Pharma market vietnam

STANA ILIEV STANA ILIEV MAIK KUBELTMAIK KUBELT

THE PHARMACEUTICAL THE PHARMACEUTICAL MARKET VIETNAM MARKET VIETNAM

SURVEY 2008SURVEY 2008 TREND TREND GUGUIIDDEELLIINNEESS AND AND MARKETMARKET ENTRYENTRY STRATEGIESSTRATEGIES

WINFRIED HUETTLWINFRIED HUETTL ISBN 978ISBN 978--33--925266925266--6363--8 8

GERMAN CHAMBER OF INDUSTRY AND COMMERCE VIETNAM

PUBLISHERS: PUBLISHERS:

Stana Iliev and Maik Kubelt:

The Pharmaceutical Market Vietnam

Survey 2008 Trend

Guidelines and market

entry strategies

Publishers:

Winfried Huettl with

German Chamber of Industry and Commerce Vietnam

© hüttl public relations gmbh ISBN 978-3-925266-63-8

Lauterstein, Hanoi 2008

1st edition

198,00 Euro

STANA ILIEV STANA ILIEV MAIK KUBELTMAIK KUBELT

THE PHARMACEUTICAL THE PHARMACEUTICAL MARKET VIETNAM MARKET VIETNAM

SURVEY 2008SURVEY 2008TREND TREND

GUIDELINES GUIDELINES AND AND MARKETMARKET

ENTRYENTRY STRATEGIESSTRATEGIES

Special thanks

My special thanks goes to the authors

Stana Iliev and Mike Kubelt, who has

worked out this case study on the spot in

Vietnam. They were supported by the

pharmaceutical distributor Deka Ltd. –

many thanks to their executive managers

Mr. Dat and Mr. Kien. Not to be over-

looked is my Vietnamese friend and repre-

sentative Mr. Dang Quoc Hung with his

fantastic network in all parts of this amaz-

ing country. It is great that the German

Chamber of Commerce and Industry will

promote as co-publisher the case study on

their channels - thanks to Jan Noether,

Chief Representative DIHK!

Thanks to Dr. Martin Godau and Stephen

Smith for editing and proofreading and

last but not least I'm indebted to my wife

Monika for the graphical design.

Professor Winfried Hüttl, Publisher

AFTA ASEAN Free Trade Area

ASEAN Association of Southeast Asian Nation

ARF ASEAN Regional Forum

ASEM Asian Europe Meeting

APEC Asian-Pacific Economic Coop-eration

BTA Bilateral Trade Agreement

CPP Certificate of Pharmaceutical Product

CIL Common Investment Law

Doi Moi Name of Vietnamese Reno-vation in 1986

EU European Union

FSC Free Sale Certificate

GDP Gross Domestic Product

GMP Good Manufacturing Prac-tices

GNP Gross National Product

HCMC Ho Chi Minh City

IMS Health pharmaceutical mar-ket intelligence

IP Intellectual Property

KPV Communist Party Vietnam

MOF Ministry of Finance

MOH Ministry of Health

MPI Ministry of Planning and In-vestment

OTC Over the counter

SME Small and medium sized enterprise

SOCB State Owned Commercial Bank

TRIPS Agreement on Trade-Related Aspects of Intellectual Prop-erty Rights

UEL Unified Enterprise Law

VAT Value Added Tax

VHI Viet Nam Health Insurance

VND Vietnamese Dong

VSI Vietnam Social Insurance

WTO World Trade Organization

GLOSSARY

• Contents

Glossary

1. Geographic and demographic facts 1

1.1 Political situation & economy 7

2. History of Vietnam; social structures and facts about society 12

2.1. General Health Care System 16

3. Development after the entry to the WTO 28

3.1. Basic conditions for foreign investors; market entry barriers 30

3.2. Basic conditions for research and development 39

3.3. Legislation and basic conditions for license applicants 42

4. Alternative Medicine and the significance of naturopathic treatments 45

5. Marketing structure & distribution channels 48

6. Business competition; previous and present competitors; future competitors 54

7. WTO Guidelines 57

8. Opportunities and forecasts on future legislation, competition,

sales potentials, product development and growth prospects 63

9. Recommendations for market entry strategy 69

Appendix:

List of importing companies

Laws on Investment Decree Nr. 23Circular on Decree 23

Drug licensing regulations, Decision No. 3121Circular on Decree No. 17

Literature

Introduction Publisher Professor Winfried Hüttl: Vietnam - a challenge and opportunity Vietnam, the fourth most populous country in the Far East Asia, entered the World Trade Organization (WTO) in early 2007. Its entry is now helping the development of the domestic pharmaceutical industry that has traditionally been regarded as not well organised due to poor standards both in financial budgets as well as in research. However, this is now changing as the industry now needs to improve its production standards and with the entry of foreign movers and shakers competition in this mar-ket will be intensified. Now it is the time for foreign companies and the doors will be wide open to plan and to do the first steps. Very helpfull for the planning and the market entry could be – hot off the presses - our case study which is now released and published to-gether with the German Chamber of Commerce Vietnam. According to industry reports, Vietnam imports medicines such as anti-bacterial agents, and many firms are registered to import these medicines. The imported medicines play an important role in preventing and treating diseases as well as providing raw materials for the local industry, in the country. The specific drugs are still rare and come mainly from France, Germany and Switzerland. However, it is not just the number of foreign companies that is rising in the country, local companies are also on the growth path. Vietnam has 180 pharmaceutical factories, 75 of which meet Good Manufacturing Practices standards, 25 of which are foreign-invested. I have to bring forward more positive arguments for an engagement of foreign investors and companies: - The government is keen to attract foreign investment in the pharmaceutical indus-try to produce much-needed medicines, such as antibiotics. The foreign investment has been on the rise in the sector. - The Vietnamese pharmaceutical market has significant growth potential, due to a sizeable population and a low per capita medicines spending of less than $10 per year. - To develop the pharmaceutical industry, the government has to modernize the industry and to implement Good Practices in pharmaceutical sector, build up the industry of pharmaco-chemicals, antibiotics and active substances from medicinal plants, supply sufficiently essential drugs for healthcare and promote rational and safe drug use. Considering this growth the pharmaceutical market is expected to top $1.15 billion, by 2011*) up from an estimated $882 million in 2006. The increase in the foreign investment in the pharmaceutical industry and Vietnam’s entry into WTO, and not to forget the government initiatives to support the industry,this all will boost the growth of the Vietnam pharmaceutical industry in the coming years. Professor Winfried Hüttl, Publisher *)with courtesy by Bio Spectrum Bureau

Foreword Jan Noether

In January 2007 Vietnam became the 150th member of the Word Trade Organization and

since, the economic growth gained a momentum this country did not experience before.

This development is by no means a surprise to the Asian neighbours of Vietnam but reflects

a consequence of the sustainable policy of economic renovation called “Doi Moi”, which

commenced some 20 years ago. The economic growth rate of 2007 surpassed 8,5%,

industrial production improved by 17% (US$ 35,9 bio.), exports were US$ 48,4 bio. (+21,7%)

and the Foreign Direct Investment almost doubled to reach an all time high of US$ 20,2 bio.

It goes without saying that Vietnam needs to overcome various challenges to maintain the

currently strong momentum, such as infrastructure needs, additional vocational training

efforts or the timely implementation of WTO agreements, to just name a few.

The strong focus of Vietnam to further develop its economy found its peak in the WTO

accession and is likely to be followed by various new opportunities for foreign investors and

for organizations to look into trading activities with their respective Vietnamese counter-

parts. According to the WTO agreements, we expect a substantial relaxation of formerly

limited distribution rights from 2009 onwards, which certainly offers potential, among

others to the foreign invested pharmaceutical industry in Vietnam. The business study

“Pharmacy Market Vietnam – Prospects and potentials after the WTO entry” sheds a

comprehensive light on the current scenario of the Vietnamese Pharmacy Market and

moreover, it outlines possible strategies, which shall be of interest to your organization.

With best wishes

Jan Nöther

German Industry and Commerce Vietnam

Abstract

The Pharmaceutical Market Vietnam in the year 2008: • Altogether the biggest market entry barriers of Vietnam are as in all ASEAN countries the risk

of competition by generic products meaning especially price battles. Secondly the still very unclear and complex bureaucracy and favoritism could become a mayor obstacle for a new company.

• The licensing of drugs is yet compared to other Asian standards rather easy and fast. The growth expectations of Vietnam’s pharmaceutical enterprises are very good. The domestic companies are more than willing to expand and to cooperate with global competitors.

• On the other hand non communicable diseases are mounting; diseases of civilization like cardiovascular diseases, cancers and diabetes. Furthermore an increasing rate of and life-style related diseases can be detected.

• The government will allow 100% foreign private owned companies by the year of 2009. Befo-re the WTO entry Vietnam had set up trade relations with 165 countries and signed bilateral trade agreements with 72 countries. After the 1st of January 2007 the primary task of the country is now to transform the centrally-planned economy into a free market economy to meet the requirements of global economy. That will bring out challenges and opportunities in economic development and lead to a profound modernization in Vietnam.

• Foreign wholesalers are basically not allowed to do marketing for their products. Still they are allowed to ’promote’ their goods to hospitals and medical staff. It is common to have agents to advertise certain offers in hospitals.

• One of the possible outcomes might be a shifting in the accessibility of foreign pharmaceuti-cal products since patent rights become stricter and distribution channels are changing. In January 2009 foreign businesses will be allowed to carry out direct import and export and to distribute directly to the Vietnamese market.

• By now the pharmacy market increases approximately 15% per year. The consumption of pharmaceutical products rose from US$ 0.3 in 1990 to US$ 7.6 in 2003. The health and phar-maceutical sector holds a lot of opportunities to foreign investors in the future. The demand for high quality drugs can not be fulfilled by domestic industries at present. In the next years the demand will even enhance.

The Vietnamese Pharmacy Market 2008 – exclusive copy for Oliver Massmann

1

1. Geographic and demographic facts

Formal name of the country: Socialist Republic of Vietnam

(Cong Hoa Xa Hoi Chu Nghia Viet Nam)

Short form: Vietnam Term for citizens: Vietnamese Capital of Vietnam: Hanoi Flag: Red with a large yellow five-pointed star in the center

Time zone: Seven hours ahead of Greenwich Mean Time Area: 331, 56 sq km

Population: App. 83,690,000

Public holidays: New Year (January 1); Lunar New Year (movable date in January or February); Liberation Day to commemorate the fall of Saigon (April 30); Labor Day (May 1); Independence Day to commemorate Japan’s withdrawal following its defeat in World War II (September 2)

Neighboring countries: Cambodia, China, Laos Size: 330,363 square kilometres Natural hazards: Occasional typhoons with extensive flooding Administrative divisions: 60 provinces, 4 municipalities Currency: Vietnam Dong (abbreviated as “VND”).

1$ = 16000 VN Dong 1€ = circa 21.000 VN Dong (1/2008)

Economy: Agriculture, forestry and fishery: 20 %; industry and

construction: 42%; service: 38% Export partners: Japan, USA, China, Australia, Singapore, Philippines,

Taiwan, Germany, UK, South Korea, France, Malaysia Import partners: Taiwan, Singapore, Japan, South Korea, China,

Malaysia, Germany, Russia, USA, France, Australia, UK, Switzerland

Natural resources: Coal, copper, crude oil, gold, iron, manganese, silver,

zinc


2

Export-commodities: Crude oil, coal, marine products, rice, garments and textiles, footwear, handicraft, coffee, rubber, tea, cashew nuts, pepper, vegetables, furniture

Import- commodities: Machinery and equipment, petroleum products,

fertilizer, steel products, raw cotton, grain, plastic materials

Demography: Age structure: 0-14 years: 29.4% (male 12,524,098; female

11,807,763); 15-64 years: 65% (male 26,475,156; female 27,239,543); 65 years and over: 5.6% (male 1,928,568; female 2,714,390)

Population growth rate: 1.3%

Birth rate: 19.58 births/1,000 population

Death rate: 6.14 deaths/1,000 population

Ethnic groups: Kinh (Viet) 86.2%; Tay 1.9%; Thai 1.7%; Muong 1.5%; Khmer 1.4%; Hoa 1.1%; Nun 1.1%; Hmong 1%; others 4.1% (1999 census)

Languages: Official language: Vietnamese Other languages used: Chinese and Khmer

Literacy: Total population: 94%

Male: 96.9% Female: 91.9%

Religion: Buddhism est. 7.6 million; Roman Catholicism 6 million; Cao Dai 2 million; Hoa Hao 1 million; Protestantism 500,000; Islam 50,000

Climate facts: Tropical monsoon zone. Humidity averages 84 %

Climate zone in North Vietnam: temperate zone. Different temperatures from May to October (hot temperature), November to April (cold temperature)

Climate zone in South Vietnam: tropical climate (very hot). Rainfall every year ranges from 1,200 to 3000 millimetres. Temperature varies between 5°C and 37°C


3

Topographic facts, natural resources and climate facts The country of Vietnam is

predominantly tropical lowland and

forested highland. Hills cover three

quarters of the total land area. Vietnam

is divided into the north, with highlands

and the Red River Delta, and the

south, with coastal lowlands and the

Mekong River Delta. Vietnam is

located in a tropical monsoon zone.

Humidity averages 84 % throughout

the year. The country has two different

climate zones. The North Zone is a

temperate zone with different

temperatures. From May to October

temperatures are very hot, while

between November and April the

weather is rather cold. The South of

Vietnam has a really hot tropical

climate throughout the whole year.

Rainfall every year ranges from 1,200

to 3000 millimeters, and temperature

varies between 5°C and 37°C.

Vietnam’s main natural resources are

coal, copper, crude oil, gold, iron,

manganese, silver, and zinc.

Infrastructure Public transport systems similar to

those found in western countries are

not yet installed. Buses are the only

alternative to the very popular

motorcycle.

The transportation system of Vietnam

needs modernization and expansion.

Generally, the roads are in poor

condition and the underdeveloped

railroad system is not very useful for

the transportation of goods. The

railroad system in general is not very

efficient. There are 6 single-track

railroads with a total length of 3,260

kilometers in Vietnam. For a low-

income country, that is one-third of the

average of the network density. The

longest railroad line runs between

Hanoi and Ho Chi Minh City. It

measures 1,730 kilometers. It takes 32

hours to travel from Hanoi to Ho Chi

Minh City on the Reunification

Express. Vietnam needs to invest more

than US$ 400 million between 2004

and 2009 to modernize its railroads.

The government plans to build two

subway lines in Ho Chi Minh City by

2007. The cost of the subways is

estimated at US$ 800 million.


4

A better alternative for transportation is

the inland waterways. The most

important inland waterways are the

Mekong River and the Red River

systems. The waterways carry more

freight than the railroads, and the

volume of freight being carried in

recent years has been steadily rising.

However, there is still great potential

as Vietnam only uses 40 % of its

waterways.

Additionally, Vietnam has seven

international ports and five additional

ports that specialize in transporting oil

and coal. The volume of freight is

about 14 million tons annually, which is

only one-third of the capacity.

Moreover, Vietnam has 17 major civil

Airports, including three international

gateways: Danang serving Danang,

Noi Bai serving Hanoi, and Tan Son

Nhat serving Ho Chi Minh City. The

largest is Tan Son Nhat, handling an

estimated 75 % of international

passenger traffic. The national airline is

Vietnam Airlines, which links Vietnam

to 19 cities worldwide.

Ha Noi

The capital of Vietnam, Hanoi, was

founded in 1010 and is therefore the

oldest city in South East Asia. A

harbour town in the north of Vietnam, it

has a population of 4 million

inhabitants, of which three quarters are

between the ages of 20 and 30.

The image of Ha Noi is more quiet and

elegant than that of Hồ Chí Minh City.

It has nine inner districts and

numerous sights such as temples,

pagodas and museums.

Ho Chi Minh City (formerly Saigon)

Hồ Chí Minh City, in the South of

Vietnam, is the biggest city of Vietnam.

It has a population of almost 7 million

inhabitants. Similar to Hanoi, three

quarters of the inhabitants are aged

between 20 and 30. Hồ Chí Minh City

is also a harbour town and has the

fastest growing economy in Vietnam.

The city consists of 19 districts and 5

inner circles. It was named after Ho

Chi Minh, who proclaimed the

Democratic Republic of Vietnam in

September 1945 and later took over

leadership of the country as the state

and prime minister.

Media

The Ministry of Culture in Vietnam

supervises all mass media and


5

communicates only officially approved

information. The government also

shuts down newspapers that do not

conform to its own values. Some

English newspaper can still be bought,

however.

There are rules governing Vietnamese

peoples’ use of the internet as well.

Vietnamese people do not have the

right to publish critical commentaries

on the internet. If they do, they can

face punishment including

imprisonment.

Telecommunication Vietnam has invested huge sums for

the modernization of its telephone

network. Today the telecommunication

in Vietnam is at a good standard level.

However, the cost of a call to another

country is really high because they

have not yet invested in

communication networks to other

countries.

Most Vietnamese people frequently

use the country’s numerous internet

cafes to connect to the World Wide

Web. The government of Vietnam is

anxious about the internet as an

information platform because they fear

they may loose their status as the only

information portal in Vietnam. For this

reason, Vietnam’s authorities block

some foreign internet sites and close

internet cafes in an attempt to

safeguard there status and monopoly

over information in Vietnam.

Education system

For every child between the age of 6

and 14 school attendance is obligatory.

Education at kinder garden is also

important in Vietnam. School

attendance is split into two periods: the

first period is elementary school

(classes one to five) and the second

period is secondary school (classes six

to nine). After school attendance the

Vietnamese have the choice to go to

high school for three more years in

order to take the acceptance test to go

to University. University courses last

for four years in an economic university

or five years in a technical university.

Environmental facts

The National Environmental Agency,

which includes the Ministry of Science,

Technology and Environment, is

responsible for the protection of the

environment in Vietnam. The Institute

of Ecological Economics is a non-

government organization that plays an


6

important role in the protection of the

environment.

Urbanization, industrialization, and

intensive farming have a negative

impact on Vietnam’s environment as

they result in:

• Air pollution

• Water pollution

• Noise pollution

Particularly in industrial and urban

centers like Hanoi and Ho Chi Minh

City, waste treatment is the most

serious problem, along with

dangerously high air pollution. Vietnam

also has to deal with other problems,

such as declining fish yields, severe

deforestation, flooding in the deltas,

soil erosion and sedimentation of

rivers, and pollution of the coastal and

marine environment.


7

1.1 Political situation and economy

Vietnam’s government consists of a

one party system. This party, The

Communist Party of Vietnam (or KPV

for short) enjoys full authority on all

political decisions in the country.

Officially, political decisions are made

by the National Party Congress.

Unofficially, verdicts are decided by a

board of 14 members of the politburo.

This politburo consists of a 3 headed

leadership which is made up of the

General Secretary of the KPV (Nong

Duc Manh), the President (Nguyen

Minh Triet) and the Prime Minister

(Nguyen Tan Dung).

The government is responsible for the

implementation of political decisions,

but still owes justification to the

National Assembly, who have become

more and more authoritarian over the

past 10 years. Since debates

concerning a large catalog of important

matters are held publicly, the

government is being forced more than

ever to give account for their actions.

Reform politics have been changing

everyday life radically. However, while

the DoiMoi reforms, implemented since

1986, have greatly improved the

economy and foreign affairs, the

government has remained rather rigid

and old fashioned. However, the strong

leadership of the KPV has ensured a

very stable political system that is free

of religious extremism.

Since freedom of opinion, the media,

religion and assembly are still

restricted, the major concerns at

present are the development of an

open society and a free media. Other

problems the country faces include

political criminals, the death penalty

and the situation of human rights.

Furthermore, Vietnam has big

problems regarding human trafficking.

In particular, young woman who are

often under age are sent to China

every year.

Foreign relations

After its incursion into Cambodia

(1978-89), Vietnam was isolated

internationally. The conflict was

resolved by the Paris agreement on

Cambodia in October 1991. During the

1990s, Vietnam started to orientate its

foreign relations towards western

countries and western standards. This

philosophy, and the wish for a stable

and peaceful situation, led to the end

of isolation from the rest of the world

and the beginning of reforms aimed at

renewing the country.


8

Soon after, Vietnam joined ASEAN,

ARF, ASEM, APEC, and consequently

the WTO.

The United States of America lifted

there economic embargo against

Vietnam in 1994. The USA and

Vietnam normalized relations in June

1995. In 2001, a new bilateral trade

agreement was signed with the USA.

In June 2005, a high level Vietnamese

delegation, led by the Prime Minister

Phan Van Khai, visited the USA, which

was the first such visit for 30 years.

Vietnam and Japan enjoy a good

economic and political relationship.

Economic development

Economic reform implemented in 1986

led to reorientation and recognizable

progress in Vietnam’s economy. Since

2000, Vietnam has seen a constant

annual GDP growth of 7 %. By 2005,

Vietnam’s GDP growth had reached a

peak of 8.4 %. This is the second

largest growth amongst all Asian

countries at present, trailing only

China. Vietnam’s economy currently

has a purchasing power parity of US$

280 billion, with an inflation rate of only

4 %. Its exports amount to US$ 19.88

billion annually and it imports reach

approximately US$ 22,5 billion a year.

