# Pharmaceutical Industry in Vietnam: Sluggish Sector in a Growing Market
## 3 Evolution of Pharmaceutical Industry
### The Evolution of Government Policies in the Pharmaceutical Industry
#### 3.2.2 Integration Period (2005-2017)  
With the new Pharmacy Law passed in 2005, the government set out a master plan for the long-term development of the pharmaceutical industry [45]. The ultimate goal was to transform the pharmaceutical industry into a \"spearhead techno-economic branch\" ([45], Article 3.1) by building a network of circulation, distribution and supply of pharmaceutical products, thus \"ensuring sufficient pharmaceutical products to meet the people's demands\" ([45], Article 3.5). In this context, the government encourages organizations and individuals (whether Vietnamese or foreigners) to \"conduct scientific research into preparation technologies and biotechnologies for manufacturing new pharmaceutical products; to invest in production of pharmaceutical products\" ([45], Article 3.2). The government also commits to \"protect lawful rights and interests of organizations and individuals in pharmacy research, trading and use of pharmaceutical products in Vietnam\" ([45], Article 3.6). The government aimed to reach 60% of pharmaceutical needs met by local manufacturers by 2015. However, by 2015, the target was not reached due to two main obstacles: (1) lack of capacity of the local industry in supplying key raw materials and (2) lack of adequate human resources. While the investment in R&D of private sector is very low, that of SOEs is also far from reaching their targets. The accession to WTO in 2007 opened the domestic economy to foreign companies, which strongly promoted competitive dynamics in the market. Vietnam committed to reduce tariffs on 47 pharmaceutical products from 10-15% in 2006 to 2.5% in 2012 [46]. According to Vietnam's WTO commitments, foreign-invested companies and their branches have been allowed to import drugs directly into Vietnam since 1 January 2009, but still not allowed to distribute them to the end-user. In parallel, most of the limitations in market access for foreign investors in the hospital, medical and dental services in cross border supply and consumption abroad were removed. Vietnam has agreed, as part of its WTO accession commitments, to extend trading rights (the right to import and export independent of government-approved channels) to pharmaceuticals since 2009 as well. These trading rights have further legal foundation in regulations relating to import and export rights such as Decree 23/2007/ND-CP (dated 12 February 2007) and Decision 10/2007/QD-BTM (dated 21 May 2007) issued by the Ministry of Industry and Trade. Since 2007, domestic drug companies have been required to achieve the standards equivalent to GMP--ASEAN, and subsequently, to GMP--WHO, PIC/S and EU--GMP, etc. This policy was motivated by the necessity of domestic pharmaceutical industry to reach the required standard to integrate into international market. As a result, the number of enterprises being certified by the Drug Administration of Vietnam (DAV) for reaching GMP--WHO standards has progressively increased. In 2015, there were 150 domestic manufacturers reaching WHO--GMP standard [1]. In 2010, another key milestone of government policies regarding the pharmaceutical industry was the Five-year Health Sector Plan 2011-2015. The main objective set out in the Plan was to \"develop the domestic pharmaceutical industry, increase efficiency in management and use of drugs and medical biological products\" [47]. In order to implement this objective, the Plan set out some focal tasks to be implemented by the pharmaceutical sector, which are summarized in the following four groups [20]: (1) Improving policies and regulations related to the pharmaceutical industry; (2) Increasing access to medicines; (3) Managing drug quality; and (iv) promoting a safe and rational use of drugs. To support the implementation of the Plan, the government issued two documents in 2013 and 2014, respectively: (1) Prime Ministerial Decision No.