(Chinhphu.vn) – Through the receiving and responding system to recommendations of businesses, the CONSULT Vietnam Partnership Law Company reflected some unclear contents in the regulation on the right of "distribution of pharmaceuticals" of invested enterprisesoutside in Vietnam and would like to request competent authorities to consider and answer.

Particularly, according to the Company's reflection, Clause 2, 3 Article 2 and Appendix 02, Appendix 03 of the Circular 34/2013 / TT-BCT stipulatedthat foreign-invested enterprises are entitled to import but, they were not entitled to distribute drugs in Vietnam.

According to Clause 10, Article 91 of the Decree 54/2017 / ND-CP, it was understandable that foreign-invested enterprises are allowed to conduct activities directly related to the distribution of medicines and medicine materials if drugs and that medicine material was produced by the company  itself.

And the Circular 23/2013 / TT-BYT stipulated that companieswere allowed to process drugs.

From the above quotations, the CONSULTVietnam Partnership Law Companywould like to request to answer the following two cases:

- Enterprise A was an enterprise established in Vietnam, with a foreign investment capital of over 51% (foreign investors own 51% or more of its capital) and has the function of producing medicines.

Enterprise A, whose name was registered for medicine, was granted drug registration numbers by the Drug Administration of Vietnam and the Ministry of Health in accordance with law. However, Enterprise A did not directly produce drugs but places drugs on the basis of processing contracts signed with drug processors. The processing was done by the entire processing method of stages’ products. The drug receiving processor wasan enterprise eligible for drug production in accordance with the provisions of law. Finished drug products after finishing processing would be delivered by the processor to enterprise A.

In this case, the drug that was placed by the enterprise A as mentioned above was considered to be the drug for the enterprise A produced in Vietnam and the enterprise A could exercise the distribution right for that medicine product or not?

In case a medicine was processed by an enterprise A is not considered a medicine produced by the enterprise itself and was distributed under the provisions of Clause 10, Article 91 of the Decree 54/2017 / ND-CP, then how the Enterprise A brought the product to market?

- Enterprise B wasestablished in Vietnam, with foreign investment capital of over 51% (parent company). Enterprise B had a subsidiary in Vietnam which was an enterprise C (Enterprise B owns over 51% of its capital in enterprise C).

The holding company and its subsidiaries were all pharmaceutical manufacturing enterprises with drug registration numbers issued by the Drug Administration of Vietnam and the Ministry of Health and entitled to produce drugs according to the provisions of law.

So, could enterprise C (a subsidiary) hadthe right to distribute drugs produced by enterprise B (holding company)? In contrast, could enterprise B (the parent company) distribute drugs produced by enterprise C (subsidiary)?

Regarding this issue, The Ministry of Health responds as follows:

With the first situation, according to the provisions of Points a, c and d, Clause 1, Article 4 of the Circular No. 23/2013 / TT-BYT dated August 13, 2013 of the Ministry of Health guiding drug processing activities of enterprise A (the processee) may own registration numbers and processed products; entitled to receive processed products from enterprise B (the processor) and shall be responsible for registering processed medicines in accordance with the order and procedures for drug registration if they wish to circulate medicines in Vietnam.

Defining ASEAN's "medicine production base" (used by the Ministry of Health and included in Clause 11, Article 2 of the Circular No. 44/2014 / TT-BYT dated November 25, 2014 stipulating the Drug registration): A medicine manufacturing establishment is an establishment that performed at least one production step or performs quality inspection to release a batch of medicine.

Thus, in case Enterprise A does not participate in any production stage as stated in the letter of the Company, Enterprise A is able only to be a basis for registering processing drugs.

In Clause 3, Article 2 of the Circular No. 34/2013 / TT-BCT dated December 24, 2013 of the Ministry of Industry and Trade announcing the roadmap for the purchase and sale of goods and activities directly related to the purchase and sale of goods of foreign-invested enterprises in Vietnam stipulating that foreign-invested enterprises in Vietnam may only exercise distribution rights to goods not on the list of goods prescribed in Appendix No. 03 issued together with this Circular.

Pharmaceuticals are among 9 items listed in Appendix 3 above.

According to CONSULT Vietnam Partnership Law Company, the Enterprise A (a foreign investor with 51% or more of its capital) is a foreign-invested pharmaceutical enterprise, based on the provisions of Clause 10, Article 91 of the Decree 54/2017 / ND-CP dated May 8, 2017 of the Government detailing a number of articles and measures to implement the Pharmaceutical Law, the Enterprise A only has the right to distribute medicine products that enterprises directly participate in production in Vietnam.

In case Enterprise A does not directly produce drugs but puts all processing in Vietnam, in order to bring processed drug products into circulation in the Vietnamese market, Enterprise A may: (1) Perform the work register for circulation of processed drugs, then transfer the circulation registration papers of processed medicines (to change drug registration establishments) to another pharmaceutical business establishment with the function of distributing drugs in Vietnam. or (2) Authorize a Vietnamese pharmaceutical business to register and / or distribute drugs.

Regarding the second situation, when businesses operate in the pharmaceutical sector, in addition to complying with the provisions of Vietnamese law and Vietnam's international commitments on investment and trade, they must comply with Vietnamese law provisions in the pharmaceutical field.

Pursuant to the provisions of Clause 10, Article 91 of the Government's Decree No. 54/2017 / ND-CP of May 8, 2017, detailing a number of articles and measures to implement the Pharmacy Law, concretely: Establishments have the right to import but not to exercise the right to distribute medicines and medicine materials in Vietnam; It is forbidden to perform activities directly related to drug distribution in Vietnam, except for drugs and medicine materials manufactured by the establishments themselves in Vietnam.