Normal business hours in Vietnam are

from 8.00 am to 5.00 pm, with working

days being Monday to Friday.

The most important factors which have

influenced the country’s economic

development are the increase in

international commerce and foreign

direct investments. By 2005, those

investments had increased up to US$

5.8 billion.

Agriculture is still vital for Vietnam’s

economy, and about 75 % of its

population is dependent on the sector.

This is very sensible, since in rural

areas around 90 % of the poor

population is engaged in agriculture.

Although Vietnam has made much

progress in converting its economy into

a free market economy, many state

owned companies play a major role in

economic growth. Many of the large

state owned companies are to be

transformed into Stock Corporations.

This process has required more time

than was first expected, and therefore

has blocked liberalization reforms.

Almost one third of all credit is

provided to state owned companies,

who are favored in location gratings.

This leads to a weakening of the

banking sector. Additionally, they are


9

often inefficiently and have rigid

leadership.

The banking sector is controlled by the

four state banks (SOCB). They provide

about three-thirds of all credit. Reforms

have not been able to improve the

credit portfolio and consequently have

not been able to grant equal

opportunities for state owned and

private companies until now.

The USA and EU are the most

important business partners for

Vietnamese exports. Thanks to the

bilateral agreements between Vietnam

and the USA, the USA has been able

to increase its exports six times since

negotiations took place. Integration

into the global market in general has

improved profoundly. Exports presently

represent 64 % of the GNP.

By 2006, around 41,000 private

enterprises were being established

each year. In 2000, 200,000 private

small and medium sized enterprises

had created 1.65 million jobs in

Vietnam.1 Forecasts for next year’s

economic development in Vietnam are

more than positive.

1 Source: 29 pg. 40


10

Embassy of the Federal Republic of Germany Ambassador: Christian-Ludwig Weber-Lortsch Add.: 29 Tran Phu St., Ba Dinh District, Hanoi Tel. (+84) 4-8453836/37 Fax. (+84)4-8453838 E-Mail: [email protected] http://www.hanoi.diplo.de

German Industry and Commerce Vietnam Add.: 257 Hoang Van Thu, Tan Binh Dist. HoChi Minh City Tel: (+84)8-8455528 Fax: (+84)8-8455527 E-Mail: [email protected] http://www.vietnam.ahk.de

Consulate General Ho Chi Minh City Dr. Heinz Peter Seidel Add: 126 Nguyen Dinh Chieu St. Dist. 3, Ho Chi Minh City Tel. (+84)8-8291967/8224385 Fax: (+84)8-8231919 E-Mail: [email protected] http://www.hcm.diplo.de

The Office of Government Minister-Director Doan Manh Giao Add: 1 Bach Thao St., Hanoi-Vietnam Tel: (+84)4-8042519 Fax: (+84)4-8044940

Department for European Market of Ministry of Trade Mr.Nguyen Canh Cuong Tel.: (+84)4-8262538-ext.1030 Fax: (+84)4-8254719 Email: [email protected]

The Ministry of Planning and Investment Minister Vo Hong Phuc Add: 2 Hoang Van Thu St., Hanoi- Vietnam Tel: (+84)4-8043782/8042560 8043255 Fax: (+84)4-84234453 http://www.mpi.gov.vn


11

The State Bank of Vietnam Governor Le Duc Thuy Add: 49 Ly Thai To St., Hanoi-Vietnam Tel: (+84)4-8255587 Fax: (+84)4-8258385 http://www.sbv.gov.vn

The General Department of Customs General Director: Le Manh Hung Add: 162 Nguyen Van Cu St., Bo De –Long Bien, Hanoi-Vietnam Tel: (+84)4-8720707 Fax: (+84)4-8263905 http://www.customs.gov.vn

German Industry and Commerce Vietnam Hanoi Office: Add: R.1303, Vietcombank Tower 198 Tran Quang Khai ST., Hanoi- Vietnam Tel: (+84)4-8251420 Fax: (+84)4-8251422 E-Mail: [email protected] http://www.vietnam.ahk.de CEO/ Chief representative: Mr. Jan Noether Representative: Mr. Le Trang The Ministry of Trade Add: 21 Ngo Quyen St., Hanoi- Vietnam Tel: (+84)4-9360733/8253905 Fax: (+84)4-8264696 http://www.mot.gov.vn Minister Truong Dinh Tuyen

Other Useful Websites: http://www.vneconomy.com.vn Website about the Vietnamese economy http://www.exim-pro.com Website about export/import promotion in Vietnam http://www.vietrade.gov.vn Website about trade promotion in Vietnam http://www.gso.gov.vn Website of the General Statistical Office of Vietnam http://www.vietnameconomy.com.vn http://www.vietnampanorama.com http://www.intellasia.com


12

2. History of Vietnam: Social structures and facts about the society

History of Vietnam

Vietnam has a history of occupation,

colonialization, war and civil war. It

also has a history of delightful

culture, remarkable dynasties and a

profound philosophic background.

In 968 C.E. the empire of An Nam

was founded and accepted by the

Chinese four years later. In the 10th

century, An Nam had to defend itself

over and over again against

Mongolian and Chinese occupation.

During the Le Dynasty, An Nam

culture and Buddhism grew stronger

and blossomed. In the 18th century

the country expanded to the south

into the Mekong Delta. By then, An

Nam was united and not divided into

two noble houses, the north and the

south.

With the help of France, the house of

Nguyen was able to win the throne

and, becoming emperor in 1802.

Shortly afterwards, the country was

officially named Viet Nam. In the

second half of the 19th century,

Vietnam had to end its persecution

of Christians and hand over several

provinces of the Mekong Delta to

France. Not until the next century, in

1926, was Vietnam allowed to form a

parliament with advocatory functions.

Consequently, the Communist Party

of Indochina was founded by Ho Chi

Minh in 1930.

As a result of the Second World War

and the occupation of France by the

Germans, the Japanese were able to

take Indochina from the French. In

answer to this action, Ho Chi Minh

and the Communist Party initiated a

movement called Vietminh, with the

aim of independence for Vietnam. In

1945, the Japanese permitted the

formation of an independent country

involving Tongking, An Nam and

Cochin China, ruled by the emperor

Bao Dai. Shortly afterwards,

Japanese occupation was ended

and the Vietminh removed the

emperor who had been installed,

founding the Democratic Republic of

Vietnam. As there was still an

ongoing conflict with the French, who


13

were not willing to accept the

Vietminh as a government, the

Indochina War occurred in 1946. By

1954 the French had to withdraw

from the country and Vietnam was

separated into a northern communist

part and a southern non-communist

part. Ho Chi Minh became president

of the northern part and Ngo Dinh

Diem was prime minister of the

south.

The separation and the refusal of the

south to allow elections for the whole

of Vietnam led to a civil war. The

south collaborated with the USA to

overthrow the northern Vietcong

rebels. Consequently, the north sent

troops over the Ho Chi Minh path

and the Civil War, the Vietnam War,

began.

The war became an international

conflict and had active participation

from the USA. Eight years later the

armistice between the Democratic

Republic of Vietnam and the USA

was agreed upon. This led to the

departure of the American troops.

Two years later, in 1975, the

communist north Vietnamese made

an attack against the south, which

led to the surrender of the non-

communist part of the country. Under

the new government both parts were

reunited again and the new Socialist

Republic of Vietnam was founded on

July 2nd 1976.

Following this, Vietnam led a war

against Cambodia, which ran from

1978 to 1989 and installed a

communist government in the

country. China responded with

attacks on the northern borders of

Vietnam. In the same year, Vietnam

had to surrender to international

pressure and withdrew from

Cambodia.

By 1992 the new constitution allowed

foreign investments and private

companies to operate in restricted

areas of the country. Little by little

Vietnam was able to open up to the

world. In 1997, Phan Van Khai was

elected as prime minister by national

representatives, and President Tran

Duc Luong was appointed by the

parliament.


14

Social structure About 62 million Vietnamese live in

rural areas. That is about 74 % of the

population. However, more and more

people are moving to urban areas.

These areas have seen an increase

in western ways of life. The future

will witness an ongoing trend

towards western customs.

Nevertheless, traditions and

traditional customs are widely

practiced and are still part of the

culture, even in urban areas.

Unlike western culture, the

Vietnamese value family and clan

over individualism. Kinship is a very

essential part of Vietnamese culture.

Hierarchies and family bonds are

taken very seriously. They are

complex and can not be ignored.

As kinship has an important role in

society, a complex hierarchy of

relationships exists. In Vietnamese

society there are 9 distinct

generations. Virtually all

commemorations and celebrations

within a clan follow the principles of

these 9 generations. Younger people

might have a higher position in the

family hierarchy than an older

person, but must still respect their

elders.

The number of inhabitants of

Vietnam is estimated at around 84.5

million people. The population is

growing at a rate of about 1.2 % per

year. The average population density

is about 246 people per square

kilometer, one of the highest levels in

the world. The highest concentration

of people is along the Red River.

The average age, however, is very

low. Only 5 % of people are over the

age of 65 years, and 30 % of the

inhabitants are under 14 years old.

The growth rate of the country is

falling, as well as the death rate due

to improved medical care.

Demographic changes are already

happening.

Around 88 % of the inhabitants are

ethnic Vietnamese. In addition, over

50 other minority groups are

represented, in particular the

Chinese, Thai, and Central Highland

peoples. These minorities, in

general, live in very poor conditions


15

and are mostly cut off from general

social life and economic

development. Over 6 % of the

inhabitants are illiterate. There are

not enough schools to serve the

country’s population. Also, because

of the high cost of tuition, books and

uniforms, and the need to

supplement their family’s income,

about one-third of students drop out

of school after the fifth grade.

Vietnamese is the official language

of Vietnam. Due to the history of the

country, other popular languages

include English, French, Russian

and German.

The government officially allows

freedom of religion and recognizes

the Buddhist, Roman Catholic,

Protestant, Hoa Hao, Cao Dai, and

Muslim denominations. However,

non-sanctioned groups, including

branches of even the recognized

denominations, face harassment.

Religion also has a big impact on

Vietnamese society. A complicated

mixture of Mahayana Buddhism,

Confucianism and Daoism is a

characteristic of the very traditional

society. Ancestor worship, as well as

animism also plays an essential role

in the country’s culture. Regardless

of religious belief, many Vietnamese

practice this ancestor worship in their

day to day lives. It is a big part of the

culture of the country and reflects the

profound influence of religion,

philosophy and the worshiping of

clans and families.


16

2.1 General health care system

Vietnam’s health care system has

recently been undergoing a great

deal of conversion. Due to the fast

development of the country in

general, and the ongoing major

program of poverty reduction and

economic growth, there are high

expectations for the continuing

improvement of the health care

sector.

Development Twenty years ago the health care

sector was completely subsidized by,

and under the control of the central

government. By 1989 it became

clear that additional ways of

financing the system were needed

for the future. Therefore, the

common system consisting of three

options was implemented:

1. Government budget allocation

2. Out-of-pocket payments

3. Prepayment schemes or

health insurance

During the recent period of change

even more tools have been

developed in the sector, such as

user fees, health insurance, and

health care funds for the poor.

However, none of these options are

able to finance the health care

system completely. Due to these

discrepancies in particular, health

facilities have been built without

being properly supplied and staffed

by the government.

Even though a policy to waive fees

for the poor has been implemented,

most hospital revenues come from

informal or private payments.

Furthermore, the private sector has

become increasingly more

significant. Unlike other Asian

countries, Vietnam spends quite a lot

on health care. In fact, its expenses

make up 5 to 6 % of GDP2 each year

and out-of-pocket payments add up

to US$ 233 per capita per year.

Therefore, it is interesting to see the

difference between public and

private expenditure. While almost

three quarters of spending is carried

2 Source 1 pg. 4 3 Source 1 pg. 4


17

out by the private sector, the public

sector only provides one quarter of

all spending.

Medical situation

During the mid-1960s, Vietnam

declared smallpox, cholera,

poliomyelitis and typhoid eradicated.

Even though the country proclaimed

many other contagious and

infectious diseases eliminated,

diseases like malaria, trachoma,

tuberculosis (and unfortunately even

cholera, poliomyelitis and typhoid)

still cause a high mortality rate and

have not yet been fully brought

under control. One reason for this is

unsanitary environments, which are

the cause of the outspread of

diseases.

The government of Vietnam has

campaigned for habitual

immunizations against diphtheria,

tetanus, whooping cough, polio-

myelitis, tuberculosis, and measles.

Also, programs have been initiated

to improve sanitary awareness.

Communal health centers have been

set up in every district to encourage

environmental decontamination, the

consumption of clean water and

food, and clean living conditions in

general. The government has also

initiated a program for the

extermination of rats, mosquitoes

and flies.

The population’s life expectancy is

relatively high. According to the

findings of the Evaluation of the

Tuberculosis Component of the

National Health Sector Project of the

World Bank in Vietnam, infant

mortality in the last few years has

been only 3.4 %. Still, Vietnam is

facing a high prevalence of chronic

malnutrition, as well as high maternal

and neonatal mortality rates. This is

especially true for minorities in

isolated areas such as the highlands,

who suffer from communicable

diseases and undernourishment.

Of course, HIV and AIDS are

widespread and a big problem in

Vietnam. According to the Atlantic

Philanthropies, an estimated

215,000 people have HIV/AIDS in

Vietnam, with more becoming

infected every day. Also, an


18

estimated 8,500 children between

the age of 0 and 15 are living with

HIV, and there are an estimated

22,000 orphans who have lost

parents to AIDS.4 The extension of

the disease has been observed as

expected. It was first spread

amongst intravenous drug users and

via sex workers. Since it has been

scattered into the general population

and the disease is also linked to an

increase in tuberculosis, HIV and

AIDS have now reached pandemic

levels. As in other countries, the

virus has been seen as shameful

and therefore those infected have

been discriminated against. Slowly

the government, as well as the

Communist Party and National

Assembly, have responded with

education and projects supporting

prevention and control. Also,

Vietnam is one of the 15 nations to

receive funding as part of a US$ 15

billion global AIDS plan.

Vietnam still faces challenges from

communicable diseases such as

4 Source 15

Hepatitis B, parasitic diseases in

children, acute respiratory infections,

tuberculosis, dengue fever,

Japanese encephalitis, and food-

borne related problems, which cause

almost 30 % of mortalities. However,

this cause of mortality will soon not

be the most common anymore.

On the other hand, non-

communicable diseases are

increasing, such as cardiovascular

diseases, cancers and diabetes.

Furthermore, an increasing rate of

lifestyle related diseases are being

detected. The abuse of tobacco,

alcohol and drugs is more common

than before. Likewise, suicide,

violence and mental diseases are on

the increase. Also, accidents are

occurring more frequently and may

well become the largest source of

premature mortality.

Certainly, there are considerable

disparities between the different

regions and population groups,

resulting in social inequalities. These

differences are not only due to

inconsistent health services, but also

to very dissimilar living conditions.


19

Especially in the Mekong River

Delta, the Central Highlands and the

Northern Uplands, living conditions

are more inferior to in other parts of

Vietnam.

Many people are still suffering from

the effects of dioxin use. The poison

made its way into the food chain and

consequently into peoples genes. A

result of this has been higher rates of

cancer, miscarriage and stillbirth.

Furthermore, rural areas still contain

a large amount of unexploded

ordnance devices and landmines.

Every year a number of farmers and

scrap collectors are wounded or

killed by exploding munitions.

Recent situation / health care programs

Almost all hospitals in Vietnam are

state owned and the insurance

system is too expensive for the

majority of the population. Social and

health insurance contributions are

only required for Vietnamese

employees. The health insurance

fund is financed both from the

employer as well as the employee.

The employer is obligated to pay 15

% of its employees' salaries and

certain allowances into a social

insurance fund. Vietnamese

employees must contribute 5 % of

their salary and certain allowances.

The employer is also required to pay

2 % of the total amount of the

principal salary and certain

allowances paid to employees as a

monthly contribution to a health

insurance fund. Vietnamese

employees are required to contribute

1 % of their salary and certain

allowances as stated in their

employment contract.

As mentioned previously, there are

three main options for financing

health care:

1. Government budget allocation

2. Out-of-pocket payments

3. Prepayment schemes or

health insurance

The concept of health insurance is

relatively new in Vietnam. Obligatory

and voluntary health insurance

schemes were installed by the

government 1992. These schemes


20

were administered by Vietnam

Health Insurance under the guidance

of the MOH.

At present Vietnam operates three

insurance schemes:

A. Obligatory coverage: This covers all active and retired

workers in the public sector, and all

salaried workers in private sector

enterprises with 10 or more workers.

The contribution rate is 3 % of a

salary (2 % paid by the employer

and 1 % paid by the employee).

B. Voluntary schemes: These include health insurance for

school children (with a per capita

contribution collected by educational

institutions) and the Farmer

Voluntary Insurance Scheme, in

which farmers contribute 30 % of

their premier and the provincial

government contributes 70 %.

C. Schemes fully subsidized by the government: These include reward schemes for

merit, free health cards for the poor,

etc. However, these schemes

disadvantage the most vulnerable in

society, who face informal user

charges.5

The newly installed health insurance

system has been well accepted,

especially with respect to hospital

costs. Though the cost of health care

is much lower with cards, people

tend to make fewer payments with

cash than they do with insurance. So

there is still the potential for great

efficiency with health insurance. Of

course, the professionalism of health

insurance programs has not yet

reached western standards.

Particular problems such as long

delays and a failure to respond to

claims, especially in the northern

provinces, curtail the benefits of

health insurance. Also, the public

health care system is still operating

rather unfairly. Poorer households

get a lesser share of support and do

not have the same access to good

facilities as richer families. On the

other hand, communal health care,

which is wide spread throughout the

country and well staffed, benefits 5 Source 1 pg. 13;14


21

poorer families disproportionately.

For this reason the government

produced a ’Strategy for People’s

Health Care’ in 2001, with the

following two objects:

- Renovating the health

insurance system to regulate the

financial relationships between the

users and providers

- Seeking new approaches to

strengthen the quality and efficiency

of the commune curative care

services

In the past few years the budget for

health care has increased

considerably, and by 2004 more

autonomy had been given to the

various provinces. Therefore, the

regions can operate with two big

blocks: wages and salaries; and all

other operations and maintenance.

The budgets depend on the size,

disease patterns and differential

resource needs of a particular

region.


22

6 6 Source 22 pg. 97

Ministry of Health

Curative Care National Programs

Local Governme

Provincial Hospitals

District Hospitals

National Hospitals N

TP

EPI

Lep

rosy

Mal

aria

IMC

I

Rep

rese

ntat

ive

Hea

lth

Vietnam’s Health Care System


23

Market share Public health care expenses, in spite

of the ongoing improvements, only

make up 1 % of the GDP and 20 %

of the income in the health care

sector, at highest. Most health

treatments are undertaken by public

hospitals, which prefer fees for their

services. In addition, unofficial

spending in the sector is very

common, which is the cause of most

of the inequality. The largest amount

of health care spending is made up

of out-of-pocket payments. This

expenditure equals about 80 % of

the sector’s turnover.

Hospitals and health facilities

Hospitals and medical centers can

be found in most provinces and in

the larger cities. In the main, inner

city institutions, especially

international hospitals, are better

staffed and maintained than the

others.

