Opportunities for foreign-invested enterprises in the healthcare sector in Vietnam
While foreign-invested enterprises bring advanced technology and global expertise to Vietnam, their operations are also affected by a complex legal landscape, creating both Opportunities in Vietnam’s SMEs sector and Challenges of doing business in Vietnam.
1. Favorable investment environment
Vietnam’s healthcare sector is developing rapidly as the country strives to modernize its system and improve healthcare outcomes for its people. Contributing to this transformation are foreign-invested enterprises. They have become important drivers of healthcare innovation in areas such as pharmaceuticals, medical devices, biotechnology and digital healthcare solutions.
Foreign-invested enterprises play a diverse role in Vietnam’s healthcare sector by introducing advanced technologies, promoting research and development (R&D), and addressing gaps in local healthcare infrastructure. Their contributions are not limited to products and services, but also extend to knowledge transfer, capacity building, and establishing linkages with domestic enterprises and organizations.
The 2016 Law on Pharmacy established a legal framework for the operations of foreign-invested enterprises in the pharmaceutical sector, which has experienced significant growth. These enterprises have contributed to the development and introduction of new drugs and therapies, especially in areas such as oncology, cardiovascular diseases, and infectious diseases. R&D efforts – supported by international standards such as Good Manufacturing Practice (GMP) and Good Clinical Practice (GCP) – have resulted in the creation of high-quality drugs that meet domestic healthcare needs.
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Foreign-invested enterprises engaged in pharmaceutical R&D often collaborate with research institutes and universities in Vietnam, promoting knowledge transfer and enhancing domestic expertise. These collaborations could help accelerate the development of new therapies and vaccines for public health.
2. Foreign-invested enterprises involved in developing innovative medical solutions enjoy incentives under the Investment Law
Vietnam offers many opportunities for foreign-invested enterprises in the healthcare sector. With a growing population, increasing demand for healthcare, and a supportive legal framework, Vietnam creates a favorable investment environment for medical innovation. There are many outstanding opportunities for foreign-invested enterprises wishing to enter or expand operations in Vietnam.
The Vietnamese government has implemented many policies to attract foreign-invested enterprises in high-tech and innovation sectors, including the healthcare sector. The 2020 Investment Law encourages investment in R&D, biotechnology, and advanced medical devices by simplifying administrative procedures and providing incentives such as Vietnam tax system for foreign businesses and reduced financial obligations related to land use rights. Foreign-invested enterprises involved in developing innovative medical solutions can benefit from these incentives, which help reduce operating costs and increase investment efficiency.
Furthermore, free trade agreements and Vietnam economic zones (EZs) provide greater opportunities for foreign-invested enterprises by improving market access. They also enhance intellectual property (IP) protection, which is crucial for foreign-invested enterprises developing innovative pharmaceutical and medical technology products.
The pandemic has accelerated the adoption of digital healthcare and telemedicine in Vietnam. Foreign-invested companies specializing in digital healthcare platforms, healthcare data analytics, and telemedicine services are seeing Vietnam as a potential market. The government’s focus on improving access to healthcare, especially in rural areas, has created Vietnam market entry strategies for foreign-invested companies to deploy digital solutions to improve the quality of telemedicine services.
Vietnam’s large and diverse population and relatively low clinical trial costs make it an attractive destination for pharmaceutical companies looking to expand their R&D activities.
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>>>Read more: Establishing a foreign-invested enterprise in Vietnam
3. Stringent Licensing Requirements
Despite the opportunities in Vietnam’s SMEs sector, foreign-invested companies also face significant challenges when operating in the healthcare sector in Vietnam. These challenges stem from the complexity of regulatory requirements, market access issues, and intellectual property enforcement, among other factors.
The regulatory landscape in Vietnam can be challenging for foreign-invested companies due to its complexity and frequent changes. Foreign-invested companies must comply with stringent licensing requirements for pharmaceuticals, medical devices, and healthcare services.
The approval process for new drugs, medical devices, or digital healthcare solutions can be time-consuming and require compliance with both domestic and international standards. Any delay in obtaining approvals or licenses can become challenges of doing business in Vietnam and overall business operations.
4. How to mitigate this risk?
Foreign-invested companies need to proactively monitor the market for intellectual property violations and work closely with the authorities in Vietnam to protect their interests. In addition, Vietnam’s compliance with international agreements provides a stronger legal foundation for foreign-invested companies to protect their innovations. However, vigilance is still needed to ensure full compliance and protection of their intellectual property rights.
While there are many opportunities in Vietnam’s SMEs sector in healthcare, they often face fierce competition from domestic companies, especially in the field of pharmaceutical and medical device distribution. The law prohibits foreign-invested enterprises from engaging in certain activities such as pharmaceutical distribution and retail, limiting their ability to compete directly in this market. Therefore, they must rely on partnerships with domestic companies to distribute their products.
S4B Vietnam is one of the trusting consulting firms who understand the legal landscape in Vietnam and build strategic partnerships. Foreign-invested enterprises can contact us for more advice if you need support with Vietnam market entry strategies or Vietnam tax system for foreign businesses. Thank you for reading!
S4B Vietnam
- Address: Unit 701B – 701C, Tower A, Handi Resco 521 Kim Ma Street, Ba Dinh District, Hanoi, Vietnam.
- Tel: + 84 24 3974 4181
- Email: service@s4b.com.vn
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