The pharmaceutical industry is currently regarded as a promising market attracting numerous investors, both domestically and internationally, including those outside the sector. The Vietnamese pharmaceutical market represents one of the most promising investment opportunities in Southeast Asia, with a stable annual growth rate exceeding 10% over the past five years. As the country’s healthcare infrastructure develops and disposable income rises among its nearly 100 million people, demand for quality pharmaceutical products continues to grow strongly.
However, foreign investors looking to capitalize on this growth face a complex legal environment characterized by significant restrictions and limitations. These controls stem from Vietnam’s historical approach to protecting its domestic pharmaceutical industry while gradually opening it up to foreign participation.
Since Vietnam joined the WTO in 2007, the country has gradually liberalized its pharmaceutical sector, although significant barriers remain. The legal framework continues to evolve, with important changes implemented through recent amendments to the Investment Law and the Pharmaceutical Law affecting foreign pharmaceutical companies.
This article examines the current investment restrictions that foreign pharmaceutical companies face in Vietnam as of 2025, providing practical insights to successfully navigate these challenges. Whether an FDI business is considering manufacturing, wholesale distribution, or retail presence, understanding these restrictions is essential for developing an effective market entry strategy.
Current Legal Framework for Pharmaceutical FDI
Key Legal Documents Regulating Pharmaceutical Investment
Foreign investment in Vietnam’s pharmaceutical industry is primarily regulated by several relevant legal documents:
- Pharmaceutical Law (2016, amended in 2024): Establishes the basic legal framework for pharmaceutical activities, including production, distribution, and retail operations. The 2024 amendments introduced more specific regulations on foreign participation in certain pharmaceutical business activities.
- Investment Law (2020): Outlines general investment procedures, conditional business sectors, and investment incentives. Pharmaceutical production and distribution remain classified as a “conditional” business sector, requiring additional approvals.
- Decree 54/2017/NĐ-CP (amended by Decree 155/2022/NĐ-CP and Decree 88/2023/NĐ-CP): Provides detailed guidelines for implementing the Pharmaceutical Law, including specific requirements for pharmaceutical business establishments and drug registration procedures.
- Decree 09/2018/ND-CP: Provides detailed regulations on the Law on Commerce and the Law on Foreign Trade regarding the purchase and sale of goods and activities directly related to the purchase and sale of goods by foreign investors and economic organizations with foreign investment in Vietnam.
- Decree 31/2021/NĐ-CP: Detailed guidelines on certain provisions of the Investment Law.
- Circular 03/2018/TT-BYT (amended by Circular 09/2020/TT-BYT): Prescribing Good Pharmacy Practice (GPP) standards for retail and wholesale pharmacies, establishing additional compliance requirements.
- Circular 34/2013/TT-BCT: Announcement of the implementation roadmap for the purchase and sale of goods and related activities directly related to the purchase and sale of goods by foreign-invested enterprises in Vietnam.
These regulations work together to form a multi-tiered control system that foreign investors must navigate carefully.
Vietnam’s Commitments to the WTO and Pharmaceutical Investment
Vietnam’s WTO accession commitments continue to shape its approach to foreign investment in the pharmaceutical sector. Pursuant to Article 27 of the amended 2024 Pharmaceutical Law, which amends Article 53 of the 2016 Pharmaceutical Law, and Article 91(10) of Decree 54/2017/NĐ-CP, the key commitments include:
- Allowing foreign investors to establish 100% foreign-owned enterprises in Vietnam to produce and distribute drugs manufactured by them in Vietnam
- Allowing foreign investors to establish joint ventures with Vietnamese partners for wholesale activities of pharmaceuticals
- Maintaining restrictions on direct foreign participation in the retail and distribution networks for pharmaceuticals (excluding non-pharmaceutical nutritional products in tablet, capsule, or powder form)
Although Vietnam has largely complied with these commitments, implementation has been slow, with domestic protection maintained through licensing requirements and operational restrictions.