There are 18 main hospitals in Hanoi: Bach Mai Hospital Add: Giai Phong St., Dong Da Dist. Hanoi Tel: (84-4) 869 3731 / 869 3732

Dong Da Hospital Add:168Nguyen Luong Bang,DongDaDist,Han.Tel: (84-4) 511 5271

E Hospital Add: Nghia Tan, Cau Giay Dist., Hanoi Tel: (84-4) 754 3832

Friendship Hospital Add: 1 Tran Khanh Du, Hoan Kiem Dist., HanoiTel: (84-4) 972 2231

Hanoi Obstetrics Hospital Add: De La Thanh St., Ba Dinh Dist., Hanoi Tel: (84-4) 834 3181

Hospital 198 Add: Mai Dich, Cau Giay Dist., Hanoi Tel: (84-4) 837 3747

Hospital of Army 108 Add: 1 Tran Hung DaoSt.,Hoan Kiem Dist.Han.Tel: (84-4) 825 4627

Hospital of Army 354 Add: 120 Doc Ngu St., Ba Dinh Dist., Hanoi Tel: (84-4) 834 5595

Institute of Ophthalmology Add: 85 Ba Trieu St., Hoan Kiem Dist., Hanoi Tel: (84-4) 943 8004

National Cancer Institute Add: 43 Quan Su St., Hoan Kiem Dist., HanoiTel: (84-4) 825 2143

National Hospital of Pediatrics Add: 18/879 La Thanh, Dong Da Dist., Hanoi Tel: (84-4) 835 9638

National Hospital of Traditional Medicine Add:29 Nguyen Binh Khiem, Hai Ba Trung Dist.Tel: (84-4) 826 3616

National Hospital of Tuberculosis and Pulmonary Add:463 Hoang Hoa Tham,Ba Dinh Dist., Han.Tel: (84-4) 832 6249/ 832 5865

Saint Paul Hospital Add: 12 Chu Van An St., Ba Dinh Dist., Hanoi Tel: (84-4) 823 3071/ 823 3075

Thanh Nhan Hospital Add: 42 Thanh Nhan, Hai Ba Trung Dist., Han. Tel: (84-4) 971 4360/ 971 4373

Viet Duc University Hospital Add: 40 Trang Thi St., Hoan Kiem Dist., HanoiTel: (84-4) 8.253.531

Vietnam - Cuba Hospital Vietnam - France Hospital


24

Add: 37 Hai Ba Trung, Hoan Kiem Dist., Hanoi Tel: (84-4) 825 3718

Add: 1 Phuong Mai St., Dong Da Dist., Hanoi Tel: (84-4) 577 1100

There are 16 main hospitals in Ho Chi Minh City: 30/4 Hospital Add: 9 Su Van Hanh St., Ward 9, Dist. 5, Ho Chi Minh City Tel: (84-8) 835 6583

An Nhon Tay Hospital Add: Cho Cu Hamlet, An Nhon Tay Commune, Cu Chi Dist., Ho Chi Minh City Tel: (84-8) 794 6443

Cho Ray Hospital Add: 201B Nguyen Chi Thanh St., Ward 12, Dist. 5, Ho Chi Minh City Tel: (84-8) 855 4138 Fax: (84-8) 855 7267

Vietnam - France Hospital in HCM City Add: 6 Nguyen Luong Bang St., Tan Phu Ward, Dist. 7, Ho Chi Minh City Tel: (84-8) 411 3333

Ho Chi Minh City Medical Hospital Add: 179 Nam Ky Khoi Nghia St., Dist. 3, Ho Chi Minh City Tel: (84-8) 932 6579 Fax: (84-8) 932 6004

Hospital of Dermatology and Venerology Add: 69B Ngo Thoi Nhiem St., Ward 6, Dist. 3, Ho Chi Minh City Tel: (84-8) 930 5995

Hospital of Pediatrics No.1 Add: 2 Su Van Hanh St., Ward 10, Dist. 10, Ho Chi Minh City Tel: (84-8) 835 3255

Hung Vuong Hospital Add: 128 Hung Vuong, St., Ward 12, Dist. 5, Ho Chi Minh City Tel: (84-8) 855 8532

Nguyen Tri Phuong Hospital Add: 468 Nguyen Trai St., Ward 4, Dist. 5, Ho Chi Minh City Tel: (84-8) 923 4349

Pasteur Institude Add: 167 Pasteur St., Ward 8, Dist. 3, Ho Chi Minh City Tel: (84-8) 823 0352

Sai Gon General Hospital Add: 125 Le Loi Str., Dis.1, Ho Chi Minh City Tel: (84-8) 829 7709 Fax: (84-8) 822 5988

Thong Nhat Hospital Add: 1 Ly Thuong Kiet St., Ward 7, Tan Binh Dist., Ho Chi Minh City Tel: (84-8) 864 2143

Thu Duc General Hospital Add: Tan Phu Hamlet, Linh Chung Communce, Thu Duc Dist., Ho Chi Minh City Tel: (84-8) 896 4992

Tropical Diseases Hospital Add: 190 Ben Ham Tu St., Ward 1, Dist. 5, Ho Chi Minh City Tel: (84-8) 923 8704

Trung Vuong Hospital Add: 266 Ly Thuong Kiet St., Ward 14, Dist. 10, Ho Chi Minh City Tel: (84-8) 865 6744

Tu Du Obstetric Hospital Add: 284 Cong Quynh Str., Dist.1, Ho Chi Minh City Tel: (84-8) 839 1229 Fax: (84-8) 839 6832


25

List of health facilities and populations covered 7

Area

Districts Hospitals

Commune Health Stations

Population per District Hospital

Population per CHS

Red River Delta Region 96 2 239 179 618 7701 North East Region 100 2 024 90 367 4 465 North West Region 25 571 92 504 4 050 North Central Coast Region 77 1 798 132 317 5 667 South Central Coast Region 51 800 131 249 8 367 Central Highlands Region 46 592 94 130 7 314 North East South Region 48 524 257 535 23 591 Mekong River Delta Region 79 1 355 209 106 12 191 Vietnam 522 9 903 150 703 7 945

7 Source 22 pg. 30


26

Pharmacies

Private and public pharmacies are

very common throughout the country

and are usually very small. A

pharmacy will be found in most cities

and towns in Vietnam. They sell both

local and international products.

Their number amounts to 41,500,

which is considerably small

considering the size of the

population. However, this number is

steadily increasing. There are about

789 private pharmacies registered in

the area of Hanoi. Many are situated

around hospitals and clinics.

Although there are only a small

number of pharmacies in Vietnam,

they sell about 55 to 60 % of the

current market share of

pharmaceutical products. All

pharmacy points are licensed

according to the area they are in.

There are three degrees of

education in pharmacy lasting 1

year, 3 years and 5 years,

respectively. All degrees allow the

holder to own a pharmacy.

Unfortunately, there are no

consistent standards for pharmacies,

and therefore drugs are not always

dispensed with the correct dosage,

information or warnings. Medicines

are often sold with incorrect advice

about dosage or intake. Even though

the practice is illegal, antibiotics and

other prescription medicines often

are sold over the counter. As a

consequence, some such medicines

have no effect.


27

3. Development of the after the entry into the WTO Social effects

Previous experience shows that

certain social effects of the country’s

economic changes can be expected.

There will definitely be changes in

the demographic structure of the

country. Large migration towards the

bigger cities will greatly speed up the

growth of those areas. Also, through

migration the countryside will go

through demographic changes as

well. The average age will drop and

traditional family structures will

dissolve. Younger people in

particular tend to move to the bigger

cities to work and take part in the

economic growth. Additionally, the

abolition of subsidies, for example on

gas, will hit the population as well.

As a result of the changes described,

the gap between the rich and poor

will almost certainly increase. The

country’s development will only be

supported by the weak social

system. Education and medical

services will become more

expensive and harder to access for

the poorer population. As a

consequence, the government will

have to initiate social reforms and

programs to tackle these problems.

Another consequence will be further

expansion of the infrastructure of

Vietnam. There are already plans for

the introduction of a subway and a

new airport in Ho Chi Minh City.

Foreign investors may take part in

the process as well.

Economy

Since the Socialist Republic of

Vietnam committed to support the

transformation of the economy from

a centrally planned command

economy to a socialist-based market

economy, more and more industrial

branches have fallen into the hands

of private investors. Supporting

programs and tax advantages have

had to be cut back as well. Although

many parts of the market are still

closed to foreign investors,

regulations will become more

relaxed over time.


28

Vietnam’s economy is going to profit

from entry to the WTO and the

resulting liberalization of the market.

International business relations,

investments and industrialization are

going to benefit the economy

immensely. On one hand, it will be

easier for Vietnamese businesses to

have access to foreign markets. On

the other hand, it will be harder for

them to keep up with their

competitors, for there will be fewer

barriers for foreign companies to

enter the Vietnamese market.

Enforcement of the new resolutions

is already proving to be difficult for

Vietnam’s bureaucracy. Rules and

regulations are not yet fully

complete. There are still guidelines

for implementation missing, and the

communication and information

systems to assist international

relationships are inadequate.

Reforms / investors

Especially for foreign investors, the

results of WTO entry will be primarily

of a positive nature. Reforms, made

possible by WTO entry, will be

accelerated and will allow external

businesses a better position in the

market. In 2007, a new investment

law was passed to ensure equal

conditions for national and

international businesses in the

country. Furthermore, the WTO is

introducing more diverse conditions

for membership. Step by step these

regulations will be obeyed. Another

law for the protection of intellectual

property has been introduced as

well. This is especially important

because the greatest risk foreign

businesses often face is major

violations of their patents. However,

most of the new regulations lack

detail and are intangible. In the

future, basic conditions will be

stricter and representatives will have

to be licensed every five years. In

the past, foreign businesses were

only permitted to import goods for

their own products. According to the

law, foreign businesses are now

allowed to open up branches in

Vietnam. They also have the right to

import and trade, which allows them

to offer services for their own

products in the country. Overall, after

WTO entry Vietnam can count on an


29

increase in direct investments. In

2005, for instance, there was an

expansion of investments by about

38 %. Inside the EU, Germany is the

most important partner for Vietnam,

and Vietnamese export activity is

increasing steadily.

Entry to the WTO does not only

create an air of respectability that will

attract foreign businesses, there are

also numerous advantages for

Vietnam itself. As a member,

Vietnam has access (free of

discrimination) to very important key

markets, including the USA, Japan

and China. It also has more power to

resist restrictions like the recent anti-

dumping-duty of the EU put on shoe

produced in Vietnam. However, the

country will also have to face much

more competition than it has been

used to. On one hand, this will result

in more effectiveness in national

businesses, but on the other hand it

will be the cause of several

dismissals and structural changes in

large, public sector companies.


30

3.1. Basic conditions for foreign investors / market entry barriers

With WTO entry, Vietnam committed

itself to providing access to foreign

investors. Since then, the country

has tried to implement various

different incentives to welcome

foreign investors into the country.

The very complicated taxation

system was reformed and made

easier in 1999. By 2000, investment

law had been improved so as to be

more flexible and allow taxation

advantages. Furthermore, a lot was

done for the protection of foreign

investments. Since 2006, equal

treatment has been ensured for both

national and foreign investments

through the harmonization of

investment and business law.

Further reforms are going to lead to

a more predictable and stable

market in general.

Besides the very favorable

geographic position Vietnam has to

offer, a very good location in the

center of Southeast Asia with

plentiful raw materials, it also boasts

a stable political situation as well as

a constantly improving economic

situation and very low labor costs. All

these circumstances make up very

positive conditions for foreign

investors. Nowadays these ventures

amount to about 40 % of the whole

investment volume of the country.

However, not only has the volume of

investment changed, there has also

been a recognizable shift in the

nature of investments. Most foreign

ventures used to be small and

medium sized businesses, whereas

now many current investors are

large, global companies. In

particular, Asian countries such as

Singapore, Japan, Hong Kong and

South Korea are increasingly

operating in the Vietnamese market.

German ventures at present are still

very rare.

Notwithstanding the above, Vietnam

still faces many obstacles, such as

the existing, rigidly structured

socialistic government. Vietnam is

yet to catch up with other Asian

countries. Initiated reforms have to

be implemented and economic

growth has to stay at a high level.

Vietnam has already signed over 30


31

multi and bilateral agreements to

protect foreign investors.

Vietnam and the WTO

Vietnam’s entry into the WTO has

already shaped the country’s

development for the future with

regards to its position in the global

economy. This move will make it

possible for Vietnam to keep up

economically with other Asian

countries. After its application as a

developing country in 1995, Vietnam

started various bilateral negotiations

with members of the WTO. In 2006

the last round of negotiations with

the USA was complete. Due to this,

Vietnam had to begin to liberalize its

economic system, which was

accelerated, and on January 11th

2007 it was accepted as a member

of the WTO.

Vietnam and Asia

The ASEAN Free Trade Area

(AFTA) was formed in 1992 with the

aim of members creating free trade

zones within the association, as well

as with China and Japan. Since

1995 Vietnam has been a member of

the ASEAN and in 1996 it became a

member of AFTA. The alliance

makes Vietnam even more attractive

because it provides access to all

ASEAN countries without major tax

impacts.

Vietnam and the USA

The trading agreement BTA

coordinates nearly all economic

transactions between the USA and

Vietnam. It includes the handling of

traded goods, the trading of services,

intellectual property rights, business

protection legislation, trading

simplifications, and transport

conditions. Both countries are

committed to providing each other

with the most favored nation

treatment and the native equal

treatment.8

Vietnam and the EU

Another vital trading agreement is

the one between the European

Union and Vietnam, called KA. It

deals mainly with the handling of 8 Source: 6 pg. 23


32

trading goods. Compared to the

benefits of the BTA though, it is

rather insubstantial, for it lacks direct

agreements in the service sector:

“Therefore there is a need to adapt

to BTA to provide the same

conditions for European and

American businesses.”9

Furthermore, since 2003 there has

been an agreement between those

who deal in textiles and an obligation

on Vietnam to reduce its tariffs on

goods of that nature. As mentioned

previously, Vietnam’s legislation is

beginning to liberalize economic

conditions, so it is now much easier

to import European goods such as

pharmaceuticals.

Vietnam and Germany

A bilateral agreement was signed in

1998 between Vietnam and

Germany for the protection of long

term investments. The agreement

covers political risks and is

additionally supported with a federal

guarantee for direct investments.10

Germany is on the top of Vietnam’s

9 Source: 6 pg. 24 10 Source: 6 pg. 25

exporting list of EU member states.

The German delegate of commerce

has offices in Ho Chi Minh City, as

well as in Hanoi. In addition, the

DIHK/AHK and the German

merchant’s community have set up

an office in Hanoi. A total of 9.9

billion US$ of direct investments

were put into Vietnam in 2006.

CIL and UEL

In order to protect foreign

investments from administrative

disposal the investment and

business laws CIL and UEL were

harmonized in 1992. The regulations

include an interdiction of the

socialization of companies and the

protection of intellectual property.

With these tools, CIL, UEL and the

reform of the constitution, Vietnam is

clearly willing to open up to the

global market and welcomes foreign

investment into the country. The

opening of the stock market in 2000

in Ho Chi Minh City and 2005 in

Hanoi was an important step in this

regard. However, the socialist

government and its heavy and rigid

bureaucracy still form an obstacle to


33

foreign companies. The system can

only adapt slowly to the new found

volume of economic investments and

the liberalized trading system.

CIL

The new law of investments has

harmonized all investment forms.

Now there is no more differentiation

between the origins of an investment

project. Companies are allowed to

interact in various different business

sectors. Investments in the country’s

infrastructure are especially

supported by the government. The

CIL lists all the sectors and their

obligations for investments.

Furthermore, there is no minimum or

maximum amount stated for

investments. Even 100 % foreign

holdings are permitted.

Foreign investors may invest in

Vietnam in any of the following

forms:

- Business cooperation on the

basis of a business

cooperation contract;

- Joint Venture Enterprises;

- Enterprises with 100 %

foreign owned capital;

- Different property holdings

can be transferred abroad,

including business benefits,

personal income of personnel

in foreign countries,

investment capital, earnings

out of technology transfer and

service, benefits and interests

of business loans, and other

property holdings

characterized as the

investor’s fortune.

There are three options for initiating

a commercial presence in Vietnam:

- Representative office license

- Branch license

- Foreign investment project

license

Sectors that have belonged to state

owned companies until now are

being reduced and foreign investors

are granted them following

guarantees11:

11 Source 6 pg. 12


34

1. The capital and assets

invested in Vietnam by foreign

organizations and individuals shall

not be requisitioned or expropriated

through administrative measures.

2. An enterprise with foreign

owned capital shall not be

nationalized.

3. The law related to foreign

investment in Vietnam affirms that in

cases where foreign investors are

affected by a change in the policies

and laws of the country, the

Vietnamese government will have a

reasonable solution to ensure their

legitimate interest. Where ownership

of foreign investors is violated the,

provisions of the law related to

foreign investments in Vietnam will

be applied as a basis for the

protection of their ownership.

4. The maximum duration of a

foreign investor’s investment

activities in Vietnam is 50 years.

However, in some cases it can be

extended, but to no more then 70

years.

A license for foreign investment is

granted by the people’s committee

under the following circumstances

and with the following information

included:

1. Legal status of investor

(Name, Address)

2. Object, costs and location of

the implementation of the investment

project

3. Investment capital, project

implementation plan, land use

demand

4. Financial report of the investor

Benefits to investors that are

available include12:

- Exemption of import tariffs on

equipment, raw material and

components

- Exemption or reduction of

income tax

12 Source 6 pg. 13


35

- The possibility to confer

business losses for up to 5 years

Investment incentives are provided

for the following industrial sectors13:

- Development of new energy

sources, production of high tech

products, biotechnology and

information technologies

- Agricultural products, salt

products, and the breeding of plant

species

- Traditional handicrafts

- Projects that will increase

employment

- Investments in research and

development

- Development of infrastructure

and important industrial production

facilities

UEL

13 Source 6 pg. 33

In the past, the UEL used to

constrain the contingent which a

foreign investor was allowed to hold

in a company. The representative

can be the chairman of the board or

the director of the company. He has

to remain in Vietnam.

As corporate forms, CIL and UEL

envisage:

- Limited Liability Companies

- Shareholding Companies

- Partnerships

- Private Enterprises

- Branch Offices

- Representative Offices

Requirements of the company

management according to UEL are:

- Legal capacity

- They have to hold 10 % of the

corporate share or have special

knowledge or experience

There are three different business

development zones: industrial zones

(IZ), export converting zones (EPZ),

high-tech zones (HTZ), and

economic zones (WZ).


36

Taxation

Over the last couple of years the

taxation system has had to adapt to

the economic changes. Several new

and modified tax laws have been

introduced, as well as the Corporate

Income Tax Law, the Value Added

Tax Law, and the Special Sales Tax

Law.

The main categories of tax imposed

in Vietnam are as follows:

• Corporate Income Tax

• Value Added Tax

• Personal Income Tax

• Foreign Contractor Tax

• Special Sales Tax

• Import and Export Duties14

The following tax benefits were

established:

- Companies in high-tech zones

only pay 10 % on the turnover tax

based on their earnings.

Furthermore, they are exempt from

turnover tax for their first four years 14 Source 7 pg. 9

in business, beginning with their first

earnings.

- Producing businesses in

export converting zones only pay 10

% on the turnover tax based on their

earnings. Furthermore, they are

exempt from turnover tax for their

first four years in business,

beginning with their first earnings.

Service companies in these zones

pay 15 % on turnover tax and get

exemption from it for their first two

years in business.

- Companies in industrial zones

are taxed after an export share is set

in their investment license. The rate

of taxation varies between 10 % and

15 %. A two year exemption is

granted as well. Additionally, a

further two year reduction of 50 % on

the turnover taxation is permitted.

Rules of competition

Since July 2005 new competition law

has been effective. Besides dealing

with anticompetitive practices and

unfair competition, sanctions can be

introduced for violations of the law.


37

This law also assists greatly with the

liberalization attempts of Vietnam.

Anticompetitive agreements are

defined as follows15:

- Direct or indirect agreements

on prices

- Agreements on the splitting of

markets or suppliers

- Agreements on the restriction

of production, purchasing or

sales amounts

- Agreements on restrictions of

technological development

investments

- Agreements at the conclusion

of a contract which force off

topic allegiances or conditions

- Agreements which prevent

the market entry of others

- Agreements which exclude

from the market those that are

not part of the agreement

- Secret agreements related to

auction procedures

The first three agreements are only

restricted if all the parties together

hold a minimum of 30 % of market 15 Source 6 pg. 72

shares. Exceptions are made if, for

example, there will be a cost

reduction for consumers.

The following behavior is restricted

for companies with market

dominating or monopolistic

positions16:

- The sale of goods or services

at prices under the total cost,

with the aim to exclude other

competitors from the market

- To force unreasonable

purchase or sale prices on

goods or services, as well as

the setting of minimum sale

prices which inflict damage on

the consumer

- The use of different business

conditions for identical

transactions to build up

unequal conditions

- To force off topic obligations

or conditions at the conclusion

of contracts

- Refusing the market entry of

new competitors

16 Source 6 pg. 72


38

Sanctions for violation of the law

include admonishment,

administrative fines up to 10 % of

yearly earnings, and the possibility of

canceling a company’s license.

The following counteractions can

also be carried out17:

- Restructuring of the company

which misapplied their

position

- Splitting of a merged or

consolidated company, or

forcing the reversal of the

transaction

- Public disclaimer

- Exclusion from an

anticompetitive agreement, or

the concerning contract or

transaction

- Other necessary action to

correct the anticompetitive

action

The biggest market entry barriers in

Vietnam are the same as in all

ASEAN countries, namely the risk of

competition from generic products

and price battles. Also, the very 17 Source 6 pg. 74

unclear and complex bureaucracy

and favoritism that occurs in the

country could become major

obstacles for a new company. Mr.

Thomas Steffen from Bayer Schering

Pharma Representative Office

HCMC identifies another obstruction

as being crossing competences of

the MOH and the MPI that leads to,

for example, the exposure of transfer

prices to the MOH, which is not

common at all.


39

3.2 Basic conditions for research and development Intellectual property rights

Many foreign investors are afraid of

investing in Asian countries. Their

main concern is corruption and the

lack of adequate intellectual property

(IP) protection. Many cases of

industrial espionage in the past have

taught investors to be very careful in

countries where there is no proper

protection. Intellectual property rights

have become more and more

important during Vietnam’s process

of liberalization and its opening up to

the global economy. Vietnam has

done a lot to improve and strengthen

its laws to protect foreign

investments. The government is still

taking action to ensure the safety of

the intellectual property of

enterprises. The main issues are

patents, science and technology,

trademarks, industrial design, and

copyrights. Besides modernization of

the law, competent institutions and

administrations are being built up

and improved.

The private sector has been able to

enrich and strengthen the

relationships between the economy

and the government. The

government has also begun to work

with civil services groups to cope

with evolving social and public

problems. Additionally, much effort

has been made to integrate science

and technology in long term

investments to ensure future

development, which consequently

requires good IP protection.

