development centres.
• Strategic Entry Models: Approaches like joint ventures and M&A are becoming key strategies to navigate legal hurdles and accelerate entry into the Vietnamese market.
• Compliance is Key: A thorough understanding of new regulations on drug registration, clinical trials, and post-market surveillance is critical for the sustainable development of any pharmaceutical business.

Vietnam’s Evolving Legal Framework for Pharmaceutical Investment in 2025

The new law, passed by Vietnam's National Assembly, signals a significant shift in regulatory philosophy. It is aimed at creating a more transparent and predictable investment environment for the pharmaceutical industry. These new regulations officially come into effect on July 1, 2025, fundamentally altering the legal framework.

Key Changes in the 2024 Amended Law on Pharmacy

One of the most crucial updates is the expansion of rights for foreign invested enterprises involved in the import of drugs. According to an analysis from Tilleke & Gibbins (2024), the amended law grants FIEs that handle imported drugs additional operational permissions. Specifically, these companies now have the right to:

• Transport drugs and pharmaceutical ingredients they have imported from their warehouses to wholesalers.
• Deliver specific pharmaceuticals, such as those for clinical trials or humanitarian aid, directly to healthcare facilities.

Guiding Regulations Effective July 1, 2025

New guidelines will streamline several administrative procedures. Most notably, the timeline for appraising drug registration dossiers will be shortened, a key focus for all pharmaceutical businesses. According to Tilleke & Gibbins (2024), key changes include:

• Faster Appraisals: The review period for new drugs will be reduced, accelerating market access for pharmaceutical products.
• E-commerce Legalized: An article from RHTLaw Vietnam (2025) clarifies this allows online retail of over-the-counter drugs, opening new wholesale activities for the domestic market. This digital transformation is a major step for the industry.

Major Barriers in Vietnam Pharmaceutical Investment Foreign Investors Must Address

Despite these improvements, significant hurdles for foreign investment remain. Identifying and strategizing to overcome them is a prerequisite for any successful investment in Vietnam's pharmaceutical sector.

Restrictions on Drug Trading and the Mandatory Vietnamese Enterprise

This remains the single biggest barrier for foreign pharmaceutical companies. Vietnamese law prohibits FIEs from directly engaging in most business activities related to the distribution of drugs.

To conduct these operations, foreign investors can only conduct your drug distribution activities through a pharmaceutical company that is duly registered in Vietnam. Drugs also need to be fully licensed and registered according to regulations to be circulated on the market..

Lengthy and Fragmented Licensing and Drug Registration Processes

While reforms are underway, the process for registering drugs remains complex. Preparing a complete dossier that meets all regulations demands deep local knowledge. Any errors can delay the investment and affect the launch of both generic drugs and original brand name drugs.

Government Incentives Strengthening Vietnam’s Pharmaceutical Sector in 2025

In parallel with legal reforms, the Vietnamese government is actively deploying incentive policies to attract investment into pharmaceutical manufacturing, especially for high-tech drugs and biological products. This is part of a national strategy to bolster the domestic pharmaceutical industry.

Incentives for Local Production and Technology Transfer

The Prime Minister's vision is to transform Vietnam into a regional hub for pharmaceutical production. The government is offering powerful incentives for investment in manufacturing and technology transfer. The focus is on elevating domestic firms to meet international standards. Investors from regions like South Korea are watching these developments closely.

This push includes incentives for building R&D and development centres to foster innovation in new drugs, including specialised drugs and rare drugs.

New Opportunities Through Domestic Capacity Building

This national strategy creates immense opportunities for long-term investment. Instead of viewing Vietnam solely as a consumption market for imported drugs, international pharmaceutical companies can establish manufacturing bases. This approach leverages investment incentives and mitigates logistics risks for their pharmaceuticals.

Effective Market Entry Strategy Options for Foreign Investors

To navigate the legal barriers and fully capitalize on the potential of Vietnam's pharmaceutical market, a strategic entry is crucial. A successful strategy requires thorough legal due diligence.

1. Establishing an Enterprise; Joint Ventures (JVs) and Mergers & Acquisitions (M&A).

Under Vietnamese regulations, foreign-invested companies are not allowed to directly distribute drugs, except for drugs they themselves produce. Therefore, the safest and most compliant approach is to distribute through a local pharmaceutical company in Vietnam, ensuring legal compliance and minimizing regulatory risks.

