# Pharmaceutical Industry in Vietnam: Sluggish Sector in a Growing Market
## 3 Evolution of Pharmaceutical Industry
### The Evolution of Government Policies in the Pharmaceutical Industry
#### 3.2.3 New Expansion Period (2017-Onward)  
In June 2016, the National Assembly promulgated the new Law on Pharmacy, which came into force since 1 January 2017, replacing the old version passed in 2005. This reform is combined to the promotion of a \"Masterplan of Medicinal Ingredient Development to 2020\" and the \"National Strategy for Development of the Vietnamese Pharmaceutical Industry to 2020\". These policies are likely to mark a consistent shift in the government industrial policy approach towards the pharmaceutical sector which appears to have been targeted as a strategic sector, given its potential in terms of market expansion and knowledge spillovers.  
In comparison with the previous 2005 Law, the 2017 Law adds four new chapters on:  
1. State policies on pharmacy and pharmaceutical industry development;
2. Pharmacy practice
3. Clinical pharmacy; and
4. Management of drug prices  
The 2017 Law introduces new supports to the investments in drug production, drug materials, essential drugs, social diseases drugs, and vaccines. The government provides new incentives to R&D in production technology and biotechnology to manufacture new drugs. In detail, the Law establishes prioritized fields of development in the pharmaceutical industry, including: (1) Research and production of drug materials from medicinal material sources available in Vietnam to serve the preparation and production of medicinal material drugs and traditional drugs; (2) Manufacturing of drugs upon the expiration of patents and relevant protection titles, and of vaccines, biological products, medicinal materials, drugs from medicinal materials, traditional drugs and rare drugs; and (3) Development of medicinal material sources and medicinal material culture and cultivation zones; conservation of gene sources and development of precious, rare and endemic medicinal material species and varieties.  
The changes introduced to the Law on Pharmacy are expected to significantly affect the development of the domestic industry. So far, the domestic firms have dominated the generics market while foreign enterprises controlled the market share for non-generic high quality drugs. The new Law aims to change such landscape by prioritizing the purchase of domestically produced products, including domestically manufactured generics and biosimilar, herbal and traditional medicines manufactured from domestic herbal ingredients, and drugs manufactured in domestic facilities satisfying good manufacturing practice standards  
On the other hand, the new Law also favors the establishment of foreign investment enterprises (FIEs) in the pharmaceutical sector since it is necessary for accessing the most innovative drugs and techniques. Another aspect to highlight is the removal of Five-Year Rule for Clinical Trials. In the old Law, a new drug could be circulated in Vietnam only if it had already been adopted in its country of origin for at least five years; otherwise, it needed to undergo clinical trials for registration purposes. On the other side, the new regulation facilitates the access to new drugs, especially those related to life-threatening diseases [48].