Consequently, penalties for IP

violations are going to be made

tougher during the country’s process

of economic growth and the rise of

foreign investments.

In the process of implementing such

laws, one of the major issues is the

educating of universities and

research and development

institutions about IP laws and

regulations. A crucial understanding

has to be internalized by the public

to create an awareness of

intellectual property, and the

acquaintance with IP regulations still

has to be improved and developed.


40

Educational conditions and workforce

Opening up an enterprise or branch

requires a good local workforce.

Vietnam has more than 150 public

and private universities and colleges.

The biggest are in the large cities

like Hanoi and Ho Chi Minh City. A

number of universities teach

pharmacy, public health, chemistry

and biochemistry. Even more

academies have excellent study

programs in economics and

business administration.

Education in Vietnam generally has

a very high ranking. Approximately

700,000 students are reported to be

enrolled in universities and colleges

throughout Vietnam. The second

language used in secondary schools

is English. Third languages are

Chinese, Mandarin, French and

Russian. German is also becoming a

common third language. Degrees

awarded are at the level of either

Bachelor, Master or Doctor.

The quality of education has recently

improved very much. International

standards have been put into

practice after the opening of the

economy. Foreign professors and

academics are being brought into the

country and much cooperation is

made with foreign universities to

upgrade the educational structure

and its potential.

Overall, it might be too early to

outsource research and

development activities, for there are

not yet enough highly qualified

people in Vietnam. However, there is

a well qualified workforce for

business administration and

management in the country. A good

labor force is also available for

manufacturing and production.

Before its opening up to other

markets, Vietnam’s research was

only predestined for public research

facilities. As the country found the

arrangement very inefficient, the

government began to connect

research facilities to establishments

of higher education and economy.

During the period of liberalization in

Vietnam, the traditional division

between science and education


41

began to close. Still, the majority of

research is carried out by these

research facilities.

Another goal is to support and

initialize international cooperation

with regards to scientific and

technological research.

Furthermore, a better networking of

research and education is another

very important aim.


42

3.3 Legislation and basic conditions for license applicants Opening up a representative office

usually takes not more than 50 days.

Applications are handed in to the

provincial municipal authority. Fees

for registration are mostly very low

and bureaucracy not to

cumbersome. Pharmacy licenses, on

the other hand, often take longer

than 6 months.

Registration of drugs and

pharmaceutical products can only

requested by local manufacturers

and domestic importing companies,

and must be requested separately

for every product. The fees are

rather low at only US$ 2000 per

product. For registration two

certificates must be approved, the

Free Sale Certificate (FSC) and the

Good Manufacturing Practices

(GMP). The GMP can be replaced

by the Certificate of Pharmaceutical

Product (CPP). Additionally, the

product must be approved by the

Institute of Quality Control and

undergo sample testing by five

different Drug Approval Committees.

Applications have to be made in

English or French in addition to

Vietnamese.

Within the Ministry of Health there is

a special department that manages

drug, pharmaceutical, and cosmetic

licenses. The Pharmaceutical

Management Department, or Drug

Administration of Vietnam (in

cooperation with the Ministry of

Commerce) is authorized to grant or

cancel licenses, and is also in

charge of national drug policies.

The licensing of drugs, compared to

other Asian standards, is still rather

easy and fast. Registration is

required for 12 months for both

foreign and domestic products. After

2012 the duration will expand and

fees will adapt to typical Asian levels,

meaning they will rise. However, one

has to be careful during the

registration process. The legal

paperwork should be approved

within the first 3 months. The very

complex and conservative

bureaucracy must be taken into

consideration. If a minor mistake

appears at the end of the process,


43

for example a wrong translation, then

the whole registration process must

start again at the beginning. The

maximum validity of a product is 5

years. In order to re-register the

application has to be made 6 months

before expiration. The validity of a

product license depends on its

demand, meaning a 5 year license is

generally given to a product that is

not locally produced but has a high

demand. A 3 year license will be

granted to foreign products with a

high demand and which can not be

produced locally in adequate

amounts. Year long licenses are

commonly granted to OTC products

that are produced under a

Vietnamese joint venture.

Altogether, the licensing of a new

medicinal product demands 4 steps:

• Legal report

• Toxicology study report

• Experimental pharmacology

study report

• Clinical pharmacology study

report

The licensing of a new western drug

also demands 4 steps:

• Legal report

• Experimental pharmacology

study report

• Pharmaco-kinetics and bio-

availability study report

• Clinical pharmacology study

report

Numerous foreign companies

complain that there is no adequate

infrastructure for these procedures.

Hospitals and other medical facilities

can not meet the requirements of

upcoming licensing procedures.

Through their license, many state

owned companies import

unregistered generic products to sell

outside their usual range. To take

action against this practice is very

difficult. Today about 10,000

products are registered on the

Vietnamese market. About 6000 of

them are domestically produced and

4000 are manufactured abroad.

The most important licensing body

for foreign investors wanting to start

a project in Vietnam is the Ministry of


44

Planning and Investment (MPI). The

MPI is in charge of the allocation of

investment licenses for significant

foreign investments. Of course,

certain types of investments require

additional approval from other

government bodies. The agency

decides as to the applicability of

investments and passes them on to

the relevant governmental agencies.

The granting of incentives and

preferences is decided in

cooperation with the MPI and the

particular government agencies

responsible. By 2012, foreign

companies will be able to open up

100 % private businesses. Their re-

registrations will be conducted by the

MPI in corporation with local

authorities.


45

4. Alternative medicine and the significance of naturopathic treatments Vietnam has a long history of

traditional medicine. Alternative

medicines are divided into three

types: The Northern Medicine

(Thuoc Bac), the Southern Medicine

(Thuoc Nam) and the Western

Medicine (Thuoc Tay).

Vietnamese physicians rely upon a

four step diagnostic: visual

inspection, auditory perception,

questioning the patient, and taking

the pulse. Vietnamese patients react

rather suspiciously to questions

about their medical history or

symptoms. It is presumed that a

physician should be able to identify

the sickness by its outer signs.

Northern Medicine is deeply

influenced by traditional Chinese

medicine. Only Chinese speaking

people practice this form of

treatment. The philosophy is based

upon the Yin-Yang force and the

eight trigrams. Both those elements

represent the entire universe,

material and moral. Ying is the

female, passive element, while Yang

stands for the male, active element.

The human body is seen as a micro

cosmos, which is shaped by the

universe, and therefore has to adapt

its inner functions to external forces

and nature. The basic idea is the

harmony of the human being with

nature. Founded on this principle,

treatments are based on the

harmonization of internal and

external forces, and through

balancing physical and moral energy

diseases and infections are

overcome. Many of the northern

practices have been found to be very

useful and are used in everyday life.

The second traditional medicine is

called the Thuoc Nam or the

Southern Medicine. Treatments rely

on cure through tropical plants and

domestic animals. The cultivation of

medicinal plants and the

manufacture of drugs derived from

domestic plants have reportedly

helped to overcome a shortage of

western medicines. Some of these

traditional drugs have been found to

be most effective in curing


46

dysentery, arthritis, gastritis,

stomach ulcers, heart diseases,

influenza, blood clotting, and high

blood pressure. Due to its minimal

expense, time and effort it is often

referred to as the poor people’s

medicine. The knowledge of this type

of medicine is passed from

generation to generation.

The third alternative is the Western

Medicine, called Thuoc Tay. Healing

is based on the handling of

hazardous ghosts. The treatment

tries to prevent evil ghosts from

entering the body, or withdrawing

them from the sick body. This

Western Medicine is the most

superstitious of all. Charms are

supposed to protect pregnant

woman, ugly names for new born

babies and magical phrases are

supposed to shield people from evil

spirits, and sacrifices of food and

alcohol are made to becalm demons.

While the Northern and Southern

Medicines are mainly of natural and

earthly nature, the Western Medicine

has a rather spiritual and religious

character.

Today this traditional medicine is a

vital part of modern treatments and

strongly integrated into the common

health care system. Traditional

Vietnamese medicine has given rise

to new therapeutic methods that

have called for the wider application

of herbal medicine and acupuncture.

The idea of the disruption of the

inner harmony of all natural systems

is seen as the reason for all

sicknesses. Consequently,

Vietnamese people will not stop

trusting alternative medicine

altogether. Vietnamese physicians

implement traditional cures in the

modern health care system with

public supervision over the efficiency

of such treatments together with

drugs. Since the development and

improvement of modern diagnostics,

traditional treatments have become

even more common. Illnesses that

are not acutely life threatening can

be treated well by naturopathic

medicine. Traditional medicine is

applied in regular hospitals, special

traditional hospitals and medical

stations, and is even covered by the

insurance system. Physicians are

generally also licensed in the


47

practice of these alternative

treatments.

Traditional medicine has a big

market share. Almost 17 % of

pharmaceutical and health care

turnover originates from traditional

medicine. There are 450 private

companies practicing traditional

medicine and around 250

manufacturers of alternative

medicine, who have even started to

export their products successfully.

It is crucial for foreign investors in

the pharmacy market to consider the

value and impact of alternative

medicine so as to develop an

understanding of the mindset of the

people, and therefore knowledge

about suitable distribution strategies.


48

5. Marketing structure and distribution channels

Vietnam’s distribution structure is

characterized by governmental

restrictions and bureaucracy. Only

domestically operating businesses

are allowed to distribute their

products on their own. All imported

medicine has to be transferred to a

local state owned company or an

approved import company. The

import company on the other hand,

is only allowed to buy foreign

products from state owned

companies. After that they can either

sell the imported products to

pharmacies or they have a very

slight chance of selling to hospitals

directly (although the possibility of

this is rather small). Hospitals in

Vietnam have a certain budget,

about 50 % of which is provided by

the government. Since 2006, there

have been regulations stating that

only 15 % of that budget can be

spent freely and not on buying from

state owned pharmaceutical

manufacturers. Due to complex

distributing channels, prices do not

vary between wholesalers.

Therefore, hospitals often prefer

state companies when it comes to

making decisions about distributors.

State owned enterprises have a

monopoly on hospital supplies. Only

a few intermediaries have a chance

to interfere and participate in the

market. Due to the financing system,

state owned companies mostly sell

OTCs instead of prescription drugs.

These are sold mainly by private

importing companies.


49

Advertisements for pharmaceuticals

are regulated by the government. A

TV spot for OTCs requires a special

permit and prescription drugs can

only be promoted in specific

publications addressing medical staff

and pharmacists. Other permitted

ways of advertising are seminars

and training, oversea trips for

doctors to attend foreign

conferences, educational material,

and samples.

Foreign wholesalers are not allowed

to market their products. Still, they

are allowed to ‘promote’ their goods

to hospitals and medical staff. It is

common to have agents advertising

products in hospitals.

Today there are about 800

companies responsible for

wholesaling drugs. These

businesses are usually very small

and operate only in very limited

areas. To employ these companies

3

1

324

3

2

1 1

Foreign Companies

Local Companies

State Owned Pharmaceutical

Companies

Importing Companies

Hospitals Pharmacies


50

is still rather expensive. The average

cost ranges from about 4 to 14 % of

general turnover.

Newly licensed drugs are registered

with the maximum market price. In

reality, products are mostly sold at

much lower levels. Since two-thirds

of the products sold are OTC

products, out-of-pocket payments

are the most common. They amount

to nearly US$ 23 per capita each

year.

The ongoing economic boom in

Vietnam and the liberalization of the

market after WTO entry can provide

new sales potential to western

enterprises. The country can also

offer attractive opportunities for

distribution, as well as profitable

manufacturing. Still, there are not

many competitors in the market

except local industry. The growth

expectations for Vietnam’s

pharmaceutical enterprises are very

good. The domestic companies are

more than willing to expand and

cooperate with global competitors.

As mentioned previously, the

government will allow 100 % foreign

private owned companies by the

year 2009. All of the named

regulations will be obsolete.

Pharmacy manufacturers and

wholesalers from abroad will be able

to sell their products freely to

hospitals, pharmacies and grocery

stores without the need of a

middleman. Therefore, any company

wanting to enter the market should

arrange a representative office so

that they become accustomed to

legislation, licensing processes and

the market itself.


51

Another crucial development is the

increasing number of outsourcing

projects. About 70 % of the

multinational companies in Asia have

already started to outsource a part of

their value chain, and the tendency

is rising. Usually this covers

production or research.

On the other hand, western

enterprises have started to

concentrate more on the distribution

and marketing of their products,

while research and development are

being outsourced. This strategy, of

course, requires long lasting and

trustful relationships and

cooperation.

1

1Foreign Companies

Local Companies

State Owned Pharmaceutical

Companies

Importing Companies

Hospitals Pharmacies


52

Profile of an importing company of pharmaceutical products: DEKA CO. Ltd.

One very large and successful

import company for pharmaceuticals

is DEKA CO. Ltd. Established in

2001, DEKA has a young team of

university graduates in pharmacy, as

well as economics. Since its

foundation, sales have increased

steadily, reaching US$ 3.5 million in

2006. Their product range contains

pharmaceutical products as well as

diagnostic products. They are the

exclusive distributor for Fresenius,

the worldwide leader in infusion

products such as anesthetic agents

and parental nutrition. Furthermore,

DEKA is also the selected distributor

of BioMerieux, a worldwide producer

of diagnostic reagents and

equipment.

Their distribution system is planed

individually for each product group

and tries to combine modern sales

knowledge with the flexibility of the

Vietnamese market. Their network

system is set up throughout the

whole country to provide direct

access to their products, which

shows in their continuing good

turnover.

1000

17002200

30003500

0500

100015002000250030003500

2002 2003 2004 2005 2006


53

DEKA operates from two

headquarters: one in Hanoi which

employs 22 people and the other in Ho

Chi Minh City with a total of 25 staff.

The northern provinces are covered by

12 salesmen. In the south, DEKA

employs 15 sub-distributors in the

major provinces.

List of Importers & Manufacturers

Hanoi Address: No.8 Lot 1A Trung Yen

Cau Giay Hanoi; Tel.: 84 4 78 30 363 Fax: 84 4 78 30 364 Email: [email protected]

Ho Chi Minh City Address: 110 Ba Hat – Ward 9

Dist. 10 HCMC Tel.: 84 8 83 49 730 Fax: 84 8 92 71 604 Email: [email protected]


54

6. Business competition; Previous and present competitors; Future competitors

Foreign companies currently active

in the market number about 300,

most of which are representative

offices. India and South Korea in

particular have large market shares

in Vietnam and they are increasing in

influence. Considering the latest

developments and future predictions

based on WTO regulations, the

number of future competitors will

increase by about 5 to 10 % a year.

Only the present lack of a proper

chemical industry might slow down

the expected development.

Locally manufactured products are

still supported by the government

and can therefore be sold at very low

competitive prices. That advantage

is, however, diminished by the fact

that raw materials have to be

imported. Consequently, the

resulting exposure to global market

prices and currencies is balancing

the competition in prices.

Corporations with domestic

companies are supportive and a

distinct advantage, and local

enterprises at present are very eager

to cooperate.


55

List of registered pharmacy services: http://www.hotfrog.vn/Products/Pharmacy List of German competitors in the country: German companies manufacturing pharmaceuticals:

• B. Braun Vietnam Representative office

• Hexal AG Representative

Office Hanoi

• German companies wholesaling pharmaceuticals:

• Detlef von Appen GmbH &

Co. Representative Office

• Helm AG Representative Office

• VI PHAT Ltd. Betw. 201 and

300 employees

• Rudolf Lietz Inc. Representative Office

• Bayer

List of international competitors in the country:

• Pfizer

Website: http://www.pfizer.com/home/

Address:Saigon Trade Center 37 Ton Duc Thang Street, District 1 Ho Chi Minh City Phone: +84 8 910 5120 Fax: +84 8 910 5118

• GlaxoSmithKline

Representative offices Address:Ho Chi Minh City Rep. office: The Metropolitan - Unit 701 235 Dong Khoi Str. District1. Ho Chi Minh City, Vietnam Phone: 84-8-824 8744 Fax: 84-8-824 8742 Hanoi Rep. Office: Hanoi Tower Center-Unit 405 49 Hai Ba Trung Street. Hoan Kiem District Hanoi, Vietnam Phone: 84-4-936 2607 Fax: 84-4-936 2608


56

• Sanofi-Aventis

Website: http://www.sanofi-aventis.com.vn

Address:10 Ham Nghi, D1 Ho Chi Minh City, Vietnam Tel.: +84 8 82 98 526 Fax: +84 8 91 44 801

• Novartis

Address: Lot 32 Bien Hoa City Dong Nai Tel.: 61 836718 Fax: 61 836724

List of the biggest state owned Competitors:

• Vietnam Pharmaceutical Corporation (Vinapharm or. VIMEDIMEX)

Vinapharm is Vietnam's largest state-owned company, which owns all of the state-owned pharmaceutical-producing units

Website: www.vimedimex2-hcm.com , www.vietpharm.com.vn

Address:246 Cống Quỳnh P. Phạm Ngũ Lão, Q.1 Ho Chi Minh City

Tel.: 08- 8398441; 8396012; 8398449 Fax: 08- 8325953 Email: [email protected] , [email protected] 260 Nghi Tàm Tây Hồ

Hà Nội Tel.: (84-4) 8 293 907 Fax: (84-4) 8 293 912 Email: [email protected]

• Vietnam OPV Pharmaceutical

Co

Website: http://www.vnemart.com/opvpharmaceutial


57

Address: Suite 803 Saigon Tower 29 Le Duan St, Dist.1 HoChiMinh,

Tel.: [84] (8) 8238999 Fax: [84] (8) 8275689

Annual Revenues: USD 5,000,000 Number of Employees: under 300 Vietnam Company Certifications: Asean GMP, GSP, GLP

7. WTO guidelines

Before WTO entry, Vietnam had set

up trade relations with 165 countries

and signed bilateral trade

agreements with 72 countries. After

the 1st of January 2007, the primary

task of the country was to transform

the centrally planned economy into a

free market economy in order to

meet the requirements of the global

economy. This will bring out many

challenges and opportunities in

economic development and lead to a

profound modernization within

Vietnam.

Of particular interest to foreign

industry are the evolving changes in

commercial law. Vietnam’s WTO

accession has meant the country is

now integrated into an international

rule based commercial system,

leading to more transparency and

openness which hopefully will result

in better economic governance and

therefore encourage foreign

investments.

Furthermore, Vietnam is obliged to

implement ceilings on duties ranging

between 0 and 35% for most non-

agricultural goods within the period

leading up to 2014. Vietnam has also

applied the Trade-Related Aspects

of Intellectual Property Rights

(TRIPS) Agreement immediately

without any transition period. Price

controls have to be notified to the

WTO and the Technical Barriers to

Trader and Sanitary and

Phytosanitary Measures agreements

have also been implemented without

any transition period. Moreover, a

new law has harmonized the

country’s import and export

regimentations to simplify trading

procedures.


58

Enforcement and acquaintance of recent laws / Trading and distribution in Vietnam

In order to display and implement its

adaptation to WTO regimentations,

Vietnam has passed guidelines

crucial for foreign investments. As

Oliver Massmann explains in an

article about the Implementation

Directive No. 09/2007, the new

directive of July 2007 is supposed to

implement the trading and

distribution rights of foreign

companies, and was decided on in a

decree of the 12th of November

2006. Decree 23 applies to

companies with foreign capital that

are executing export, import and

distribution activities according to

national commercial law. This results

in a broadly termed decree.

The background to this wide ranging

regimentation is the existence of two

parallel concepts for trading and

distribution in Vietnam which

underlie different terms. Trade has

the right to import and export goods,

while distribution is only allowed to

sell goods within Vietnam.

Decree 23 does not provide an

independent schedule for the course

of rights granted to foreign investors

concerning trading and distribution,

but refers to the international

contracts made by Vietnam.

Therefore, the possibility of foreign

investors taking action in those fields

depends on the position of Vietnam

in the particular agreement.

According to Decree 23, a license for

commercial transactions can be

applied for. Despite numerous

agreements, the decree is still very

restrictive and all concessions are

fully within the control of the

responsible authorities.

The obligations met by Vietnam for

WTO access are vital for all foreign

investments. Accordingly, all

member states of the WTO enjoy full

trading rights, including the right to

import goods and to pass them to

licensed distributors. This, on the

other hand, excludes the possibility

of selling directly to other

organizations or to individuals as

end-consumers. The following

schedule is compiled for the granting

of trading rights:


59

• WTO access: Joint Venture

Companies with Vietnamese

partners and foreign capital

share of not more than 49 %

• January 2008: Annulment of

limitation on foreign capital

share

• January 2009: 100 % foreign

owned companies

Outside these regimentations there

will be no trading licenses granted by

Decree 23.

Decree 23 now allows foreign

enterprises to import and distribute

goods in the country within the

boundaries of governmental

obligations. These obligations

include trading permission for

commercial interactions, as well as

the duty of the importer to inform the

authorities about all national

business partners. Moreover, the

guidelines contain further obligations

for companies intending to open up

retail outlets.

