# Pharmaceutical Industry in Vietnam: Sluggish Sector in a Growing Market
## 3 Evolution of Pharmaceutical Industry
### Overview of the Industry
#### 3.1.3 Agents, Dynamics and Governance in the Vietnamese Pharmaceutical Sector  
Similar to other sectors, the pharmaceutical industry in Vietnam is structured in a mix of both public, private and foreign agents. In 2015, the industry counted 170 firms, including 20 joint-venture foreign-invested firms, with the largest one controlling less than 5% of the market [5]. To operate in the market, local manufacturers have to comply with the code of Good Manufacturing Practice (GMP), importers with Good Storage Practice (GSP), distributors with Good Storage Practice (GSP) and Good Distribution Practice (GDP) and retailers with Good Pharmacy Practice (GPP) (see Table 1).  
Although the largest former State-Owned Enterprises (SOEs) have been equitized, they continue to prosper on the basis of close relationships with distributors and hospitals in their areas. Procurement is largely managed by individual hospitals, and bidding is open to corruption, with allegations of high markups for producers making payments to hospital administrators [5]. Most local pharmaceutical manufacturers comprise small-scale operations with outdated manufacturing technology and duplicated production processes. As a result of this, local producers massively rely on imports. For example, in 2013 the total turnover of the 9 biggest domestic pharmaceutical firms was about 450 million USD, equal to 25% of total imported drugs (see Table 2).  
Foreign pharmaceutical companies are not allowed to directly distribute on the market, so they must sell their products to domestic pharmaceutical distributors. Typically, foreign investors enter the domestic pharmaceutical market by establishing a joint-venture company with a local partner or as a wholly foreign-owned enterprise (WFOE) to import and sell their pharmaceutical products to a licensed domestic distributor in Vietnam [10].  
At the same time, some foreign-owned companies active in the wholesale sector have managed to control a vast segment of the market, particularly regarding the imported drugs. Through their  
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large brand portfolios, they have become key players in the supply-chain (Diethelm Vietnam, Zuellig Pharma Vietnam, Mega Lifesciences).  
Product registration is under the responsibility of the Drug Administration of Vietnam and requires long local trials as it is conducted case by case, with the regulator retaining considerable discretion. Under these conditions, genuinely private and foreign firms are disadvantaged in market access, enabling small producers of generic drugs to survive in what on the surface looks like a highly competitive market [5].  
Before being sold in Vietnam, a drug must be registered to the MoH with a declared price set by the registrant company. The Ministry issues a marketing authorization, usually valid for 5 years, after which the product must be re-registered. The MoH can allow medicines without a registration number to be marketed on a case-by-case basis, to avoid shortage of medicines. By law, within 6 months from the date of receipt of a complete and legitimate registration applications, the MoH shall issue medicine-marketing authorization for the medicine.  
Newly developed drugs may take around 5 years to enter Vietnam; this includes clinical trials of 2.5 years, and then the same time for the approval procedure. In principle, existing drug registration takes maximum 6 months, and is valid for 3-5 years. In practice, it can be anything between 12 and 24 months. The firms also have to reapply for the license at least 6 months prior to the registration expiration date. Yet, the process of renewal can take up to 8-12 months.