2. Contract Manufacturing: The Risk-Mitigation Strategy
This model allows foreign companies to partner with a local factory for manufacturing. It is an excellent strategy for reducing upfront investment for both original brand drugs and generic drugs.

Compliance and Operational Solutions for Sustainable Investment

According to Baker McKenzie (2024), the new regulations will strengthen regulatory oversight. Companies in the pharmaceutical sector must have rigorous systems for providing healthcare services and monitoring product safety. Building compliant distribution networks is essential for all business activities in Vietnam's pharmaceutical industry.

Your Next Steps

The Vietnamese pharmaceutical market is at a promising inflection point. While regulatory barriers persist, the focus on improving the investment environment is creating unprecedented opportunities. Success will belong to international investors who develop a robust strategy for their pharmaceutical business.

Navigating this complex legal framework successfully requires a partner with deep local expertise. With extensive experience in FDI advisory, Viettonkin Consulting is ready to guide your investment.

Frequently Asked Questions

What is the single biggest change for foreign pharmaceutical investors in Vietnam in 2025?

The most significant change is that the new law allows FIEs that import drugs to perform certain logistics activities, improving supply chain efficiency for their pharmaceuticals. While not full distribution rights, it's a critical step for Vietnam's pharmaceutical industry.

How long does it typically take to establish a Vietnamese enterprise for drug distribution?

Based on our experience, the process for this form of investment typically takes 4 to 6 months. This timeline covers all administrative procedures, but can vary based on project complexity.

Should I choose an M&A strategy or a greenfield investment to enter Vietnam's pharma market?

An M&A strategy is ideal for investors who want to quickly enter the Vietnamese pharmaceutical market by acquiring an existing license. A greenfield investment offers complete control, making it suitable for long-term plans for manufacturing new technology or traditional medicines.

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Vietnam's pharmaceutical industry is at a major inflection point. Driven by a post-pandemic push for self-sufficiency and a rapidly growing domestic market, the government has enacted a landmark policy designed to transform the pharmaceutical industry from an import-dependent market into a regional manufacturing powerhouse. 

This shift, underpinned by the ambitious national strategy detailed in Decision 1165/QĐ-TTg on the development strategy of Vietnam's pharmaceutical industry, creates significant opportunities and new challenges for foreign investors.

The overarching goal for the pharmaceutical sector is to enhance drug security for the population. The successful implementation of Vietnam's pharmaceutical industry development plan will rely heavily on guidance from the Ministry of Health and other state management agencies.

As an FDI consulting firm established in 2009, Viettonkin has supported thousands of cross-border projects, helping investors navigate complex pharmaceutical mechanisms and policy frameworks. We understand that translating legal documents into actionable business strategy is the key to unlocking market potential within the pharmaceutical industry.

Key Takeaways:

• Aggressive Growth Targets: Vietnam aims for its pharmaceutical market to see its market value reach USD 20 billion by 2045, signaling strong, sustained growth for the pharmaceutical industry.
• Shift to Self-Sufficiency: The national strategy prioritizes domestic drug production, targeting 80% of local demand and 20% localization manufacture of active pharmaceutical ingredients (APIs) and medicinal raw materials. Domestically produced vaccines meet 100% of the demand for expanded vaccination and 30% of the demand for service vaccination.
• High-Value Investment Focus: The government is encouraging FDI in high value pharmaceutical production, including technology transfer for vaccines, biologics, and EU-GMP-standard drug manufacturing.
• Regulatory Upgrades: Compliance with international standards is becoming mandatory, raising the barrier to entry but creating a level playing field for quality-focused pharmaceutical enterprises in the domestic pharmaceutical industry.
• Digital Transformation: A nationwide push to digitize the pharmaceutical industry supply chain is opening opportunities for investment, including the creation of a national pharmaceutical database.

Decoding the Vietnam New Pharmaceutical Strategy: A Blueprint for the Pharmaceutical Industry

Official policy documents can be dense. In essence, Vietnam's new national strategy is a clear signal to the world: the country is moving from a volume-based market to a quality-driven, self-reliant hub.

The core of Vietnam's pharmaceutical industry development is a focus on quality and sustainability. For investors, understanding the core objectives is the first step toward aligning with this vision for the pharmaceutical industry.