The points that are taken into

consideration are as follows:

• The number of service

providers in a certain area

• The market stabilty

• The size of the particular area

Within the guidelines there are

three more obligations

positioned:

• An appropriate number of

present retail outlets

• Population density

• Compliance with the

investment plans of the

particular city or province

The decree regulates the procedure

of applications for trading and

distribution rights. An application for

a license containing distribution

rights also needs the approval of the

Ministry of Trade, which in most

cases leads to a double licensing

procedure. Responsible authorities

have the right to demand information

about reports, data and justification

from the licensed company at any

time. Further authorization of

commercial operations according to

the WTO schedule is supposed to be


60

carried out on behalf of Economic

Needs Tests. It is a case of ‘wait and

see’ whether that appliance should

come into action in practice. In

conclusion, Decree 23 does

implement the WTO obligations, but

does not go beyond. It will not be

before 2009 when 100 % distribution

rights for foreign investors are

allowed, and licensing procedures

turn out to be rather complicated due

to a large number of contact points

and long standby times.18

Overall, legislation and enforcement

are very state-company friendly.

Nevertheless, competition law and

intellectual property law are

becoming more widely practiced in

day to day business. Vietnamese

people are embracing these new

laws and have come to use them

more frequently in commercial

procedures. Of course, this recent

use is still in a test phase and

judgments in most cases are mainly

meant to make an example. Most

penalties are not that great, but are

meant to set a standard for the

18 Oliver Massmann, Partner, DUANE MORRIS Hanoi

future, which will spare much

aggravation. Furthermore,

punishments, other than in some

Asian countries, are regarded as a

severe loss of face for the convict.

Main punishments consist of

monetary fines and temporary

business closures. However, these

fines are not very high and business

closures are not long term, since

judgments is still being fathomed and

evaluated. Competition and

intellectual property laws are

experiencing major alterations and

are becoming more and more

adequate as requirements rise. The

new protection and regimentation

systems in Vietnam are working in

the main because all actors involved

are interested in their proper

operation. Trade Mark Agents exist,

as well as institutions for

administrative enforcement.

Compared to China, for example,

Vietnam’s judiciary is capable of

administering IP rights and

consequently the resultant

implementation.

A majority holding for foreign

investors has been possible since


61

January 1st 2008. This allows full

rights on active imports and

distribution within the country, if

appropriate licenses are granted.

The approval of commercial licenses

only takes about three months, so if

applications are handed in, the new

found company with a majority

holding can start operating and enjoy

full trading and distributing rights.

Short and midterm developments

One of the most noticeable effects of

the WTO commitments is tariff cuts

on foreign goods. Lower tariffs have

led to more imports of larger

quantities of foreign goods, thereby

lowering prices of certain products

for consumers. In general, the

market is becoming wider and more

diverse, and competition between

local and foreign goods is increasing.

Another major change is the

constraint of price regulations within

the WTO integration rules. Overall,

the obstacles caused by

administrative procedures will

decrease. Another issue is the future

requirement for transparency of state

policies and administration, which

will create a more competitive

market and help reduce inflation.

These are only examples of intended

market oriented reforms meant to

help Vietnam open up to the global

economy and adjust to its

requirements. Other crucial aspects

will be improvement of the

investment climate and the

implementation of new investment

laws. The average increase in GDP

of 8 % is expected to remain

constant until 2010. This will

strengthen the banking sector as

well as the structure of state

enterprises. Further expectations of

economic development include the

improvement of infrastructure and

human resources, the reduction of

administrative fees, a more efficient

public service system, and

macroeconomic stability.

Impact on the pharmacy market

One possible outcome might be a

shift in the accessibility of foreign

pharmaceutical products, as patent

rights will become stricter and

distribution channels will change. In


62

January 2009, foreign businesses

will be allowed to carry out direct

importing and exporting, and will be

able to distribute directly to the

Vietnamese market.

Another positive development will be

a reduction in the tax rate to 2.5 %

on pharmaceutical products,

scheduled for 5 years after WTO

entry. The tax rate on cosmetic

products is expected to decrease

from 44 % to 17.9 % by the time

Vietnam has fully enforced all

commitments made for its entry to

the WTO.

The Swedish International

Development Agency measured the

Vietnamese pharmaceutical industry

at 2.5-3 on the World Health

Organization 4-grade scale. Already

86 % of the domestically produced

pharmaceutical products meet Good

Manufacturing Practice guidelines.

Vietnam’s pharmaceutical industry is

on the way to meeting international

standards and the country has

started to provide favorable

conditions for foreign industry.

The government even supports and

evokes domestic businesses to

cooperate with international

companies to establish

pharmaceutical groups and to keep

up with international standards and

market information.


63

8. Opportunities and forecasts for future legislation, competition, sales potentials, product development and growth prospects

Future legislation and conditions

Future legislation is going to adapt to

international standards and

regulations, as well meet WTO

requirements and the requirements

of bilateral trading agreements. One

example is the implementation of

GMP criteria due to ASEAN

standards. By 2003, 41

pharmaceutical enterprises in

Vietnam had joined the standard,

and the government of Vietnam

promised to invest US$ 1.5 billion in

the pharmaceutical manufacturing

sector over the next 10 years.

It might take about 5 more years to

fully establish ASEAN and WTO

requirements in Vietnamese law.

Although the Vietnamese

government and society in general

have experienced a profound shift in

principles, actual implementation

might take longer than expected.

Liberalizing international trade and

foreign investment has been

welcomed by the communist party, in

spite of its former ideology. A

paradigm shift has led to an

endorsement of free market

capitalism and is noticeable in the

economic strategy of the country.

Although domestic firms are still

favored by the government and

problems like corruption and

favoritism are still critical, this will

most certainly change in the future.

Dramatic economic growth and the

overwhelming speed of globalization

in Vietnam have, along with creating

many opportunities, also created

very serious problems. The disparity

between the rich and the poor is

already very alarming and will no

doubt increase at fast rate. While

economic prospects look good,

social issues and intellectual

curiosity might suffer due to the fast

developments and influence of

global players.

Another concern is the transfer of

large state owned companies to the

private sector. The government still


64

struggles with the idea of such

companies being domestic capitalist

enterprises, although many

arguments favor the idea. The

resulting impact of market forces will

inescapably increase competition

and therefore generate more

economic efficiency and increase

consumer choice. Large private

companies are now able to compete

for finance in the private capital

market, both at home and abroad;

but most of all, privatization will

reduce the duty of the government to

financially support nationalized

industry.

Competition development

In 1995 the local pharmacy sector

produced only 80 substances. By

2002 it had reached 384. Today, in

additional to local companies, there

are 8 joint ventures and 16 wholly

foreign owned investments with a

total capital of US$ 172 million. The

market share of state owned

companies in 2003 was 40 % of the

whole turnover. After 2009

competition will be much stronger.

State owned companies will no

longer have a monopoly in the

market. Due to the resulting

competition, prices will be lower.

Growth prospects

Growth prospects in the health

sector are very optimistic. Today the

pharmacy market is increasing by

approximately 15 % per year. The

consumption of pharmaceutical

products rose from US$ 0.3 in 1990

to US$ 7.6 in 2003. In the year 2000

the production value of the sector

was US$ 418 million, which amounts

for 10 % of the Vietnamese market

share. In 2002, 64 % of all medicine

consumed was imported. The

turnover in 2003 amounted to US$

606.7 million; the domestic turnover

of which was only US$ 241.88

million. By 2006 the market share

was US$ 11.23 per capita. The main

reason for the increase was cheap

OTC products. According to IMS

Health pharmaceutical market

intelligence, the market growth in

2006 was 22 %, and made a

turnover of US$ 773 million. Though

the market grew, imports increased

up to 69 % (approximately US$ 533


65

million). Domestically produced

products only made up US$ 240

million. Besides the big share of

OTC products, cheap generic

products make up a large quantity of

the market as well.19 With regards to

the fast developments of society,

civil illnesses in particular will

increase, demanding special

attention.

19 Source 29 pg. 54


66

Market growth in the health sector Indicators 2005 2006 Change (%)

Total consumption of drugs 817.4 956.4 17-of which domestically produced 395.2 475.4 20.3Imports, including raw material 650.2 710.0 9.2Exports 17.7 19.7 12.0Consumption per capita 9.85 11.23 14.0Market players in trade and distribution

No. of importers 79 89 12.7

No. of distributors 680 800 17.7No. of retailers 37,500 41,500 10.7Market players in production

No. of manufacturers 174 178 2.3

No. of foreign comp. in market 270 320 18.5

Source: Ministry of Health Product development:

Leading product classes: their market share and growth rete in 2006

22 21

9 9 8

1521

15

23 21

05

10152025

syst

emic

antie

ffect

ives

alim

enta

ry a

ndm

etab

olis

m

cent

ral

nerv

ous

syst

em

card

iova

scul

arsy

stem

resp

irato

rysy

stem

market share (%)growth rate (%)

20

20 Source IMS report


67

The fastest growth rate in products is

75 % for the antineoplast and

immunomodule products. Next,

blood and blood forming organ

products with a growth of 45 %;

followed by hospital solutions

growing at a rate of 40 %.

Future shift in sales figures

Nowadays, sales figures in hospitals

mainly depend on the financing

system which is still implemented.

Hospital budgets consist of 50 %

government support, 30 % insurance

payments and 20 % free patient’s

payments. Also, the segmentation

and prescription of pharmaceutical

products (brands, generics, OTC)

depends on the budget and type of

hospital.

Most brands are prescribed to

government patients or wealthy free

patients. Hospitals that treat such

patients mostly prescribe brand

products.

Most OTC products are prescribed to

insurance patients and poorer free

patients. Many rural medical centers

and hospitals which treat the poorer

population sell OTCs and generics.

Generics are mostly sold to

insurance patients and free patients.

Pharmacies mostly sell OTC and a

few generic and brand products.

In the future hospital budgets will

longer rely mostly on the

government. Only 10 % of financial

resources will be provided by the

government. About 40 % of the

income will be generated from

insurance patients and 50 % will be

taken via free patient payments.

Therefore, the segmentation of

brands, OTCs and generics will

change fundamentally.

A bigger demand for brand products

will arise because hospitals will be

able to prescribe them to free

patients and insurance patients as

well. More generics will be

prescribed to government patients as

well as free patients.

OTCs will still sell the most,

especially through public


68

pharmacies. OTC prescriptions will

also be made to poor free patients.

Price of workforce: Hanoi US$ Ho Chi Minh

City US$ Worker’s salary including bonuses and allowances

80-140 90-170

Engineer’s salary including bonuses and allowances

210-400 250-500

Manager’s salary including bonuses and allowances

400-600 450-650

Office rent/m2/month 15-20 15-25 Apartment rent/for 100m2/month 1850 1800 Power charge/ Kw 0.08-0.10 0.8-0.10 40-foot container transport cost to European port

2,700 2,200

Petrol price / liter 0.5 0.5

Highest personal income tax 40% 40% Source: GSO Vietnam Prospects

The health and pharmaceutical

sector holds a lot of opportunities for

foreign investors in the future. The

demand for high quality drugs can

not be fulfilled by domestic industries

at present, and in the next few years

the demand will increase even more.

While high levels of restrictions and

bureaucracy are still a problem for

foreign investors, which allows local

companies to benefit, entry to the

WTO will result in a complete

change of circumstances. Also, the

toughest competitors will be

weakened greatly by the

opportunities given to foreign

companies by WTO regulations with

regards to the free market. As IP

rights and competition laws are

being tested and implemented


69

adequately, GDP increases

constantly, the market grows and the

government continues to reduce

commercial barriers for foreign

industry.


70

9. Recommendations for market entry strategy SWOT Analysis

Strengths:

By cooperating with local businesses,

foreign enterprises, with their

experiences and capital, have a very

high chance of saturating a new

opening market. However, to ensure

success, the expertise of businesses

should be utilized.

A profound understanding of the local

business environment will certainly be

vital for all strategies. Without such

knowledge, an undertaking will risk to

loose invested capital and eventually

fail. The Vietnamese culture and

economy holds many conventions to

consider, beginning with working

morals and ending with the proper

approach for dealing with authorities.

Such an issue leads to contemplation.

Before entering a new market the

investors should be aware of the

country’s culture to ensure a good start

and prevent any mistakes or

complications occurring. In reality,

business is carried out not with a

company, but with its people.

Another supporting factor for entry to

Vietnam’s market is the updating of

legislation and its controlling organs.

Considering these new regulations, it is

advisable to cooperate with domestic

companies and to consult established

legal advisors. The assistance of local

experts will further provide flexible

management methods in an unknown

environment, simplifying business

processes inside and outside company

structures.

Nowadays, Vietnamese companies are

very western oriented and wish to work

hand in hand with foreign companies.

The liberalization and opening up of

the market are being welcomed by the

economy. Local enterprises want to

take part in international business and

are trying to adapt to the requirements.

Weaknesses:

Notwithstanding the above, there are

many obstacles a foreign investor must

face before enjoying equal rights with

domestic companies. Before January

2008, extraneous companies were only

allowed to operate representative

offices with very limited powers in the

country. After this time, foreigners were

allowed to hold the majority share of an

enterprise. Due to the WTO regulations


71

it will be possible to operate as a

foreign company with full rights in

Vietnam after January 2009.

Nevertheless, even the current status

can be used wisely before entering the

market completely. The time can be

used to cooperate with domestic

partners and to register pharmaceutical

products in advance before the

licensing procedures become more

complicated and expensive. That will

give companies a head start for when

the WTO commitments take effect.

Apart from the legal fundamentals, it

can be expected that difficulties will be

faced with regards to the moral

conflicts of the majority caused by the

fast changes and developments in the

country. Even after 2009, distribution

could be hampered by preferential

treatment of domestic businesses.

Rethinking and a change of

paradigms, especially in state

authorities, will take more time than

simply a change of legislation. Again,

joint ventures and their common

interests can help protect from

discrimination and provide better

access to local authorities.

Opportunities:

Two thirds of the Vietnamese

pharmacy market consists of over the

counter products. Still, the spectrum of

drugs is limited. Specializing in OTCs

can therefore be a very profitable field.

Another interesting aspect is the

increasing focus on brand products.

By 2009, 100 % foreign investment

subsidiaries with direct import rights

will be allowed by Vietnamese

legislation. Investment licenses will be

given and supported by the Ministry of

Planning and Investment. The

possibility of direct imports and

distribution will provide the opportunity

to not only reduce costs compared to

the present, but will also enable

businesses to be much more flexible

and make quicker transactions.

There is a definite need for a wider

range of available products. In

particular, hospitals are claiming a

need for a greater variety of

pharmaceutical products. Availability of

foreign medicine and treatments, as

well as a bigger portfolio, is an urgent

desire of staff in health care facilities all

over the country.

Today, smaller hospitals and health

stations are not yet relying on foreign

products. Availability is the most


72

important factor. Therefore, domestic

manufacturers are being preferred in

rural areas. As a consequence of the

change in legislation, direct distribution

will change that preference to a large

degree, and open up a so far

inaccessible market.

Since western medicine enjoys wide

acceptance due to its quality

guarantees and reliability, and no

financial obligations are negated,

health care facilities tend to use many

more foreign products when the

opportunity arises.

An important consideration is the quite

different attitudes of the northern and

southern consumers. While in the

south customers are more eager to

buy the latest products and brands,

and are willing to spend more money in

doing so, in the more traditional

northern part of the country people are

more likely to compare prices and

ingredients, and tend to choose

generics over brand products.

Threats:

The biggest possible threats are still

the violation of IP rights and

competition laws. Vietnam’s process of

adaptation to international standards is

still in progress and will take more time

and experience. Therefore, foreign

investors should prepare carefully to

ensure successful and safe market

entry. According to

PricewaterhouseCoopers, the following

actions can help to protect businesses:

• Careful selection of an IP

holding location, as well as

examination of the tax

implementations of IP migration

and revenue from future

exploitations

• Structuring for R&D, cost

sharing and royalty

arrangements

• Incentive planning, strong

documentation and IP studies

• Engaging with the related

central government agencies to

improve their knowledge and

law enforcement capability

• Aligning interests with those of

the local government party,

because much infringement is

local in nature

• Engaging in local standard

debates and elevating


73

protection initiatives in

international standard groups

• Organizing government

education efforts that stress and

quantify the benefits of IP

protection, especially for future

R&D patents and health care

delivery

• Encouraging local IP holders to

support the cause of IP

protection

• Nurturing alliances with

researchers, academics and

policy advisers, and helping

them expand their knowledge

and influence

Another possible threat is the cost of

development, which is hard to estimate

in a booming Tiger state like Vietnam.

Mr. Steffen from Bayer Shering

identifies how yesterday’s calculations

might be obsolete tomorrow.

Therefore, planning should always stay

up to date and flexible in relation to

new developments and changes in the

market.

Investor insights

Without a proper point of view and

good analyses of the market, the way

into Vietnam’s business culture can be

very bumpy. A business will not be

successful without the appropriate

preparation and support. Expert

knowledge and insight analyses are a

vital point for new businesses in a

foreign country. Conducting business

in Vietnam is littered with obstacles,

but is also very worthwhile.

Until 2009, foreign companies still

need to cooperate with local

enterprises, but this does not have to

be disadvantageous. To find a good

business partner is not hard at all in

these times of transformation.

Sometimes less turnover can mean

more. To begin, a company’s

management should invest mainly in

intensive planning and the

development of a strategy so as to

ensure long term survival in the

Vietnamese market. To consider all

relevant factors, new companies

should consult local experts for advice.

Especially for a pharmacy enterprise,

tight distribution contracts are

important; for example, to ensure

proper cold chains, transportation and

infrastructure guarantees. Therefore,

trustworthy and able partners can

provide a great deal of support.


74

In order to achieve company goals,

strategies should be carefully adapted

to the market. Also, bureaucracy

should be paid attention to very

carefully because of the complex

structures and constant changes in

legislation. Local partners should be

consulted for such operations as well.

A partnership made out of commercial

regulations can open up many

advantages and benefits, and even

open doors to future business affairs

and additional markets. For example,

taxation in Vietnam is very complex at

present. Benefits and assessments

vary dramatically between legal

persons and foreign contractors. Also,

the agreement on double taxation with

Germany is not airtight21, which is

another reason for finding qualified

support in the local market, as well as

good juristic advice. Rather important

in this matter is implementation by the

partner company during development

of the Vietnamese market. This will

ensure a healthy and strong status for

investments.

21 Quote: Oliver Massmann

AAPPPPEENNDDIIXX

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2002; Georg Evers; Internationales Katholisches Missionswerk e.V.Fachstelle; ISSN 1618-6222 missio-Bestell-Nr. 600 230; Aachen.

28. German Vietnam Business Handbook and directory: 2005; Wolfgang Ehmann; German

Industry and Commerce Vietnam; www.vietnam.ahk.de; Hanoi. 29. Report on Vietnam: 05/2007; European Union Economic and Commercial Counselors;

www.delvnm.ec.europa.eu; Hanoi. 30. Bilaterale Wirtschaftsbeziehungen: German Embassy Hanoi; 31.10.2007;

http://www.hanoi.diplo.de/Vertretung/hanoi/de/Startseite.html.