Recent Legal Developments
Several significant legal changes during the 2024-2025 period have impacted the investment environment under Article 27 of the amended 2024 Pharmaceutical Law, which amends Article 53 of the 2016 Pharmaceutical Law, including:
- Amendments to the list of industries subject to foreign investment restrictions, continuing to classify pharmaceuticals as a conditional industry
- Introducing new guidelines on technology transfer in pharmaceutical production
- Implementing a streamlined approval process for certain pharmaceutical investment projects
- Strengthening regulatory oversight of pharmaceutical joint ventures
These developments reflect Vietnam’s balance between attracting foreign expertise and technology while protecting domestic pharmaceutical interests.
Differentiation Between Business Activities
The legal framework varies depending on the specific pharmaceutical business activity under Chapter IV on Pharmaceutical Business in the 2016 Pharmaceutical Law, as amended by the 2024 Pharmaceutical Law:
| Business Activities | Permitted Foreign Ownership Ratio | Key Restrictions |
|---|---|---|
| Manufacturing | Up to 100% | Must comply with GMP certification and technological requirements |
| Distribution Wholesale | Up to 49% | Limited to certain types of pharmaceuticals |
| Retail activities | Up to 49% with conditions | Significant restrictions on activities |
| Import activities | Up to 49% | Must collaborate with a licensed Vietnamese entity |
| Clinical Research | Up to 100% | Subject to approval by the Ministry of Health |
Specific Investment Limitations and Restrictions
Foreign Ownership Restrictions by Business Activity
Foreign investors face varying degrees of ownership restrictions depending on their intended pharmaceutical activities:
Pharmaceutical Manufacturing
Under Article 53a of the amended 2024 Pharmaceutical Law, manufacturing represents the most favorable point of entry for foreign investors, with provisions allowing:
- Foreign ownership up to 100% for production facilities
- Full operational control over the production process
- The ability to produce both branded and generic drugs
However, these provisions are subject to significant requirements:
- Mandatory Good Manufacturing Practice (GMP) certification
- Minimum capital investment threshold (currently 25 billion VND)
- Technology transfer requirements for advanced pharmaceutical products
- Obligation to develop local workforce
Wholesale and Distribution of Pharmaceuticals
Pursuant to Article 5, Clause 1 of Decree 09/2018/NĐ-CP, this sector faces significantly greater restrictions:
- Foreign ownership is limited to 49% for wholesale activities
- Requirement for Vietnamese partners to hold a pharmaceutical license
- Mandatory GDP (Good Distribution Practice) certification
- Limited ability to establish a national distribution network
Pharmaceutical Retail Activities
Pursuant to the 2009 WTO Commitments and Article 53a of the amended 2024 Pharmaceutical Law, retail represents the most heavily restricted sector:
- Foreign investment is limited to 49% in retail pharmacy operations
- Additional restrictions on opening multiple retail locations
- Mandatory hiring of Vietnamese pharmacists with licenses
- Prohibition of certain direct-to-consumer marketing activities
Further research on market entry strategies at https://luatminhnguyen.com/doanh-nghiep/dau-tu/chien-luoc-xam-nhap-thi-truong-duoc-pham-viet-nam-danh-cho-cac-cong-ty-nuoc-ngoai/
Legal Services for Pharmaceutical Investments in Vietnam
Harley Miller Law Firm provides specialized legal consulting services for pharmaceutical investments in Vietnam, with a team of experts having over 15 years of industry experience.
Our Services
- Investment strategy consulting: Analyzing legal constraints and proposing suitable investment structures
- Licensing support: Comprehensive guidance on the process of obtaining Investment Certificates and Pharmaceutical Business Licenses
- Legal due diligence: Evaluating potential partners and associated legal risks
- Business establishment: Assisting in the establishment of subsidiaries, representative offices, or joint ventures
- Compliance: Consulting on GMP, GSP, GDP, and other good practice standards
Why Choose Harley Miller Law Firm?
- A team of specialized lawyers in pharmaceuticals and foreign investment law in Vietnam
- Experience in assisting international pharmaceutical companies enter the Vietnamese market
- A practical approach to help clients navigate complex legal barriers
- In-depth understanding of future regulatory trends and new investment opportunities
Contact us today for a consultation on your pharmaceutical investment strategy in Vietnam. Our team of experts is ready to assist you in developing compliant and commercially viable approaches to this promising market.
Email: [email protected]
Phone: +84 937215585