Core Objectives of the National Strategy for Pharmaceutical Industry Development

At its heart, the national strategy aims to achieve greater drug security. According to a summary from LuatVietnam (2023), the policy, guided by the Ministry of Health, is built on several key pillars: boosting drug production, developing local sources of medicinal ingredients, advancing vaccine capabilities, upgrading facilities to meet advanced GMP, and digitizing the supply chain.

This blueprint is designed to reduce reliance on imports, improve clinical pharmacy activities, and elevate the position of Vietnam's pharmaceutical industry in the global pharmaceutical supply chain. The development of a skilled pharmaceutical workforce is also central to this plan.

Key Targets to 2030-2045: Impact on the Domestic Pharmaceutical Industry

The national strategy sets quantifiable goals that directly impact investment. The government is targeting 80% domestic drug production to reduce reliance on imported drugs. This fundamentally shifts supply chain economics.

The long-term vision aims to establish Vietnam as a premier hub, enhancing its international competitiveness. This includes producing a range of domestically produced drugs, from generic drugs to specialised drugs, and eventually fostering an environment for innovative drugs. The Ministry of Health will oversee these production and business activities.

Orientation to 2045: Domestically produced drugs meet domestic demand and increase export value, deeply integrating into the global supply chain. The system of drug testing, distribution, clinical pharmacy, drug information and pharmacovigilance reaches the same level as advanced countries in the world.

Market Landscape and Opportunities in Vietnam's Pharmaceutical Industry

This national strategy is a catalyst for market transformation. The strategic shift toward high-value manufacturing is creating fertile ground for savvy investors who can fill critical gaps in the pharmaceutical industry ecosystem.

Growth Outlook for Vietnam's Pharmaceutical Industry

The market's potential is substantial. Targets set out in the national drug development strategy: By 2045, strive for the total value of the pharmaceutical industry to contribute to GDP of over 20 billion USD. This growth is fueled by rising incomes, an aging population, increased health consciousness, and a greater focus on disease prevention.

Priority Investment Areas: From Technology Transfer to Innovative Drugs

The government has clearly signposted where it wants foreign capital to flow. Key areas include the pharmaceutical industry development of raw materials and advanced manufacturing. The focus is not just to produce generic drugs, but to move up the value chain.

The table below maps these government priorities to tangible investor opportunities:

Policy Priority (from Decision 1165)	Corresponding Investor Opportunity
Reduce API import dependency	Investment in manufacturing facilities for APIs and pharmaceutical chemicals.
Upgrade drug quality to international standards	M&A with local firms to upgrade plants for producing high-quality generic drugs.
Secure vaccine & biologic supply	Technology transfer partnerships for original brand name drugs, vaccines, and biologics.
Develop domestic herbal medicine	Investment in cultivation and processing of medicinal herbs and medicinal plants.
Digitize the healthcare ecosystem	Development of digital health platforms and a pharmaceutical industry data bank.

There is a significant opportunity in developing domestic medicinal sources. The national strategy emphasizes the potential of natural medicinal herbs and medicinal materials, aiming to cultivate medicinal plants originating from Vietnam to create drugs derived from these sources, including essential oils. This also creates opportunities for technology transfer in modern drug preparation technology.

Navigating the Regulatory Environment of the Pharmaceutical Industry

As Vietnam elevates its pharmaceutical industry, it is tightening its regulatory framework under the Law No.105/2016/QH13 on Pharmacy and Law No. 44/2024/QH15 of the National Assembly: Law amending and supplementing a number of articles of the Law on Pharmacy. Foreign investors must be prepared to meet higher standards. These regulations, managed by the Ministry of Health and other state management agencies, aim to improve monitoring drug quality across all production and business activities.

Upgraded QA Requirements: GMP and PIC/S

The national strategy mandates a move toward higher manufacturing standards. This will impact investment costs but ensures that investors who commit to quality will operate in a more transparent environment, ultimately improving the quality of domestically produced drugs.

Licensing, Clinical Trials, and IP Protection for Innovative Drugs

Navigating pathways for drug licensing and registration remains complex, especially for new drugs. A key area of focus is the enhancement of the drug testing system and building capacity to conduct clinical trials. The government seeks to promote research and expand research capabilities for drug research within the pharmaceutical industry.

Improving clinical pharmacy and the standards for clinical trials is a priority for the Ministry of Health. The process for conducting clinical trials for both brand name drugs vaccines and generic drugs is being streamlined. This commitment to robust clinical trials is crucial for the long-term pharmaceutical industry development.