List of importing companies:

1 DEKA CO. Ltd. No.8 Lot 1A Trung Yen Cau Giay Hanoi 2 TRAPHACO J.S.C 75 Yên Ninh Str., Ba Đình Dist. 3 Viet Phan Co., Ltd. 4 Toan Cau T&C Co., Ltd. 5 Central Pharmaceutical Co., No.3 6 Global Connections Inc. (GCC) 7 TL Forex Limited Company 8 TAYPHAR CO.,LTD. 439 Hoàng Hoa Thám Str., Ba Đình Dist. 9 CUU LONG PHARMACEUTICAL JOINT STOCK CORPORATION 150 Str. 14/9,

Ward 5, Vĩnh Long Town 10 GREAT WORLD CO., LTD Km 1954, Highway 1, Khánh Hậu Hamlet, Tân An Town 11 LIEN THANH CO.,LTD. 1/4 Lý Thường Kiệt Str., Mỹ Bình Ward, Long Xuyên City 12 HAGIANG PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. Group 13, Nguyễn

Trãi Ward, Hà Giang Town 13 7BINH LUC PHARMACEUTICALS J.S.C Bình Mỹ Townlet, Bình Lục Dist. 14 LAOCAI PHARMACEUTICALS AND MEDICAL EQUIPMENT J.S.C. 66 Thanh Niên

Str., Duyên Hải Ward, Lào Cai City 15 BAC KAN PHARMACEUTICAL CO. Group 6, Phùng Chí Kiên Ward, Bắc Kạn Town 16 TUYENQUANG PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. Quang

Trung Str., Tân Quang Ward, Tuyên Quang Town 17 THAINGUYEN PHARMACEUTICALS AND MEDICAL MATERIALS CO. 477 Lương

Ngọc Quyến Str., Phan Đình Phùng Ward, Thái Nguyên City 18 KIM BANG PHARMACEUTICAL CO. Group 10, Quế Townlet, Kim Bảng Dist. 19 THAIBINH PHARMACEUTICAL AND MEDICAL MATERIAL J.S.C 64 Hai Bà Trưng

Str, Thái Bình City 20 NINHBINH PHARMACEUTICAL CO. 12 Lê Đại Hành Str., Ninh Bình Town 21 HATAY PHARMACEUTICAL J.S.C. 80 Quang Trung Str., Quang Trung Ward, Hà

Đông Town 22 VIET DUNG PHARMACEUTICAL CO., LTD. 22 Trần Nguyên Hãn, Cát Đaì Ward, Lê

Chân Dist. 23 BAC NINH PHARMACEUTICAL J.S.C 21 Nguyễn Văn Cừ Str 24 HAIDUONG PHARMACEUTICAL AND MEDICAL MATERIALS J.S.C 102 Chi Lăng

Str., Nguyễn Trãi Ward 25 VINAPHACO 10 Tô Hiệu Str., Đống Đa Ward, Vĩnh Yên City 26 CHONG KUN DANG CORPORATION 122 Đội Cấn Str., Ba Đình Dist. 27 HANOI PHARMACEUTICAL - MEDICAL EQUIPMENT IMPORT EXPORT J.S.C 2

Hàng Bài Str., Hoàn Kiếm Dist. 28 SOUTH EAST ASIA PHARMACEUTICAL CO.,LTD. 7 Alley 6, Thái Hà Str., Đống Đa

Dist. Block 28, Alley 178, Thái Hà Str., Đống Đa Dist. 29 CENTRAL PHARMACEUTICAL ENTERPRISE NO.1 160 Tôn Đức Thắng Str., Đống

Đa Dist. 30 HA NOI TRADING AND MARKETING CO.,LTD. 185 Khâm Thiên Str., Khâm Thiên

Ward, Đống Đa Dist. 31 TUNG LOC PHARMACEUTICAL CO.,LTD. 168 Khâm Thiên Str., Đống Đa Dist. 32 SUNSTAR J.S.C 92 Vĩnh Hưng Str., Hoàng Mai Dist. 33 EDV CO.,LTD Fl.2, No.10 Lê Quý Đôn Str., Hai Bà Trưng Dist. 34 CO. FOR VACCINES AND BIOLOGICAL PRODUCTION NO.1 1 Yersin Str., Hai Bà

Trưng Dist. 35 BA DINH PHARMACEUTICAL CO.,LTD. 46 Alley 164, Vương Thừa Vũ Str., Khương

Trung Ward, Thanh Xuân Dist. 36 LONG CHAU PHARMACEUTICAL CO., LTD. 89/6 Phước Hanh A Group, Phước

Hậu Hamlet, Long Hồ Dist.

37 NGHEAN PHARMACEUTICAL MEDICAL MATERIALS J.S.C 16 Nguyễn Thị Minh Khai Str., Vinh City

38 CAOBANG PHARMACEUTICALS CO. 12 Nguyễn Du Str., Hợp Giang Ward, Cao Bằng Town

39 HOABINH PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. 5A/12 Cù Chính Lan Str., Đồng Tiến Ward, Hoà Bình City

40 TRUNG VIET PHARMACEUTICAL CO., LTD. 366 Quang Trung Str., Trần Hưng Đạo Ward, Quảng Ngãi Town

41 MEDIPHARCO CENTRAL PHARMACEUTICAL J.S.C 8 Nguyễn Trường Tộ Str., Phước Vĩnh Ward, Huế City

42 THANHHOA MEDICAL MATERIALS PHARMACEUTICAL J.S.C 232 Trần Phú Str., Lam Sơn Ward, Thanh Hoá City

43 HATINH MEDICAL MATERIALS PHARMACEUTICALS CO. 143 Hà Huy Tập Str., Nam Hà Ward, Hà Tĩnh Town

44 BINHDINH PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. 498 Nguyễn Thái Học Str., Qui Nhơn City

45 VAN THANH PHARMACEUTICAL CO., LTD. 205 Line 2/4 Nha Trang, Vạn Thạnh Ward, Nha Trang City

46 HUY LOC PHARMACEUTICAL ENTERPRISE PTE. 182 Lê Duẩn Str., Thạch Thăng Ward, Hải Châu Dist.

47 PIMEPHARCO LABS J.S.C 166-170 Nguyễn Huệ Str., Ward 7, Tuy Hoà City 48 THUAN THAO PTE.ENTERPRISE 140 Nguyễn Trái Str., Nha Trang City 49 BEN THANH PHARMACEUTICALS J.S.C 63 Nguyễn Thị Minh Khai Str., Bến Thành

Ward, Dist. 1 50 LAMDONG PHARMACEUTICAL AND MEDICAL EQUIPMENT JOINT STOCK

COMPANY 6A Ngô Quyền Str., Ward 6, Đà Lạt City 51 ALLERGAN INC. Rm.34, 6 Phùng Khắc Khoan Str., Dist. 1 52 ASTRAZENECA SINGAPORE 115 Nguyễn Huệ Str., Dist. 1 53 PHIL INTERNATIONAL CO., LTD 27 Nguyễn Trung Trực Str., Dist. 1 54 PHARMACEUTICAL AND MEDICAL PUBLIC CO 367 Nguyễn Trãi Str., Dist. 1 55 VIMEDIMEX MEDI-PHARMA J.S.C 246 Cống Quỳnh Str., Dist. 1 56 MEYER PHARMACEUTICALS 646T Nguyễn Trãi Str., Dist. 5 57 TRUONG THINH PLASTIC J.S.C 365A Nơ Trang Long Str., Bình Thạnh Dist. 58 MEKOPHAR PHARMACEUTICAL CHEMICAL J.S.C 297/5 Lý Thường Kiệt Str.,

Ward 15, Dist. 11 59 THANH THAO PHARMACEUTICAL CO.,LTD. 2/10B Trần Não, Bình An Ward, Dist. 2 60 VIDIPHA CENTRAL PHARMACEUTICAL J.S.C 19-21 Nguyễn Văn Trỗi Str., Ward 12,

Phú Nhuận Dist. 61 RHONE POULENC RORER CO. 10 Hàm Nghi Str., Dist. 4 62 HCM PHARMACEUTICAL CO. 18-20 Nguyễn Trường Tộ Str., Ward 12, Dist. 4 63 LAC MINH PHARMACEUTICAL CO.,LTD. 2/15D Cao Thắng Str., Ward 5, Dist. 3 64 HOCHIMINH MEDICAL EXPORT IMPORT CO. 181 Nguyễn Đình Chiểu Str., Dist. 3 65 PHONG PHU PHARMACEUTICAL J.S.C. 30-32 Phong Phú Str., Ward 12, Dist. 8 66 NATIONAL PHARMACEUTICAL CO.NO.2 136 Tô Hiến Thành Str., Ward 14, Dist. 10 67 ZUELLIG PHARMA-REP.OFFICE 8th Flr., 37 Tôn Đức Thắng Str., Dist. 1 68 PHARMACEUTICAL J.S.C OF FEBRUARY 3RD 10 International Site Str., Ward 6,

Dist. 3 69 PHUTHO PHARMACEUTICAL J.S.C 29 Line 52, Lữ Gia Living Quarter, Ward 15,

Dist. 11 70 OPC PHARMACEUTICALS JSC 343 Hùng Vương Str., Dist. 6 71 HUONG THAO PHARMACEUTICAL CO.,LTD. 73/3Bis Hùng Vương Str., Ward 6,

Dist. 6 72 MST CO.,LTD. K63/1 Village Str.70, Tân Xuân Hamlet, Hóc Môn Dist. (165-165A Sư

Vạn Hạnh (ext.), Ward 13, Dist.10) 73 LIMITED COMPANY MANUFACTURE TRADING SERVICE & PACKING TAN TOAN

PHAT Lot 14, Tân Tạo Str., Tân Tạo IZ, Bình Tân Dist. 74 ROUSSEL VIETNAM CO. 4-6 Nguyễn Huệ Str., Dist. 1 75 PHARMACEUTICAL FACTORY 150 112 Trần Hưng Đạo Str., Phạm Ngũ Lão Ward,

Dist. 1

76 DAM SAN CO.,LTD. 834/12 Sư Vạn Hạnh Str., Ward 13, Dist. 10 77 JANSSEN CILAG Rm.1203, 12 Flr., 35 Nguyễn Huệ Str., Dist. 1 78 SANOFI - SYNTHELABO VIETNAM J.V.C 440 Nguyễn Thị Minh Khai Str., Dist. 3 79 EGIS PHARMA CO. 1230U Villa No. 87, Thảo Điền Ward, Dist. 2 80 BRISTOL - MYERS SQUIBB VIETNAM 235 Đồng Khởi Str., Dist. 1 81 NEO UNICAP CO.,LTD. 224-226 Cách Mạng Tháng Tám Str., Dist. 3 82 CHOONG WAE PHARMA CORPORATION. REP.OFFICE Rm.205, 10 Line 3-2, Dist.

10 83 CHUNG HIEP LOI ORIENTAL MEDICAMENT CO. LTD 41 Nguyễn Phi Khanh Str.,

Tân Định Ward, Dist. 1 84 AMOLI ENTERPRISE - REP.OFFICE 133 Ngô Quyền Str., Ward 6, Dist. 10 85 WIND ASIA TRADE LTD. 1D Phổ Quang Str., Ward 2, Tân Bình Dist. 86 INTAS PHARMACEUTICAL CO.,LTD. 148 Nguyễn Đình Chính Str., Phú Nhuận Dist. 87 UCB SA 40 Bà Huyện Thanh Quan Str., Dist. 3 88 PANOFI AVENTIS REP.OFF. 10 Hàm Nghi Str., Bến Nghé Ward, Dist. 1 89 GROWENA IMPEX CO.REP. OFFICE 448/1B Lê Văn Sỹ Str., Ward 14, Dist. 3 90 30 ACTION CHIMIQUE THERAPEUTIQUE CO. 7 Trần Quang Diệu Str., Ward 14,

Dist. 3 91 HELM AG 5th Flr,Somerset Bldg.,21-23 Nguyễn Thị Minh Khai Str.,Dist. 1 92 BINH NGUYEN PHARMACEUTICS CO.,LTD. 19 Hồ Biểu Chánh, Ward 12, Phú

Nhuận Dist. 93 YOUNG IL PHARM CO. REP.OFF. Rm.108, 12 Mạc Đĩnh Chi Str., Dist. 1 94 NOVARTIS VIETNAM CO.,LTD. 8th Flr., Rm. 809, 37 Tôn Đức Thắng Str., Bến Nghé

Ward, Dist. 1 95 HOFFMANN LA ROCHE LTD. 19th Flr., 35 Nguyễn Huệ Str., Dist. 1 96 EBEWE PHARMA GEF.M.B.H NFG.KG Rm.205, City View Bldg., 12 Mạc Đĩnh Chi

Str., Dist. 1 97 JOHNSON AND JOHNSON MEDICAL S.A - REP.OFFICE 12th Flr., 35 Nguyễn Huệ

Str., Dist. 1 98 AMPHARCO USA 16th Flr., 37 Tôn Đức Thắng Str., Dist. 1 99 WYETH (SINGAPORE) PTE., LTD. Rm.11, 1st Flr., 6 Phùng Khắc Khoan Str., Dist. 1 100 GLAXO SMITHKLINE 235 Đồng Khởi Str., Dist. 1 101 U.S. SUMMIT CO. 5th Flr., Yoco Bldg., 41 Nguyễn Thị Minh Khai Str., Dist. 1 102 SUCHIANG CHEMICAL AND PHARMACEUTICAL CO.,LTD - REP.OFFICE 781/C9

Lê Hồng Phong Str., Dist. 1 103 TORRENT CO.,LTD. - REP.OFFICE 56A Nguyễn Thông Str., Tân Bình Dist. 104 RALABORATOIRES FOURNIER SCA Rm. 506, 37 Tôn Đức Thắng Str., Dist. 1 105 PIERRE FABRE S.A 106A Nguyễn Đình Chiểu Str., Đakao Ward, Dist. 1 106 CIECH - POLFA REP.OFFICE 2 Ngô Đức Kế Str., Lot 6, Dist. 1 107 ROHTO MENTHOLATUM VIETNAM CO. 18th Flr., 37 Tôn Đức Thắng Str., Dist. 1 108 THANH DAT PTE. 90A/B63 Lý Thường Kiệt Str., Ward 14, Dist. 10 109 KOREA GREEN CROSS CORP. REP.OFFICE Rm. 421, 243-243B Hoàng Văn Thụ

Str., Ward 1, Tân Bình Dist. 110 PHARMACIA & UPIJOHN CO. Rm.1202, 12th Flr., Mê Linh Point Tower, 2 Ngô Đức

Kế Str., Dist. 1 111 MERCK SHARP AND DOHME ASIA 115 Nguyễn Huệ Str., Dist. 1 112 GEDEON RICHTER LTD. 2A Nguyễn Văn Hường Str., Dist. 2 113 OPV VIETNAM LTD. Rm. 803, Sài Gòn Tower, 29 Lê Duẩn Str 114 IMEXPHARM CO. 63B-65B Lữ Gia Str., Dist. 11 115 PHARMAMATE INTL CO.,LTD. 12/4A Nguyễn Thị Minh Khai Str., Dist. 1 116 JIANGYIN JIANGLIAN INDUSTRY TRADE CO.,LTD. 6th Flr., 163 Hai Bà Trưng Str.,

Dist. 3 117 ISHAN-REP.OFFICE 243-243B Hoàng Văn Thụ Str., Tân Bình Dist. 118 DOMESCO MEDICAL IMPORT EXPORT J.S.C 190 B 3/2 Str., Ward 14, Dist. 10 119 BAXCO PHARMACEUTICAL INC. 22/42 Lữ Gia Living Quarter, Ward 15, Dist. 11 120 BV PHARMA JOINT VENTURE COMPANY Tân Thạnh Tây Hamlet, Củ Chi Dist. 121 ORGANON - REP.OFFICE 235 Đồng Khởi Str., Dist. 1 122 KIEN VIET COMPANY LTD 2/1 Hồng Hà Str., Ward 2, Tân Bình Dist.

123 HISAMITSU VIETNAM PHARMACEUTICAL CO.,LTD. 14+15 Str. 2A, Biên Hoà 2 IZ., Biên Hòa City

124 HOANG LONG CO.,LTD. 18-18 C1, Long Bình Tân Ward, Biên Hoà City 125 ROHTO MENTHOLATUM VIETNAM CO. 16 Str.5, Vietnam-Singapore IZ., Thuận An

Dist. 126 BINHTHUAN PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. 114 Nguyễn

Hội Str., Phú Trinh Ward, Phan Thiết City 127 DOMESCO MEDICAL IMPORT EXPORT J.S.C 66 Highway 30, Mỹ Phú Ward, Cao

Lãnh Town 128 IMEXPHARM PHARMACEUTICAL J.S.C 4 Road 30-4, Ward 1, Cao Lanh Town 129 KIENGIANG PHARMACEUTICALS AND MEDICAL EQUIPMENT CO. 458 Ngô

Quyền Str., Vĩnh Lạc Ward, Rạch Giá City 130 LONGAN PHARMACEUTICAL AND MEDICAL EQUIPMENT CO. 59 Nguyễn Huệ

Str., Ward 1, Tân An Town 131 TRADE AND COSMETIC PHARMACEUTICALS J.S.C. 9 Nguyễn Kim Str., Ward 4,

Vũng Tàu City 132 HAIPHONG PHARMACEUTICAL CO. 71 Điện Biên Phủ Str., Minh Khai Ward, Hồng

Bàng Dist. 133 DIETHELM & CO.,LTD. 23 Láng Hạ Str., Đống Đa Dist. 134 ABBOTT LABORATORIES SA CO. 4th Flr., B19 Hà Nội Horison Hotel, 40 Cát Linh

Str., Đống Đa Dist. 135 SIA TENAMID CANADA INC 23 Kim Đồng Str., Giáp Bát Ward, Hai Bà Trưng Dist. 136 GEDEON RICHTER LTD. Rm.803, 8th Flr., 4 Dã Tượng Str., Hoàn Kiếm Dist. 137 TASLY PHARMACEUTICAL GROUP CO.,LTD. 4th Flr., Horison Hotel, Ba Đình Dist. 138 PHARMACEUTICAL ENTERPRISE NO.120 1A Trần Thánh Tông Str., Hai Bà Trưng

Dist. 139 HOFFMANN LA ROCHE LTD. 6A Trần Quốc Toản Str., Hoàn Kiếm Dist. 140 NEO UNICAP CO.,LTD. 2 Hàng Bài Str., Hoàn Kiếm Dist. 141 VIEN DONG PHARMACEUTICAL CO.,LTD. 27 Mai Hắc Đế Str., Hai Bà Trưng Dist. 142 N.V ORGANON Rm.702, Đồng Tâm Bldg., 29 Hàn Thuyên Str., Hoàn Kiếm Dist. 143 ASTRAZENECA SINGAPORE PTE .LTD. Rm.601, 4 Dã Tượng Str., Hoàn Kiếm Dist. 144 JOHNSON AND JOHNSON MEDICAL S.A - REP.OFFICE Rm. 8, 5th Flr., Int'l Center,

17 Ngô Quyền Str., Hoàn Kiếm Dist. 145 EAST ASIA PHARMACEUTICALS TRADING CO.,LTD. Rm.3, C6 Giảng Võ

Exhibition., Ba Đình Dist. (Lot 13D Trung Hoà, Nhân Chính Ward) 146 TRAVINH PHARMACEUTICAL J.S.C 27 Điện Biên Phủ Str., Ward 9, Trà Vinh Town 147 PHARMACEUTICALS AND MEDICAL EQUIPMENT CO. 99 Hoàng Văn Thụ, Ward 3,

Bạc Liêu Town 148 NAM HA PHARMACEUTICAL J.S.C 96 Thái Hà Str., Đống Đa Dist. 149 HAU GIANG PHARMACEUTICAL J.S.C 288B Nguyễn Văn Cừ Str., Ninh Kiều Dist. 150 MINH HAI PHARMACEUTICALS J.S.C 322 Lý Văn Lâm Str., Ward 1, Cà Mau City 151 SOUTH WEST PHARMACEUTICAL CO.,LTD. 529A Hà Hoàng Hổ Str., Mỹ Xuyên

Ward, Long Xuyên City 152 MEYER - BPC J.S.C 6A3 Highway 60, Bến Tre Town 153 SOUTHERN PHARMA CO.,LTD 366 Cách Mạng Tháng Tám Str., An Thới Ward,

Cần Thơ City

Regulation on Drug Registration

THE MINISTRY OF HEALTH

SOCIALIST REPUBLIC OF VIETNAM

Independence- Freedom- Happiness

----***----

Regulation on Drug Registration

(Issued in conjunction with Decision No3121/2001/QD-BYT dated 18 July 2001 of the Ministry of Health)

With the aim to unify the government's management over production and sale of drugs; to ensure the safety, efficacy and qualify of drugs, the MoH hereby promulgates the Regulation on Drug Registration. Chapter I General Provisions Article 1: Drug products produce and sold in Vietnam for proposes of prevention and treatment of diseases and for improvement of the human's health shall be registered with the Ministry of Health and be approved by the lattes to get a registration number. In special cases (drugs for epidemic and disasters relief and orphan drugs) the sale and consumption of un-registered drugs shall be specifically considered and approved by the Ministry of Health. Article 2: Scope of application and objects of the regulation: 2.1. Scope pf application - Drug products produce by legal domestic and foreign manufacturers, who have satisfied conditions in drug production, shall be registered before production and sale. - New drug products developed by scientific research institutions, while awaiting technological transference to any producers with satisfied conditions in drug production, the innovator institutions can apply for registration for their own production and sale, provided that the institutions meet required conditions for drug production - Drug products produced under-license can only produced by a drug producer with GMP standard production facilities located in Vietnam. -Drug products produced and prepared by health care institutions for the use of that institutions or their peripheral stations in therapy (that shall not be sold to the market): Heads of such institutions shall be responsible for drug formula, preparing process, specifications, safety and efficacy of the drugs produced by their institutions. 2.2. Scope of application: The following entities can register drug products for production and sale in Vietnam - Drug manufacturers located in the territory of Vietnam. - Domestic companies having functions in pharmaceutical trading, foreign companies registered to operate in pharmaceutical field in Vietnam. Article 3: In this Regulation, some terms can be interpreted as follows: 3.1 Drugs are products intended for use in human for the purpose of prevention, treatment, relief or diagnosis of diseases or for modification of physiological functions. 3.2 Finished drug products are those drug products that have passed all stages of production and are ready for marketing, distribution and use.

3.3. Starting materials are substances, active (active ingredients) or in-active (reagents, excipients) that are put in composition of drug products in production process.

3.4. Western drug products include: - Pharmaco- chemicals and biological used as starting materials for drug production - Finished Pharmaco- chemicals and biological products.

3.5. Ancient medicines are those that are used following ancient (old) literatures regarding number of medicinal ingredients, quantity of each ingredient, processing methods, dosage, usage methods and indications.

3.6. New drugs are those with a new active ingredient in their composition; those that are new combination of known active ingredients; or those known drug products with new pharmaceutical dosage forms, new indications or new administration routes.

3.7 A brand name is a name given by drug manufacturer for a drug product that are different from the generic names or International Non-proprietary Names (INN) internationally or domestically recognized.

