27 July, 2017
The Government recently issued Decree No. 54/2017/ND–CP (Decree 54) dated 1 July 2017, which replaced Decree No. 79/2016/ND-CP dated 9 August 2016; Decree No. 89/2012/ND-CP dated 24 October 2012 providing guidance on the Pharmaceutical Law 2006; Decree No. 102/2016/ND-CP dated 01 July 2016 on criteria for pharmaceutical businesses; and certain provisions on drug advertisements under Decree No. 181/2013/ND-CP guiding the Advertising Law.
Decree 54 allows for foreign-invested enterprises (FIE), including 100% foreign-owned FIEs, to import drugs into Vietnam.
In order for an FIE to be granted a Certificate of satisfaction of conditions for drug trading, it is required to have a warehouse, storage equipment, transportation means, quality management system, technical materials and human resources which meet the Good Storage Practice requirements.
Please note that FIEs have the right to import drugs but are not permitted to distribute drugs. Under Decree 23/2007/ND–CP guiding the implementation of the Commercial Law and the Pharmaceutical Law 2016, the right to import drugs is distinct from the right to distribute drugs.
According to Article 91.10 of Decree 54, FIEs with drug importation rights, but not distribution rights, are prohibited from conducting "activities directly related to the distribution of drugs or drug materials in Vietnam", which include:
- Selling drugs to, or accepting purchase orders from, drug retailers/pharmacies, hospitals/clinics or other organizations or individuals which are not wholesalers;
- Transportation of drugs and provision of drug storage services;
- Determining or fixing the sale prices of drugs distributed by other companies;
- Deciding the distribution strategy or business policy for drugs distributed by other companies;
- Making drug supply plans for hospitals and clinics in Vietnam;
- Providing financial support to purchasers in order to control or intervene in distribution activities; and
- Conducting other activities related to drug distribution.
The current language of Article 91.10 may lead to the misinterpretation that the scope of distribution activities has been expanded so as to cover, for example, "storage" and "transportation" services, which may impact the operation of FIEs which were already established and licensed prior to the issuance of Decree 54 to provide drug storage services and drug transportation services to third parties.
For further information, please contact:
Minh Ha Vu, Baker McKenzie
minhha.vu@bakermckenzie.com