Conclusion: Actionable Recommendations for Investors

Vietnam's national strategy for its pharmaceutical industry is a clear invitation for investment. Success requires a strategic approach focused on high value pharmaceutical production. Effective pathways include joint ventures, M&A, and greenfield investments in facilities that support pharmaceutical production.

Viettonkin Consulting specializes in navigating these complexities. With deep expertise in FDI, pharmaceutical management, and risk management, we help investors align their strategy with Vietnam's evolving regulatory landscape, a key component of Vietnam's pharmaceutical industry development.

Frequently Asked Questions

What is the single most important change for investors under Decision 1165?

The most critical change is the strategic shift from an import-dependent market to one that heavily prioritizes local, high-quality manufacturing of domestically produced drugs. This makes direct investment in drug production facilities, particularly those meeting EU-GMP standards, more viable.

What are the biggest compliance costs when investing in Vietnam's pharma sector?

The largest costs are typically associated with building or upgrading manufacturing facilities to meet international standards. Additionally, navigating the complex product registration process, including local clinical trials, can involve significant time and expense for the pharmaceutical industry.

What is the most effective market entry strategy for a mid-sized pharmaceutical firm?

For a mid-sized firm, a joint venture or M&A with an established local company is often effective. This approach provides immediate access to drug distribution networks, existing licenses, and local knowledge, shortening the time-to-market for their original brand name drugs.

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Belgium has emerged as a European leader in green innovation and renewable energy technologies, building a strong ecosystem around offshore wind, solar integration, and circular economy solutions. This model demonstrates strong circular economy principles and resource efficiency.

Meanwhile, Vietnam is undergoing a profound transition towards sustainable development and a circular economy. As one of the fastest-growing economies in Asia, this country faces rising energy demand and climate challenges.

The Government has shown clear political will through key legal instruments such as the National Green Growth Strategy (Decision No. 1658/QĐ-TTg, 2021) and the Circular Economy Development Scheme (Decision No. 687/QĐ-TTg, 2022).

The Government has made environmental protection a key priority, creating significant investment opportunities. This combination of urgency and ambition makes Vietnam a compelling destination for Belgian Greentech firms looking to offer support and advanced technology.

Key Takeaways

• Strong Commitment from Vietnam: Vietnam is demonstrating clear political will to accelerate its green transition and circular economy development, backed by national strategies and policy such as Decision 1658/QĐ-TTg (2021), Decision 687/QĐ-TTg (2022), and Decree 08/2022/NĐ-CP (amended by Decree 05/2025/NĐ-CP) guiding the Law on Environmental Protection 2020.
• Belgium as an Ideal Partner: Belgian companies possess proven expertise in critical areas like waste management and renewable energy technology, which aligns perfectly with Vietnam's current needs.
• Collaboration is Key to Success: Success depends not just on technology but on strong collaboration with local stakeholders and an understanding of policy to develop effective practices.
• Waste Management as an Urgent Opportunity: The challenge of waste management, particularly in urban centers like Ho Chi Minh City, represents one of the most immediate opportunities for impactful investment.

Vietnam’s Green Transition and Circular Economy Development: Policy and Market Drivers

The Government of Vietnam's energy and sustainability agenda is driven by a convergence of policy, economic, and social pressures. This national strategy is crucial for long-term economic growth.

• Rising energy demand: With electricity consumption growing at over 8% annually, as noted by the IEA (2023), Vietnam must expand generation capacity while achieving a reduction in emissions.
• Renewable energy push: Reuters (2023) reports that offshore wind alone could reach 6 GW by 2030, a core part of the Government's strategy.
• Government Focus: The Prime Minister has approved a national action plan for circular economy development, signaling a clear political will to accelerate this shift through government incentives and support.
• Urbanization and pollution pressures: Expanding cities, notably Ho Chi Minh City, face growing demand for better waste management and solutions for plastic packaging.

While incentives specific to the circular economy are still being developed, existing provisions under the Green Growth Action Plan (Decision 889/QĐ-TTg, 2023) encourage private-sector participation and green investment projects.

This broad agenda, supported by government policy and various initiatives, creates opportunities across the full spectrum of Belgian green tech expertise and requires significant investments.