3.8. Drug stability is stability of quality of drug products (starting materials or finished products) that under specified storage conditions remain their physical, chemical and biological nature, and their characteristics of pharmacology, toxicity, etc, in specified limitations.

3.9 Drug shelf-life is the duration from the time point when a drug product still maintains its quality criteria as required in respective specifications in specified storage conditions.

3.10 Expiration date is a certain validity period from the date of production given to a certain drug product, within which and under specified storage conditions the product is no longer valid for use.

3.11 A drug product under-license is a drug product owned by a domestic or a foreign drug entities and has been granted a registration number (in Vietnam or in other countries), the production of which has been authorized by that manufacturer to another legal manufacturer in Vietnam. Article 4: An application dossier for registration of a drug product shall be prepared in three sets, including at least one of originals. In the application dossier, the following papers shall be provided with the original or notarized papers. - Free Sale Certificate (FSC) -Certificate of good manufacturing Practices (GMP Certificate) (The FSC and GMP can be placed with a Certificate of Pharmaceutical Product (CPP) In addition, two sets of drug labeling shall be attached application dossier. The application dossier literally presented on A4-sized paper sheets, in required order, with clear separation between difference parts. All the documentation in the dossier shall be certified by the manufacturer (with signature and stamp). In case where drug labelling is glued on A4-sized paper sheet, ad joint stamp is required. - Application dossiers of drug manufacturer located on the territory of Vietnam shall be presented in Vietnamese language. Application dossiers of imported drug products shall be presented in Vietnamese language or English. The Summary of Product Characteristics shall be written in Vietnamese language. Name of ingredients of the drug product shall be stated by generic names or international or domestic non-proprietary names. For the ingredients of herbal origin, the names shall be given along with scientific names in Latin. - For a domestic drug products applied with a brand name, the application dossier shall be include a copy of a reference note proving that no similar names have been registered with the Department of industrial Properties Protection (Ministry of Science, Technology and Environment)

or a certificate of industrial properties registration issued by the Department. For imported drug products with marketing authorization in the country of manufacture, reference to the trademark and design by the Department mentioned in the previous paragraph must be made upon request. - A local applicant applying for registration of a drug product, as a new drug manufacturer shall provide the following papers: + Certificate of operation registration with indication of business functions + Certificate of Good Manufacturing Practices or Certificate of satisfied conditions for manufacturer of medicinal plants or herbal medicines (applied to drug products originated from medicinal plants only) Article 5: Labeling requirements - Drug labeling shall comply with the Circular on Drug Labeling issued by the MoH and the regulation on Goods Labeling issued in conjunction with the Decision No 178/1999/QD-TTg dated 30 August 1999 of the Prime Minister - - Brant-names, principal trade mark (language, images or combination of them which is presented with one or more colors) shall not imitate or be confusingly similar to the names or principal trademarks of drug products of other manufacturers that have already been approved by MoH; not infringe to industrial properties right; not be confusing to the nature of drug product or being exaggerated in presentation and ambiguous to the potency of drug products. The use of generic names or international or national non-propriety names for drug products are encouraged - - Other information, such as bar code, digital code, medals, awards, marks of industrial properties rights to be appeared on the label, should be provided with proper duly proof - - Labels that are officially marketed shall be of the same color and presentation as those provided in the application dossier for drug registration. Article 6: In the period of registration validity, a registered drug product shall be applied for registration as a new application if any of the following changes is made: - - Change of formula and compositions - - Change of pharmaceutical dosage form - - Change of quality specifications and analytical methods - - Change of rout of administration - - Change of manufacturing process and methods - - Change of manufacturer Article 7: In the period of registration validity, the following changes to registered drug product shall be subject to prior approval of MoH: - - Product name - - Dosage - - Labeling - - Applicant - - Manufacturer (provided that the site of manufacturer remains unchanged) - - Shape or color of product, provided that the changes will not impose any impact to quality specifications and analytical methods of the product; - - Change or for more indications - - Change or for more contra-indication - - Site of manufacturer (provided that the site of manufacturer remains unchanged) - - Drug self-life - - Presentation of product label - - Change or for more packing sizes Application dossiers for the any of the changes or additions specified in this Article shall include the following: - - Forms 1-ĐKT and 9A-ĐKT (for domestic drug products) or 9B-ĐKT (for imported drug product), or 9C-ĐKT for change of applicant (01 original copy) - - documents related to the proposed changes or additions (01 original copy) For imported drug products, in applying for change of product name, the Free Sale Certificate in the country of manufacture for the product under new name must be submitted; applying for the change of the site factory, a GMP certificate for the factory at new location must be submitted; applying for change of name of manufacturer, a GMP certificate issue to the manufacturer under

the new name. The aforesaid certificates (FSC, GMP) must be issued by the national competent authority in the country of manufacture. Article 8: - - The registration is valid for 5 years from the date of issuance, The Ministry of Health shall have specific cases, and the registration name given shall be printed on the drug label. - - Six months prior to the expiry of the registration, for continuation of production and marketing of the drug product in Vietnam, the registration shall apply for the re-registration shall only be acceptable if being submitted not later than 6 months after the registration expiry. Submissions for re-registration, that are make later than 6 months after registration expiry shall follow requirements as new applications. - - Application dossiers for re-registration is specified in Article 15, Chapter 11, (for domestic drug products), Article 19, Chapter III (imported drug products) Article 22, Chapter IV (drug products under-license) of this Regulation. Article 9: Requirements on stability studies and registration of self-life; 9.1. Stability of drug product - - All drug products shall be stored in such storage conditions as required by the manufactures that are given based on stability studies - - Reports of stability studies shall specifically indicates: conditions for storage of product sample (temperature, humidity, etc) package, methods of study, results of studies in all indicator conducted on at least three different batches, a conclusion of stability of the studied drug product. - - Results of accelerated stability studies shall only be valid for prediction of drug shelf-life for new application for registration. For drug products under-license: if report of normal stability studies conducted on the batches produced in Vietnam is not available, reports of stability studies conducted by the foreign license holder can be used for registration purpose. During port-marketing period, the manufacturer shall monitor the stability of the drug product in normal stability studies shall be submitted as part of application dossier for re-registration. - - For imported drug products that have been marketed for a period equivalent to or longer than the predicted shelf-life, report of normal stability studies shall be submitted as part of application for registration in Vietnam. 9.2. Shelf-life of drug product: - - The product shelf-life shall be established basing on proper stability studies. The shelf-life of a drug product shall not longer than the shelf-life obtained in stability studies. - - Heads of applicant companies shall be responsible for the quality of drug products during the period of registered shelf-life. Article 10: Domestic registration applicants shall submit applications to its direct managing authorities (provincial departments of health, department of health of other ministries) for certification of legal status and manufacturing conditions with their opinions as request for registration approval of the Ministry of Health (with exception for the drug products included in Appendix1). The direct managing authorities shall have their certification and opinions on the application of the applicants not later than 7 days from the date of receipt of proper application. The applications shall then be submitted to the Ministry of Health for assessment and registration. Application dossiers of the members of VINAPHARM, of 100% foreign-invested manufacturers shall be signed and stamped by director of the manufactures and then submitted to the Ministry of Health (with exception for the drug products included in Appendix 1). The MoH shall, after receiving a complete application dossier, have feedback to the applicant in 3 three months for domestic drug product, and 12 months for foreign drug product at maximum. For the drug products included in the Appendix1, the application dossiers shall be submitted to the provincial department of health of the respective province where the production takes place for assessment. Those applications that have passed assessment of the provincial department of health shall be listed (with accurate product names and compositions) and sent as an attachment to an official request to the Ministry of Health for approval and registration grant. Registration applicants after having drug product registered shall be obliged to send the quality specifications of their registered products to the National Institute of Drug Quality control, the Sub-institute of Drug Quality Control and provincial drug quality control centers.

THE MINISTRY OF HEALTH

No.17/2001/TT-BYT

SOCIALIST REPUBLIC OF VIETNAM

Independence- Freedom- Happiness

----***----

Hanoi, August 01, 2001

CIRCULAR

GUIDING FOREIGN COMPANIES IN REGISTRATION FOR TRADING IN MEDICINES AND MEDICINE MATERIALS IN VIETNAM

THE MINISTER OF HEALTH

Pursuant to the Law on People’s Health Protection of July 11, 1989;

Pursuant to Decision No. 113/CT of May 9, 1989 of the Chairman of the Council of Ministers (now called the Prime Minister) on management of import and export of medicines and medicine materials for making curative medicines for human beings;

Pursuant to the Statute on preventive and curative medicines issued together with Decree No. 23/HDBT of January 24, 1991 of the Council of Ministers (now called the Government);

Pursuant to Decree No. 11/1999/ND-CP March 3, 1999 of the Government prescribing goods banned from circulation, services banned from commercial business and goods and services subject to business restriction and conditional business;

Pursuant to Decree No. 57/1998/ND-CP of July 31, 1998 of the Government detailing the implementation of the Commercial Law on import, export, processing and sale and purchase agency activities with foreign countries;

The Ministry of Health of the Socialist Republic of Vietnam guides in detail the foreign companies in registration for trading in medicines and medicine materials in Vietnam as follows:

Chapter I

GENERAL PROVISIONS

Article 1

1. As a special item of goods, medicine is the conditional business goods professionally controlled by the Ministry of Health of Vietnam. Foreign enterprises must register the activities concerning medicines and medicinal materials in Vietnam so as to ensure the imported medicines with good quality, safety and effect for the users.

2. The foreign enterprises who can satisfy the conditions stipulated in this Circular shall be issued the foreign companies’ operation license on medicines and medicinal materials ( hereinafter referred to as "License") by the Ministry of Health of Vietnam.

Article 2. Medicines and medicinal materials are stipulated in this Circular as follows:

- The medicinal materials include the materials, pharmaceutical material, excipients, capsules and immediate packing.

- The medicines includes pharmaceutical products and medicines made from medicinal herbs.

Article 3: Adjustment scope:

This Circular stipulates conditions, orders, procedures of registration dossiers, rights and obligations of the foreign enterprises who register the activities concerning medicines and medical materials in Vietnam

Article 4. Application objects:

Foreign enterprises not having juridical status in Vietnam (referred to as foreign enterprises) supplying Vietnam with the medicines under the import and export contracts with Vietnamese enterprises trading in medicines and medicinal materials

Chapter II

CONDITIONS, DOSSIERS, REGISTRATION PROCEDURES AND COMPENTENCE TO GRANT LICENSE

Article 5: Conditions:

1. Conditions for enterprises who have the first registration:

a) Enterprises who produce and trade in the medicines and medicinal materials are established in accordance with the local country’s law provisions.

b) Accepting to supply Vietnam with the medicines and medicinal materials under the import and export contracts through the medicine business enterprises of Vietnam.

c) The registration dossiers must be complete and valid.

d) In case of being production enterprises, they must satisfy GMP (Good Manufacturing Practice) standards. In case of being distribution enterprises, they must have licenses to trade in, import, export and preserve the medicines issued by the Competent bodies in the local country. In case, these certificates are unclear or doubtful in the authentication, the Ministry of Health of Vietnam shall appraise the enterprises’ real production and business premises in the local country (the foreign enterprises must pay every expense for the appraisal).

e) Experience in medicinal business and solvency

- The enterprises must have at least 3 years of experience in producing and trading in medicines and medicinal materials.

- The minimum turnover from medicines and medicinal materials in the most recent year (basing on the auditing report in the most recent fiscal year):

+ For the enterprises who are trading in the new medicine products: US $ 15 million per year. + For the enterprises who are producing the new medicine products: US $ 05 million per year. + For the enterprises who are producing and trading the medicines made from medicinal herbs, pharmaceutical materials, excipients and immediate packing: US $ 03 million per year.

g) For the enterprises who have had indirectly engage in activities concerning medicines and medicinal materials in Vietnam; within 2 years before the date of handing the registration dossier,

it is required to have no medicines of bad quality in the violation handling scope as stipulated in Article 15 of this Circular.

2. Conditions for enterprises who have the re-registration: when the license expired, the enterprises must make the re-registration dossiers and must satisfy the following conditions:

- Registration dossiers must be complete and valid - Turnover from the medicaments supplied into Vietnam must reach the average minimum of US $ 50,000 per year. - No law violation, no professional in the violation handling scope as stipulated in Article 15 of this Circular.

Article 6: depending on extent of violation:

Dossiers must be the originals or valid copies (with notary’s or issuing organ’s verification). The dossiers must be expressed in Vietnamese or English (in case of other languages, they must be translated into Vietnamese by a law-full translation establishment enclosed with the copy of original documents).

The dossiers shall include :

1. The registration application of the foreign enterprises trading in medicines and medicinal materials (Form 1 includes 1 Vietnamese and 1 English versions).

2. The brief profile on the enterprises’ activities (Form 2 includes 1 Vietnamese and 1 English versions).

3. Documents that prove the enterprises’ establishment in the local country in which has the trading and/or producing function (Enterprise establishment license or business registration).

4. For the enterprises who are manufacturers: There must be the certificates of the GMP (Good Manufacturing Practice) or certificates of pharmaceutical products (CPP) according to the certificate system by the World Health Organization (WHO).

For the enterprises who are trading in, importing and exporting medicines: There must be the licenses for trading in, importing, exporting and preserving medicines in the local country that are issued by the competent bodies in the local country.

Those above mentioned documents must remain effective at the time of applying for registration. In the duration of operating, companies must supplement if these documents expired .

5. Confirmation of current account number of enterprises at the bank in the local country (confirmed by the bank).

6. Brief auditing reports in the most recent fiscal year (confirmed by an independent auditing body).

Article 7: Procedures and licensing competence:

The Drugs Administration Department of Vietnam shall guide accepts and appraise the registration dossier of foreign enterprises who trading in medicines and medicinal materials in Vietnam. Annually, the Drugs Administration Department of Vietnam shall inform the schedules and accept dossiers periodically (2 twice per year).

Within 03 months from the date of receiving valid dossiers, the Ministry of Health shall issue licenses. In case, licenses are not issued, the Ministry of Health (The Drugs Administration Department of Vietnam) must clearly explain in writing reasons therefor.

Article 8: In case of changing name or address, the enterprises must give proposal and send the enclosed legal document to the Ministry of Health (The Drugs Administration Department of Vietnam ):

- The notices of changing enterprise’s name or legal address.

- The concerning legal documents must be the originals or legal copies. If they are not in English, there must be a translation into Vietnamese (translated by a law-full translation establishment).

Article 9: Re - registration dossiers:

Dossiers must be the originals or valid copies (with notary’s or issuing organ’s verification). The dossiers must be expressed in Vietnamese or English (in case of other languages, they must be translated into Vietnamese by a law-full translation establishment, enclosed with the copy of original documents).

The dossiers shall include :

1. The application for re-registration (Form 3 includes 1 Vietnamese and 1 English versions).

2. The brief report of the enterprise’s activities in the medical field with Vietnam enterprises (Form 4 includes 1 Vietnamese and 1 English versions)

3. For the enterprises who are manufacturers: There must be the certificates of the GMP (Good Manufacturing Practice) or certificates of (CPP) pharmaceutical products according to the certificate system by the World Health Organization (WHO).

For the enterprises who are only trading in importing and exporting medicines: The licenses of trading, importing exporting and preserving medicines in the local country shall be issued by the competent bodies of that country.

Those above mentioned documents must remain effective at the time of registration application. In the duration of operating, companies must supplement if these documents expired .

4. Confirmations of current account number of enterprise at the bank in the local country (confirmed by the bank)

Article 10: Provisions on charges and fees:

In case of registration or re- registration, the foreign enterprises must pay approval expenses and fees in accordance with the current provisions. The companies must complete all procedures on handing fees and receiving licenses within 6 months from the date of being informed to be issued licenses otherwise the licenses are obviously invalid.

Article 11: The licenses take effect within 02 years from the date of signing. If the enterprises want to continue working, they shall have to carry out the re-registration procedures 3 months before the licenses expired .

Chapter III

RIGHTS AND RESPONSIBILITIES OF FOREIGN ENTERPRISES REGISTERING THE ACTIVITIES CONCERNING MEDICINES AND MEDICINAL MATERIALS IN VIETNAM

Article 12: Foreign enterprises who register activities concerning medicines and medicinal materials in Vietnam shall have the following rights:

1. Being named as the foreign registration in case of registering medicines and medicinal materials produced by the manufacturers with the Ministry of Health of Vietnam.

2. Supplying Vietnam with the medicines and medicinal materials under the type of signing import and export contracts with medicine import-export enterprises of Vietnam

3. Organizing scientific workshops exchanging professional experience, medicinal information and advertisement according to the provisions stipulated by the Ministry of Health.

Article 13: Foreign enterprises who register medicine and medicinal materials in Vietnam shall have the following obligations:

1. Observing strictly Vietnam’s law provisions, provisions of the State management by the Ministry of Health, The Drugs Administration Department of Vietnam .

2. Not supplying Vietnam with medicines banned in Vietnam, artificial medicines and poor quality medicines.

3. Not distributing medicines directly into Vietnam in any forms.

4. Being completely responsible before the State’s management organs and the users for the quality of medicines supplied into Vietnam. Compensating for the users and Vietnamese partners in case of the damages caused by the medicine supplying enterprises in accordance with the law provisions.

5. Annually reporting to the Ministry of Health of Vietnam (The Drugs Administration Department of Vietnam ) about the medicinal activities with Vietnam (Form 4).

6. Reporting to Vietnam Ministry of Health (The Drugs Administration Department of Vietnam) in case of changes and sending the relevant legal documents in the following cases:

a) Changing the Director who is mainly responsible for the activities concerning medicines and medicinal materials. b) Terminating the medicine trade with Vietnam. c) Merging or separating enterprises.

7. Foreign enterprises shall be in charge of informing irregularly in the following cases:

a) Being required by the competent bodies b) Reporting to the Ministry of Health (The Drugs Administration Department of Vietnam ) in case of recognizing that the enterprises supply Vietnam with poor - quality medicines and violate other professional provisions. c) Reporting to the Ministry of Health (The Drugs Administration Department of Vietnam ) in case of serious events caused by the medicine that the enterprises have supplied into Vietnam. Reporting to ADR Centre about the harmful reaction of the medicine.

Chapter IV

EXAMINATION, INSPECTION AND HANDLING OF VIOLATIONS

Article 14: Examination and inspection:

Foreign enterprises who are issued the licenses for trading in medicines and medicinal materials shall be under the inspection by the Ministry of Health (The Drugs Administration Department of Vietnam ), Health Services of provinces, centrally-run cities and under the inspection by the Ministry of Health, and the Inspectorates of the provinces and centrally-run cities.

Article 15: Handling of Violations:

In the duration of working in Vietnam, the foreign enterprises that violate the laws and professional regulations shall be handed depending on the extent of violation according to the following provisions:

1. Licenses:

1.1 6 months of the probation operation (the enterprises violate professional rules at the possible operation they must make the report within 6 months, the Ministry of Health shall evaluate. If there is no violation, the enterprises will be issued the licenses);

- Quality violation at level 2 (as stipulated in Article 25 in Regulations on medicine quality management), twice within 12 months and the enterprises are sanctioned against the administrative violations by the Medical Inspectorates according to the provisions in Decree No.46/CP by the Government, those enterprises shall be warned and probated for 06 months.

- Quality violation at level 3 (as stipulated in Article 25 in Regulations on medicine quality management) three times within 12 months, those enterprises shall be warned and probated for 06 months.

1.2. Withdrawing of licenses:

- Quality violation at level 1 (as stipulated in Article 25 in Regulations on medicine quality management) and being fined by the Medical Inspectorates (according to the provisions at Points a, b in Clause 3; Points a, b in Clause 4.7 in Article 17 of Decree No. 46/CP dated August 6th, 1996 by the Government), the enterprises shall be withdrawn the licenses.

- During 6 months of probation (as stipulated in section 1.1 of this Article), if the enterprises continue supplying bad-quality medicines at level 2, they shall be withdrawn the licenses.

- Quality violation at level 2 more than 3 times within 12 months those enterprises shall be withdrawn the licenses.

- In case where the enterprises are withdrawn licenses or they are not granted licenses because of violation they can only re-hand in the registration dossiers after at least 2 years (the registration dossiers are stipulated the same as the first registration).

1.3. The enterprises who violates the pharmaceutical regulations and other provisions, depending on extent of violation, shall be considered and decided by the Ministry of Health (the Drugs Administration Department, Inspectorates of the Ministry of Health).

2. For other violations, the enterprises shall be handled in accordance with the current law provisions.

Article 16. The Drugs Administration Department and Inspectorates of the Ministry of Health regularly exchange information about the granting of licenses and violations, sanctions against administrative violations. The Inspectorates of the Health Services of provinces and centrall-run cities shall inform the result of handling and punishment for the violations in the controlled regions to the Inspectorates of the Ministry of Health for coordination, synthesization and announcement nationwide.

Chapter V

IMPLEMENTATION PROVISIONS

Article 17: This Circular takes effect 15 days after its date of signing and replaces Circular No. 07/BYT-TT of March 30, 1991 of the Ministry of Health guiding the registration of foreign companies being allowed to import and export of medicines and medicine materials with organizations and companies of the Socialist Republic of Vietnam.

