Written by Partner Ngoc Luong Trinh and Associate Truc Ta

On 21 November 2024, the National Assembly officially passed Law No. 44/2024/QH15, amending and supplementing certain provisions of the Law on Pharmaceuticals 2016 (“2024 Law Amendment”). The 2024 Law Amendment is a key step in modernizing Vietnam’s pharmaceutical regulations.

The 2024 Law Amendment addresses critical limitations in the existing regulations to better align Vietnam’s pharmaceutical sector with global standards. The law focuses on enhancing the quality and safety of pharmaceutical products, streamlining administrative procedures for drug licensing and circulation, and fostering an environment conducive to innovation and sustainable development in the pharmaceutical sector.

The 2024 Law Amendment will take effect on 1 July 2025, with some selected provisions, such as those related to the licensing procedures for renewing marketing authorizations (MA) for drugs and medicinal ingredients, coming into force earlier, on 1 January 2025, to immediately address difficulties in the pharmaceutical business.

The subsequent sections discuss the changes introduced by the 2024 Law Amendment and their implications for stakeholders, including foreign investors, in the pharmaceutical industry.

Enhanced Incentive Policies for Pharmaceutical Investment

The 2024 Law Amendment introduces transformative reforms to bolster Vietnam’s pharmaceutical industry, recognizing it as a strategic priority sector. These updates reflect a commitment to fostering a robust and innovative domestic pharmaceutical ecosystem by encouraging investment, enhancing local production, and simplifying administrative processes.

A key highlight is the pharmaceutical sector’s designation as a priority industry, serving as the foundation for a range of policies and incentives introduced under the amending law. These aim at promoting domestic manufacturing, facilitating streamlined administrative procedures, and supporting technology adoption and R&D initiatives.

Furthermore, the 2024 Law Amendment introduces specific investment incentives aimed at attracting significant capital into Vietnam’s pharmaceutical industry. This marks a vital shift towards fostering large-scale development within the sector. Under the new framework, investment projects, including expansions, with a minimum investment capital of VND 3,000 billion and meeting a disbursement threshold of at least VND 1,000 billion within three years from the issuance of an investment registration certificate or in-principle investment approval, will qualify for special incentives. These preferential policies encompass projects in critical areas such as the research, production, or technology transfer of herbal medicines, traditional medicines derived from domestic herbal sources, new drugs, brand-name drugs, rare drugs, first generic drugs manufactured domestically, high-tech drugs, vaccines, and biologicals.

Additionally, support is extended to projects focused on cultivating medicinal plants in economically disadvantaged regions or those committed to conserving and developing rare, indigenous medicinal resources, including creating new varieties from high-value genetic materials.

Broader and Clearer Rights for Foreign-Invested Enterprises (FIEs) in the Pharmaceutical Sector

Aligning with the prioritization of the pharmaceutical industry as a strategic sector, the 2024 Law Amendment introduces several notable reforms to the pharmaceutical regulatory framework affecting FIEs’ rights.

This section focuses on introducing two key changes that significantly impact FIEs: (1) wholesale and distribution rights for manufacturers and (2) expanded rights for importers. These changes aim to empower FIEs to assume greater control over their supply chains, resulting in reduced operational costs, improved efficiency, and strengthened quality assurance.

Wholesale and Distribution Rights for Manufacturers

FIE pharmaceutical manufacturers are now permitted to wholesale and transport not only drugs and medicinal ingredients they produce domestically, but also drugs produced through domestically manufacturing contract or technology transfer arrangements. This revision reduces reliance on external service providers, cutting costs by eliminating intermediary fees. Furthermore, it eliminates the need for cumbersome local export-import procedures for contract-manufactured goods, expediting the market launch of high-quality products.

Expanded Rights for Importers

In addition to the existing right to sell imported drugs and medicinal ingredients directly to wholesale entities, FIE importers now enjoy broader rights. These include the ability to independently manage logistics operations such as:

• Receiving and transporting imported drugs and medicinal ingredients, including those produced under manufacturing contract or technology transfer agreements in Vietnam, from warehouses directly to wholesalers;
• Delivering medicinal ingredients from warehouses to local manufacturers under manufacturing contract or technology transfer agreements;
• Transporting imported drugs used in clinical trials to designated clinical trial facilities.

By taking direct control of transportation and storage, FIEs can mitigate risks associated with improper handling, ensuring the safety and efficacy of pharmaceutical products throughout the distribution process.

Streamlined Marketing Authorization Process for Drugs

The 2024 Law Amendment also introduces key changes to simplify and refine the procedures for registering, renewing, and amending marketing authorizations (MAs) for drugs and medicinal ingredients. These updates are designed to ensure regulatory oversight while promoting efficiency for drugs that have established safety and stability in the market.

Under the 2024 Law Amendment, the Ministry of Health (MOH) will issue regulations on the MA renewals and amendments. The MOH will determine when dossier appraisals and consultations can be omitted based on the drug’s quality, safety, and efficacy. The upcoming regulations to be issued by MOH will likely aim to reduce procedural complexities, especially for minor amendments or straightforward renewals.

Processing timelines under the 2024 Law Amendment have been clarified, with several key additions to optimize efficiency and ensure faster approvals in specific cases:

• Referenced appraisal results: For new registrations where existing appraisal results are referenced, the processing timeline is now reduced to 9 months.
• Minor amendments: Amendments that do not impact a drug’s quality, safety, or efficacy can now be completed within 20 days from the date of receiving a complete dossier.
• Emergency cases: For new drugs targeting Group A infectious diseases (declared outbreaks under Vietnam’s infectious disease laws) that have been approved or conditionally authorized by stringent regulatory authorities (SRAs) or recognized agencies, the processing timeline is expedited to 15 days.

To ensure continuity, the law allows MA licenses to remain valid beyond expiration, provided the MOH receives a renewal application. This validity persists until the renewal is granted or denied, minimizing potential supply chain disruptions.

Lastly, to address concerns about redundant registrations and monopolization, the law imposes stricter criteria for renewal. Products not marketed for five consecutive years will no longer qualify for renewal, encouraging active market participation and reducing regulatory bottlenecks.

Other Changes

The 2024 Law Amendment establishes a comprehensive framework for other aspects, namely:

• E-commerce trade of pharmaceuticals: introducing specific rules to govern both retail and wholesale activities through e-commerce platforms (e.g., e-commerce websites, trading platforms, and mobile sales applications with online ordering functionalities).
• Pharmacy chains: outlining the business conditions, rights, and responsibilities of these organizations and the individual pharmacies within the chain.
• Simplification of procedures for pharmaceutical information compliance: removing the verification or certification step of pharmaceutical information content. Instead, pharmaceutical information must adhere to prescribed formats, labeling requirements, and content standards, which will be detailed in subsequent regulations.

Conclusion

The new 2024 Law Amendment represents a significant milestone, aligning Vietnam’s pharmaceutical regulatory framework with international practices while addressing the unique dynamics of the local market. By streamlining procedures and enhancing transparency, the law creates opportunities to bolster the competitiveness of domestic enterprises and improve their production capacity, while maintaining fair market conditions for FIEs.