Strategic Opportunity Zones for Belgian Greentech in Vietnam

Belgium’s green technology sector has built global credibility in renewable energy and the circular economy. In Vietnam, several priority areas for collaboration and investment stand out:

Waste Management and Recycling: A Core Circular Economy Project

A significant challenge in Vietnam is that much of the waste collected is not properly treated, leading to environmental pollution. Belgium’s proven circular economy models in waste management, reuse, and recycling can be adapted for industries in Vietnamese cities. These projects can address critical issues like packaging waste and improve environmental protection, transforming waste into valuable natural resources.

Implementing Circular Business Models and Strategy

The private sector in Vietnam is showing growing interest in adopting circular business models. There are significant opportunities for Belgian companies to support this shift, especially with the Government's push for policy like Extended Producer Responsibility (EPR).

Collaboration with a key Ministry, such as the Ministry of Natural Resources and Environment, can help navigate regulatory constraints and accelerate the implementation of these new practices.

Enhancing Manufacturing and Technology Transfer

In the manufacturing sector, Belgian technology can help local businesses improve resource efficiency and reduce their carbon footprint, contributing to lower emissions.

Technology transfer is a critical component for enhancing the capabilities of local industries, from agriculture to textiles. A project demonstrating this success can serve as a powerful model for other companies.

Climate-Tech and Innovation Supporting the Circular Economy

Innovation in science and technology is key. Belgian startups can help Vietnamese businesses meet ESG requirements, improving their access to international capital. This fosters the development of smarter, more efficient value chains.

Challenges & Risk Factors in Market Entry and Implementation

Implementing a circular economy model offers major opportunities but Belgian firms must navigate clear challenges:

• Access to Capital: Securing capital for large-scale green projects remains a hurdle for many domestic businesses.
• Regulatory Constraints: Navigating the legal framework requires a deep understanding of local policy. The Ministry is working on this, but it remains a challenge.
• Technology and Skills Gap: There is a need for advanced technology to effectively implement circular economy practices across industries.

Recommended Entry Strategies for Success in Vietnam's Circular Economy

To succeed, businesses should focus on these strategies:

• Build Partnerships: Work with local utilities and developers. A project co-developed with local partners sees faster approvals.
• Focus on Technology Transfer: Offer training to build local skills. This support signals a long-term commitment to accelerating Vietnam’s sustainable development.
• Start with Pilot Initiatives: Deploy small-scale circular economy initiatives in recycling or waste-to-energy. These pilot projects help prove the model works under local conditions.

Conclusion

Vietnam’s transition to a circular economy represents both a necessity and an opportunity for a better life and environment. The country must modernize its infrastructure with innovation and international support.

The Government, led by the Prime Minister, has approved a national strategy for circular economy development, highlighting the nation's commitment.

Success will depend on implementing proven practices and models. By forming strong partnerships, Belgian businesses will not only capture investment opportunities but also help shape Vietnam’s sustainable future.

Frequently Asked Questions (FAQ)

1. Why is Vietnam an attractive market for circular economy projects right now?

Vietnam is attractive due to strong government support, a clear national strategy for circular economy development, and an urgent need for advanced technology in waste management and renewable energy. This creates numerous investment opportunities for the private sector.

2. What are the biggest challenges for companies implementing circular economy models in Vietnam?

The main challenges include navigating regulatory constraints, securing capital for new investments, and bridging the gap in advanced technology and skills needed for effective implementation of circular economy practices.

3. What is the most effective strategy for a foreign company to support Vietnam's circular economy?

The most effective strategy involves building strong local partnerships to co-develop projects. A focus on technology transfer, starting with pilot initiatives in areas like recycling or waste management, helps demonstrate value and ensures long-term success

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Vietnam is fundamentally restructuring its pharmaceutical law, a critical shift headlined by the new Circular 31/2025/TT-BYT. For any pharmaceutical business, understanding the specific new regulations on the methods, forms, and introducers of drug information is central to operational success and securing marketing authorization. As a critical YMYL sector, the pharmaceutical sector demands the highest standards, a principle that underpins this amended pharmaceutical law.

At Viettonkin Consulting, our expertise is frequently applied to navigating Vietnam's complex legal documents, particularly for a pharmaceutical business establishment. This guide breaks down the new regulations from the Ministry of Health (MOH), providing insights for any pharmaceutical business aiming for sustainable growth.