All licenses granted before the effective date of this Circular remains effective till the time limit as stipulated in the licenses and 3 months before the expire date of these licenses, enterprises shall have to re-register and observe all regulations on re-registration stipulated in this Circular.

Any problems arising in the course of implementation shall be reported immediately by units and localities to the Ministry of Health (the Drugs Administration Department of Vietnam) for consideration on amendments and supplements.

FOR THE MINISTER OF HEALTH

VICE MINISTER

(Signed)

LE VAN TRUYEN

(This translation is for reference only)

Form No.1

REGISTRATION APPLICATION OF FOREIGN COMPANIES FOR TRADING IN MEDICINES AND MEDICINE MATERIALS IN VIETNAM

To: - The Ministry of Health of the Socialist Republic of Vietnam

- The Drugs Administration Department of Vietnam

Name of Business:

Address:

Tel:

Fax:

Address:

Tel:

We apply for business registration with the Ministry of Health of the Socialist Republic of Vietnam to trade in medicines and medicine materials in Vietnam. If being licensed, we shall commit ourselves to strictly observing the provisions of Vietnamese law, pharmaceutical statutes and regulations issued by the Ministry of Health and to being inspected by relevant competent management bodies of Vietnam.

Date...........................

Director

(Signature with the full name and sealed)

Form No.2a

BUSINESS RECORD

1. Name of Business:

2. Nationality of Business:

3. Address:

Tel: E-mail:

Fax:

4. Type of business:

- Trading business:

- Producing business:

�

�

5. Trading and producing sectors allowed to be engaged in the local country:

Pharmaceutical: Producing Trading

- Materials: � �

- Products: � �

- Finished medicine products made from medicinal herbs: � �

Chemicals: � �

Other trading and producing sectors (if any):

6. Date of establishment:

7. Place of establishment:

8. Charter capital:

9. Operating capital:

10. Number of account ........... at....... Bank, Tel: ................, Fax...............

11. Number of license:............... Expire date of the license:..............

12. Name and address of the competent licensing bodies in the local country:

13. Turnover from pharmaceutical trading in latest 3 years:

14. Total employees of the business:

15. Total pharmaceutical employees:

16. Director of the business:

- Name and surname:

- Professional qualification:

17. Lawfull person authorized who takes responsibility for activities of the business in Vietnam (if any):

Name, title:

Professional qualification:

The authorized term:

I ensure for the trustfulness of the above mentioned contents, if wrong, I shall take responsibility for them.

Date.....................

(General) Director of business

(Signature, full name, seal)

Form No.2b

REPORT ON ACTIVITIES RELATED TO MEDICINES AND MEDICINE MATERIALS WITH VIETNAMESE PARTNERS

(For enterprise making new registration)

1. Vietnamese businesses having trading relations (if any):

2. Total turnover from volume sold into Vietnam (including volume sold through other foreign companies):

Note: This total turnover calculated according to implemented contracts, excluding contracts never or haven’t been implemented.

3. List of medicines and medicine materials sold into Vietnam: (clearly stating name of medicine, kind of medicine, model of packing, content, concentration)

4. List of medicines and medicines having registered number for circulating in Vietnam.

5. Report on other activities in the pharmaceutical sector with Vietnam.

Date..............

(General) Director of business

(Signature )

Form No.3

REGISTRATION APPLICATION OF FOREIGN COMPANIES FOR TRADING IN MEDICINES AND MEDICINE MATERIALS IN VIETNAM

To: The Ministry of Health of the Socialist Republic of Vietnam

Business:

Address:

Tel:

Fax:

E-mail:

We have been granted license to trade in medicines and medicine materials in Vietnam by the Ministry of Health of the Socialist Republic of Vietnam.

Number of licenses granted for the first time: ..............Granting date:

Number of effective licenses:............Expire date:

We apply for registration with the Vietnam’s Ministry of Health to be re-granted licenses for trading in medicines and medicine materials in Vietnam. We commit ourselves to observing all professional statues and regulations of Vietnam’s Law.

Your faithfully,

Date...................

Director

(Signature with the full name)

Form No.4

OPERATION REPORT

(For 2 years)


Name of business:

Address:

Tel:.................................Fax:..........................E-mail:

Contents of report:

1. Representative office:

- License for opening rep. office No.: ............Date of granting:

- Address:

- Head of the rep. office:

2. Having business relations with the following Vietnamese businesses:

3. Report on turnover:

Year... Year...

Analysis:

a/ Materials:

Name of materials

Unit Volume Turnover

Year

Total

Year

Total

b/ Finished products:

Name of medicine

Registered number (if any)

Main active substances (if haven’t been registered)

Unit Volume Turnover

Year

Total

Year

Total

4. Report on violations of statutes, volume of quality-violated medicine lots that have been sold into Vietnam and settlement results.

We ensure for trustfulness of the above mentioned contents, if wrong we shall take responsibility for them.

Date.................

Director

(Signature with the full name)

Form No.5

OPERATION REPORT

Year....


Name of Business:

Address:

Tel:...............Fax:.........................E-mail:

Contents of report:

1. Representative office:

- License for opening Rep. office No.:.................... Date of granting:

- Address:

- Head of the rep. office:

2. Having business relations with the following Vietnamese businesses:

3. Report on turnover:

- Total turnover from medicines sold into Vietnam (according to contracts, converted into US$)

- Report on violations of statues, volume of quality-violated medicine lots that have been sold into Vietnam and results of handling.

We ensure for trustfulness of the above mentioned contents, if wrong, we shall take responsibility for them.

GOVERNMENT SOCIALIST REPUBLIC OF VIETNAM

Independence - Freedom - Happiness No. 23-2007-ND-CP

Hanoi, 12 February 2007

DECREE PROVIDING REGULATIONS FOR

IMPLEMENTATION OF COMMERCIAL LAW REGARDING PURCHASE AND SALE OF GOODS AND ACTIVITIES DIRECTLY RELATED TO THE PURCHASE AND SALE OF GOODS BY ENTERPRISES WITH FOREIGN

OWNED CAPITAL IN VIETNAM

The Government

Pursuant to the Law on Organization of the Government dated 25 December 2001; Pursuant to the Commercial Law dated 14 June 2005;

On the proposal of the Minister of Trade,

Decrees: CHAPTER I

General Provisions Article 1 Governing scope This Decree provides detailed regulations for implementation of a number of articles of the Commercial Law regarding activities of purchase and sale of goods and activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam. Article 2 Applicable entities This Decree shall apply to enterprises with foreign owned capital, and to organizations and individuals involved in management of purchase and sale of goods and of activities directly related to the purchase and sale of goods by enterprises with foreign owned capital in Vietnam. Article 3 Interpretation of terms In this Decree, the following terms shall be construed as follows: 1. Activities of purchase and sale of goods and activities directly related to the purchase and sale of goods means import, export, distribution and other activities stipulated in Chapters 4, 5 and 6 of the Commercial Law. 2. Import and export of goods means the activities stipulated in article 28 of the Commercial Law. 3. Right to export means the right to purchase goods in Vietnam for export, and includes the right to provide one’s name on the goods export declaration in order to conduct and bear liability for the conduct of procedures relating to export. Right to export does not include the right to organize a network of purchasing in separate parcels throughout Vietnam for export, unless the law of Vietnam or an international treaty of which the Socialist Republic of Vietnam is a member stipulates otherwise. 4. Right to import means the right to import goods into Vietnam for sale to business entities which have the right to distribute such goods in Vietnam, and includes the right to provide one’s name on the goods import declaration in order to conduct and bear liability for the conduct of procedures relating to import. Right to import does not include the right to organize or participate in a goods distribution system in Vietnam, unless the law of Vietnam or an international treaty of which the Socialist Republic of Vietnam is a member stipulates otherwise. 5. Distribution means activities of wholesaling, retailing, agency for purchase and sale of goods and franchising in accordance with the law of Vietnam. 6. Right to distribute means the right to undertake directly activities of distribution. 7. Wholesaling means the activity of selling goods to other business entities and organizations; and does not include the activity of selling goods directly to the final consumer.

8. Retailing means the activity of selling goods directly to the final consumer. 9. Retail sales outlet means a unit owned by an enterprise for the purpose of conducting retailing. Article 4 Conditions for enterprises with foreign owned capital to be granted a business

license for activities of purchase and sale of goods and activities related to purchase and sale of goods in Vietnam

1. The conditions for an enterprise with foreign owned capital to be granted a business license for activities of purchase and sale of goods and activities related to purchase and sale of goods in Vietnam shall comprise:

(a) It is an investor belonging to a country or territory participating in an international treaty of which the Socialist Republic of Vietnam is a member and in such treaty Vietnam has undertaken to open the market on activities of purchase and sale of goods and activities directly related to purchase and sale of goods;

(b) The form of investment is consistent with the schedule/s undertaken in international treaties of which the Socialist Republic of Vietnam is a member and is consistent with the law of Vietnam;

(c) The goods and services in which business is conducted are consistent with Vietnam’s undertaking to open the market and are consistent with the law of Vietnam;

(d) The scope of operation is consistent with Vietnam’s undertaking to open the market and is consistent with the law of Vietnam;

(dd) It has approval from the State body authorized pursuant to article 5 of this Decree.

2. The Minister of Trade shall be responsible to announce the schedule/s undertaken in international treaties of which the Socialist Republic of Vietnam is a member and the specific conditions pursuant to clause 1 of this article. 3. With respect to foreign investors not in the category stipulated in clause 1(a) above, the Minister of Trade shall consider each application on a case by case basis and must approve activities of purchase and sale of goods and activities directly related to purchase and sale of goods before the authorized State body grants a business license. Article 5 Authority to issue business licenses for activities of purchase and sale of goods

and activities related to purchase and sale of goods, and to issue licenses to establish retail sales outlets

1. Provincial people’s committees shall be responsible to issue business licenses for activities of purchase and sale of goods and activities directly related to purchase and sale of goods (hereinafter referred to as business licenses) to enterprises with foreign owned capital which have already been issued with an investment certificate or investment license (hereinafter both referred to as an investment certificate) after receiving written approval from the Ministry of Trade. 2. A foreign investor investing in Vietnam for the first time which invests in activities of purchase and sale of goods and activities directly related to purchase and sale of goods shall submit an application file in order to conduct investment procedures with the State administrative body for investment. The State administrative body for investment shall obtain the opinion of the Ministry of Trade and shall only issue an investment certificate for activities of purchase and sale of goods and activities directly related to purchase and sale of goods if the Ministry of Trade has provided written approval. In this case the investment certificate shall act concurrently as the business license. Investment procedures shall be implemented in accordance with the Law on Investment.

3. If a foreign investor only invests in import/export business or if an enterprise with foreign owned capital only requests addition of import/export business without distribution business or activities directly related to purchase and sale of goods, then the State administrative body for investment shall rely on the schedule/s undertaken in international treaties of which the Socialist Republic of Vietnam is a member to issue or supplement the investment certificate without requiring approval from the Ministry of Trade. 4. An enterprise with foreign owned capital which already has the right to distribute shall be permitted to establish its first retail sales outlet and shall not be required to conduct procedures applying for issuance of a license to establish a retail sales outlet pursuant to this Decree. The establishment of any additional retail sales outlet after the first such establishment shall be subject to a decision of the provincial people’s committee in accordance with guidelines of the Ministry of Trade and in accordance with the order and procedures stipulated in this Decree. Article 6 Compliance with provisions of relevant laws 1. Enterprises with foreign owned capital must, in addition to exercise of rights and discharge of obligations stipulated in this Decree, also comply with the provisions of the Law on Enterprises, the Law on Investment and other relevant laws. 2. Where the activities stipulated in Chapters 4, 5 and 6 of the Commercial Law are regulated by another Decree, then the provisions of such other Decree shall apply. 3. Enterprises with foreign owned capital must pay fees in accordance with regulations of the Ministry of Finance when they conduct procedures for the issuance, re-issuance, amendment of or addition to business licenses and licenses to establish retail sales outlets. 4. In necessary cases, in accordance with the law of Vietnam, enterprises with foreign owned capital shall be obliged to report, supply data and explain issues relating to their activities at the request of an authorized State administrative body.

CHAPTER II Procedures for Issuance of Business Licenses

Article 7 Application files for issuance of business licenses: 1. Request for issuance of a business license on the standard form issued by the Ministry of Trade. 2. Explanatory statement on satisfaction of the conditions stipulated in sub-clauses (a), (b) and (c) of article 4.1 of this Decree. 3. Proposed business contents of purchase and sale of goods and of activities directly related to the purchase and sale of goods by the enterprise. 4. Copy investment certificate. Article 8 Rules for issuance of business licenses 1. An enterprise shall lodge three sets of its application file, one of which shall be an original, with the provincial people’s committee in the location where the enterprise has its head office. 2. Within a time-limit of three working days from the date of receipt of the application file, the body which received the file shall check its validity and forward it to the Ministry of Trade for its opinion. Where an application file is invalid, the body which received the file shall notify the investor in writing in order for the latter to amend or supplement the file. 3. Within a time-limit of fifteen (15) working days from the date of receipt of the application file, the

Ministry of Trade shall provide its written opinion on issues for which such Ministry has the administrative function. 4. Within a time-limit of fifteen (15) working days from the date of receipt of the opinion of the Ministry of Trade, the provincial people’s committee shall make a decision on issuance of a business license. In a case of non-issuance of a business license, the body which received the file shall notify the enterprise in writing, stating clearly the reasons therefore. 5. Within a time-limit of seven (7) working days from the date of issuance of a business license, the body which received the file shall provide copies of the business license to the Ministry of Trade and to the provincial people’s committee in the location where the enterprise has its head office. Article 9 Contents and effective term of business licenses 1. A business license shall contain the following items:

(a) Name and head office address of the enterprise; (b) Business contents of purchase and sale of goods and activities directly related to the purchase and sale of goods as stipulated in article 12 of this Decree; (c) Effective term of the business license.

2. In the cases stipulated in article 5 of this Decree, the effective term of the business license shall be equal to the duration of operation of the investment project as recorded in the investment certificate. Article 10 Amendment of and/or addition to business licenses 1. If an enterprise with foreign owned capital wishes to change one of the items stipulated in sub clauses (a) and (b) of article 9.1 of this Decree, it must conduct procedures to amend and/or add to the business license with the body which issued the license. 2. An application file for amendment and/or addition to a business license shall contain the following items:

(a) Request for amendment and/or addition to the business license on the standard form issued

by the Ministry of Trade; (b) Copy issued business license.

3. The business license-issuing body shall be responsible, within a time-limit of ten (10) working days from the date of receipt of a complete and valid file in accordance with clause 2 of this article, to amend and/or add to the business license if such amendment and/or addition is consistent with the law of Vietnam and an international treaty of which the Socialist Republic of Vietnam is a member. In a case of non-approval to the amendment and/or addition to the business license, the business license-issuing body must notify the enterprise in writing, stating clearly the reasons therefore. 4. On receipt of the amended business license, the enterprise must hand in the original of its old license to the business license-issuing body. Article 11 Re-issuance of business licenses for activities of purchase and sale of goods and

activities related to purchase and sale of goods

1. A business license which is lost, torn, corrupted, burnt or destroyed in any other form shall be reissued. 2. An enterprise whose business license is lost must declare such loss with the police office in the location where the business license is lost and with the business license-issuing body, and must publish an announcement on the mass media on three consecutive occasions. Thirty (30) days after the date of the first announcement, the enterprise shall lodge an Official Letter requesting that the business license-issuing body re-issue the license. 3. An application file for re-issuance of a business license shall comprise:

(a) Request for re-issuance of a business license on the standard form issued by the Ministry of

Trade; (b) Certification from the police office of declaration of loss of the business license; and explanatory statement of the reason for the loss or destruction in some other form of the

business license. 4. The business license-issuing body shall be responsible to re-issue a business license within a time limit of seven (7) working days from the date of receipt of a complete and valid application file. Article 12 Operational contents of purchase and sale of goods and activities related to

purchase and sale of goods 1. The operational contents of purchase and sale of goods and activities related to purchase and sale of goods of an enterprise with foreign owned capital must be specifically recorded in the business license, including:

(a) Activities of purchase and sale of goods and activities directly related to the purchase and sale

of goods which the enterprise has the right to conduct; (b) The types of goods in which business is prohibited, applicable to each activity

stipulated in clause 1(a) of this article; (c) The types of services permitted to be provided which directly relate to the purchase

and sale of goods.

2. An enterprise with foreign owned capital shall only be permitted to conduct activities consistent with the items recorded in its business license. 3. An enterprise shall only be permitted to conduct business in goods and services which the law stipulates are conditional when the enterprise has satisfied all the conditions stipulated by the law of Vietnam.

CHAPTER III Procedures for Issuance of Licenses to Establish Retail Sales Outlets

Article 13 Application files to establish retail sales outlets 1. An application file to establish a retail sales outlet in Vietnam shall contain the following items:

(a) Name and head office address of the enterprise;

(b) Names and addresses of retail sales outlets already established; (c) Name and address of the retail sales outlet it is proposed to establish; (d) Operational contents of the retail sales outlet; (dd) Full name, residential address, and number of identity card or passport or other legal

personal identification of the head of the retail sales outlet;

(e) Full name and signature of the legal representatives of the enterprise.

2. Copy business license. Article 14 Rules for issuance of licenses to establish retail sales outlets 1. An enterprise shall lodge three sets of its application file, one of which shall be an original set, with the provincial people’s committee in the location where the enterprise proposes to establish the retail sales outlet. 2. Within a time-limit of three working days from the date of receipt of the application file, the body which received the file shall check its validity and forward the file to the Ministry of Trade for its opinion. Where an application file is invalid, the body which received the file shall notify the investor in writing in order for the latter to amend or supplement the file. 3. Within a time-limit of fifteen (15) working days from the date of receipt of the application file, the Ministry of Trade shall provide its written opinion on issues for which such Ministry has the administrative function. 4. Within a time-limit of fifteen (15) working days from the date of receipt of the opinion of the Ministry of Trade, the provincial people’s committee shall make a decision on issuance of a license to establish the retail sales outlet. In a case of non-issuance of a license, the body which received the file shall notify the enterprise in writing, stating clearly the reasons therefore. 5. Within a time-limit of seven (7) working days from the date of issuance of a license to establish a retail sales outlet, the body which received the file shall provide copies of the license to the Ministry of Trade and to the provincial people’s committee in the location where the enterprise has its head office. Article 15 Contents and effective term of licenses to establish retail sales outlets 1. A license to establish a retail sales outlet shall contain the following items:

(a) Name and head office address of the enterprise;

(b) Name and address of the retail sales outlet;

(c) Operational contents of the retail sales outlet;

(d) Full name, residential address, and number of identity card or passport or other legal personal

identification of the head of the retail sales outlet;

(dd) Effective term of the license to establish the retail sales outlet. 2. In the case stipulated in article 5.4 of this Decree, the effective term of the license to establish the retail sales outlet shall be equal to the effective term of the business license. Article 16 Amendment of and/or addition to licenses to establish retail sales outlets 1. Within a time-limit of ten (10) working days from the date of a decision by an enterprise with foreign owned capital to change any one of the items stipulated in sub-clauses (a), (b), (c) or (d) of article 15.1, the enterprise must conduct procedures to amend and/or add to its license to establish the retail sales outlet. 2. An application file for amendment and/or addition to a license to establish a retail sales outlet shall contain the following items:

(a) Request for amendment and/or addition to the license on the standard form issued by the

Ministry of Trade, specifying the amended or supplemented contents;

(b) Copy issued license to establish the retail sales outlet. 3. The business license-issuing body shall be responsible, within a time-limit of ten (10) working days from the date of receipt of a complete and valid file, to amend and/or add to the license to establish the retail sales outlet. 4. On receipt of the amended license to establish the retail sales outlet, the enterprise must hand in the original of its old license to the business license-issuing body. Article 17 Re-issuance of licenses to establish retail sales outlets 1. An enterprise with foreign owned capital whose license to establish a retail sales outlet is lost, torn, corrupted, burnt or destroyed in any other form shall be re-issued with a license. 2. The application file and procedures for re-issuance of a license to establish a retail sales outlet shall be implemented the same as for a business license stipulated in article 11 of this Decree.

CHAPTER VIII Implementing Provisions

Article 18 Dealing with breaches 1. Any enterprise with foreign owned capital which commits a breach may, depending on the nature and seriousness of the breach, be subject to an administrative penalty. In the case of a serious breach, the business license or license to establish a retail sales outlet shall be withdrawn. 2. In a case where a breach shows sign of constituting a crime, the offender shall be prosecuted for criminal liability in accordance with law. Article 19 Effectiveness This Decree shall be of full force and effect after fifteen (15) days from the date of its proclamation in the Official Gazette. Article 20 Organization of implementation 1. The Ministry of Trade shall provide guidelines for the implementation of this Decree.

2. The Ministry of Finance shall provide regulations on the amount and management of fees for the issuance, re-issuance, amendment and addition to business licenses and licenses to establish retail sales outlets. 3. Ministers, heads of ministerial equivalent bodies and Government bodies, and chairmen of provinces and cities under central authority shall be responsible for the implementation of this Decree.

On behalf of the Government Prime Minister

NGUYEN TAN DUNG

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