The Indonesian regulations seemed straightforward until we dug deeper. A Fortune Global 500 client was planning their market entry strategies, confident they had ticked all the regulatory compliance boxes. However, the reality on the ground was far more complex. The official pharma regulation stated one thing, but the unwritten rules of implementation at the National […]
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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