Key Takeaways:

• Regulatory Overhaul: Vietnam's legal framework for drug information is transitioning to a digital model, driven by the amended pharmaceutical law (Law No. 44/2024/QH15).
• Clear Distinction: The new regulations draw a firm line between drug information (for professionals) and advertising, affecting every pharmaceutical business.
• Licensed Introducers: The role of a drug introducer is now formalized and requires a pharmacy practice certificate, transforming them into regulated communicators for the pharmaceutical business establishment.
• Pre-Approval is Mandatory: All drug information materials must be pre-approved by the MOH before use, a key step after receiving marketing authorization.
• Compliance as an Advantage: Mastering these new regulations is a strategic advantage for any pharmaceutical business looking to build trust and achieve long-term success with their marketing authorization.

The Amended Pharmaceutical Law: New Vietnam Regulations on Drug

The most significant transformation in Vietnam's system is its shift to a digital compliance model, designed to simplify administrative procedures for the pharmaceutical business.

The foundation of this legal framework is the amended Law on Pharmacy, documented as Law 44/2024/QH15, which provides principles for all pharmacy activities. Supporting this law are detailed regulations, including the pivotal Circular 31/2025/TT-BYT, which specifies rules for providing drug information. Obtaining marketing authorization is a central theme.

These instruments apply to every pharmaceutical business establishment, drug introducers, and distributors. The competent authority overseeing enforcement is the MOH and its Drug Administration of Vietnam (DAV). This guide provides practical applications for any pharmaceutical business beyond just listing legal documents.

Regulations on Methods, Forms, and Raw Materials

A core principle of the new pharmaceutical law is that "informing is not advertising." The regulations create a clear distinction for how a pharmaceutical business can discuss its products that have marketing authorization.

Approved methods for delivering drug information include meetings with professionals who hold pharmacy practice certificates, seminars, and digital content. Permitted forms include leaflets and e-brochures, which must align with approved package inserts. As Vietnam embraces digital transformation, the Ministry of Health will issue further guidance. All drug information must be faithful to the approved marketing authorization; promoting off-label uses is strictly prohibited. The focus is always on ensuring drug quality, starting from raw materials and medicinal materials.

Responsibilities and Licensing of Pharmaceutical Drug Introducers

The era of loosely defined sales roles is over. Under the new regulations, a "Licensed Introducer" is a regulated communicator, and the person responsible at the pharmaceutical business establishment must ensure compliance.

To qualify, an individual must have the proper training and a valid pharmacy practice certificate. The Circular 31/2025/TT-BYT mandates a rigorous licensing process for anyone practicing pharmacy in this role. Companies must implement MOH-approved training programs. These introducers are subject to strict supervision. Any violation can lead to severe penalties, including suspension of their pharmacy practice certificates and a ban on the company's pharmaceutical activities.

For instance, a European pharmaceutical business establishment we advised had to overhaul its training program to align with these requirements for pharmacy practice certificates, ensuring every introducer was certified before discussing products with marketing authorization.

Checklist: Securing Marketing Authorization and Managing Administrative Procedures

To assist any pharmaceutical business, we have developed this checklist.

• Secure Marketing Authorization: No drug information can be disseminated until the product has a valid marketing authorization from the Ministry of Health. This applies to both new drugs and generic drugs. The process requires extensive documentation, including clinical trial data for a new drug.
• Pre-Approval of Materials: Every piece of informational material must be approved. The content must match the package inserts tied to the marketing authorization.
• Quality of Drug Materials: A pharmaceutical business establishment is responsible for verifying the raw materials, drug materials, and medicinal materials used in its products. The quality of pharmaceutical ingredients is key to maintaining marketing authorization.
• Prohibited Practices: There is zero tolerance for advertising prescription drugs or offering material benefits to professionals. This includes psychotropic drugs and other certain drugs under special control.

Compliance Area	Pharmaceutical Enterprise Responsibility	Licensed Drug Introducer Responsibility
Content	Get pre-approval for materials based on the marketing authorization.	Only use approved drug information and package inserts.
Licensing	Manage training and ensure all introducers hold valid pharmacy practice certificates.	Maintain their pharmacy practice certificate and adhere to rules for pharmacy practice.
Activity	Supervise all professional pharmacy activities.	Report activities accurately.
Ethics	Ensure the pharmaceutical business avoids prohibited practices.	Refrain from offering incentives.

Strategic Outlook: Technology Transfer and Customs Clearance

While these regulations add complexity, they also create opportunities. A pharmaceutical business that masters digital compliance will gain an advantage. For investors, the new regulations also emphasize technology transfer and opportunities for importing drugs with a clear path to marketing authorization, which involves simplifying customs clearance.

At Viettonkin Consulting, our team helps FDI enterprises navigate these challenges, from the initial application for marketing authorization based on clinical trials to establishing compliant training programs. In Vietnam’s evolving market, compliance is the most powerful lever for a pharmaceutical business to achieve success.

Frequently Asked Questions

What is the biggest change under TT BYT 31/2025 for drug information?

The most significant change is the formalization of the drug introducer role, which now requires a pharmacy practice certificate and strict supervision by the pharmaceutical business establishment. This ensures all drug information provided is accurate and ethical.

How does marketing authorization impact providing drug information?

A product must be granted marketing authorization by the Ministry of Health before any drug information activities can begin. All materials, including package inserts, must strictly align with the terms of the approved marketing authorization.

Should a foreign pharmaceutical business hire its own introducers?

Hiring your own team provides greater control over compliance with the new regulations and ensures they hold valid pharmacy practice certificates. However, using a distributor's team can accelerate market access. We often advise a hybrid model or a rigorous audit of the distributor’s team to ensure they meet the stringent requirements of the pharmaceutical law.

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In a landmark move for Southeast Asia, Vietnam has enacted its first-ever Law on Digital Technology Industry (LDTI) No. 71/2025/QH15 dated 14 June, 2025, a standalone law specifically dedicated to governing the rapidly growing digital technology industry. Approved by the National Assembly in 2025 and set to take effect on January 1, 2026, this pioneering legislation creates both immense opportunities and critical compliance challenges for the entire digital technology industry.

For enterprises accustomed to navigating fragmented regulations, the new law on digital technology introduces a unified legal framework. This article unpacks the LDTI’s core principles for the digital technology industry and provides a strategic roadmap for business leaders managing technology products and services.

Key Takeaways:

• Pioneering Legislation: Vietnam is the first country to pass a standalone law governing the digital technology industry, aiming to build an ecosystem of 150,000 digital firms by 2035.
• Broad Regulatory Scope: The law applies to the digital technology industry, covering everything from digital technology products and digital technology services to artificial intelligence.
• Significant FDI Incentives: Foreign invested enterprises that facilitate technology transfer are eligible for investment incentives, including multi-year corporate income tax reductions.
• Strict Compliance Obligations: The Law on Digital Technology Industry introduces new requirements for digital technology enterprises, including licensing, annual reporting, and adherence to standards on artificial intelligence.
• Strategic Advantage Through Compliance: Proactive compliance unlocks support policies, tax exemptions, and preferential treatment, turning a legal necessity into a competitive edge for the digital technology industry.

The Digital Technology Law and the National Digital Transformation

The LDTI is the cornerstone of Vietnam’s national digital transformation, a strategy to elevate the nation’s position in the global digital technology industry. The Law has institutionalized Resolution 57-NQ/TW, Resolution 59-NQ/TW, Resolution 66-NQ/TW, Resolution 68-NQ/TW of the Politburo, creating a strong legal corridor, promoting innovation, enhancing competitiveness and promoting digital transformation, developing the digital economy quickly, strongly and sustainably. 

The government’s goal is ambitious: foster an ecosystem of 150,000 digital enterprises and grow the digital economy to US$43 billion by 2030. According to Vietnam Briefing (2025), the law provides critical legal certainty for high-growth sectors, especially for digital technology products and digital assets.

The national digital transformation process aims to unify the country’s approach to technological innovation. The objectives are clear: strengthen production capacity under the "Make in Vietnam" initiative, attract high-quality FDI, and ensure the nation's digital technology industry infrastructure is competitive and secure.

The Legal Framework of the Law on Digital Technology Industry

The legal framework of the Law on Digital Technology Industry is comprehensive. Its key components include:

• Covered Industries: The law applies to all digital technology industry activities, including hardware, software, artificial intelligence, and the management of digital assets and virtual assets.
• Applicable Entities: Its scope extends to both domestic tech enterprises and foreign invested enterprises that offer technology products and services.
• Primary Regulator: The Ministry of Information and Communications (MIC) is the lead agency for the digital technology industry.

This law complements regulations like the Cybersecurity Law of 2018 and the Law on Personal Data Protection Decree (coming into effect January 1, 2026). The draft Decree guiding the Law on Digital Technology Industry has been drafted; it is proposed to detail Clause 4, Article 13, Clause 1, Article 19, Clause 3, Article 20 of the Law on Digital Technology Industry 2025 (effective January 1, 2026) on digital technology industry activities; criteria for determining high-quality digital technology industry human resources; attracting and promoting digital technology talents. 

Regulations on measures to implement the Law on Digital Technology Industry on controlled testing of digital technology application products and services.

Compliance Obligations for the Digital Technology Industry

The Law on Digital Technology Industry establishes a dual framework of obligations and investment incentives. Businesses in the digital technology industry must prepare for:

• Core Obligations: Licensing for digital technology services, registering digital technology products, and submitting annual reports.
• Key Standards: Adhering to new technical regulations and international standards for artificial intelligence systems, especially high risk systems.
• Strategic Incentives: Compliant firms receive support policies, including corporate income tax and personal income tax reductions. These tax incentives are designed to support Vietnamese enterprises and domestic startups.

This transforms compliance into a strategic imperative for the digital technology industry, creating a path to high-value government contracts.

Impact on Investment for Key Digital Technology Products

For foreign investors, the law on digital technology presents a predictable anchor. The impact is significant in three areas:

• FDI Incentives: The law encourages technology transfer. According to Article 16 of LDTI, research and development activities of digital technology products and services enjoy the highest incentives according to the law on science, technology and innovation; digital transformation.
  • According to Vietnam Briefing (2025), FIEs that facilitate technology transfer receive multi-year tax incentives. This is a key part of supporting enterprises in the digital technology industry.
• Data Governance: Stricter rules for cross-border data transfers and the handling of digital assets will require careful planning, especially for major global tech corporations.
• Legal Integration: The law interacts with existing regulations governing foreign direct investment and trade agreements, adding complexity for companies developing key digital technology products. This will require investment in high quality human resources.

Challenges and Opportunities in Digital Technology Industry Activities

The full implementation of the Law on Digital Technology Industry will depend on sub-laws still in development. For medium sized enterprises, this requires balancing risk with opportunity. The table below highlights key risks for the digital technology industry and potential responses for their technology products and services.

Risk Level	Compliance Risk Description	Potential Opportunity or Mitigation
High	Handling artificial intelligence data models (high risk systems subject) without ethical review	Establish AI ethics board and adopt international standards (ISO/IEC 42001)
Moderate	Weak data security for technology products and services	Implement MIC-approved cyber security audit and response plan
Low	Certified software and registered digital technology products	Gain priority access to government procurement and tax incentives
Emerging	Cross-border transfer of digital assets non-compliance	Use local servers or hybrid cloud architecture to meet localization rules
Strategic	Fragmented governance for the digital technology industry	Develop an internal compliance committee to centralize oversight

Conclusion: Turning Compliance into a Competitive Edge

Vietnam’s leadership in developing this comprehensive law on digital technology underscores its commitment to the digital technology industry. This legislation solidifies the country's ambition on the world stage.

For investors, compliance with the Law on Digital Technology Industry is a gateway to competitive advantages. It is the key to unlocking investment incentives and building trust with regulators for digital technology products.

Proactive preparation before the 2026 enforcement date will be the defining factor. By seeking expert guidance now, businesses can turn these requirements into a platform for sustainable development in one of Asia's most dynamic markets for digital technology products.

Frequently Asked Questions

What is the most critical first step for a foreign tech company to comply with the new law?

The first step is a comprehensive gap analysis of your current digital technology industry activities. This involves mapping your digital technology products and services against the Law on Digital Technology Industry's scope, particularly concerning licensing, data security for digital assets, and artificial intelligence ethics.

How long will it take for a foreign company to become fully compliant with the LDTI?

Our experience suggests a 6-to-12-month period for full implementation within the digital technology industry. This includes adapting technology products and services and training staff. For major global tech corporations, starting before mid-2025 is essential to meet the January 1, 2026 deadline.

Should my company establish a local entity or partner with a Vietnamese firm to navigate this law?

The best strategy depends on your long-term objectives in the digital technology industry. A local entity provides control and direct access to investment incentives. Partnering with a local firm can accelerate market entry. Based on our 3,000+ projects, we often advise a hybrid approach to maximize growth and eligibility for support policies.

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