Innovation and R&D: Vietnam’s Path to Pharma Excellence

Innovation and R&D: Vietnam’s Path to Pharma Excellence

Vietnam's pharmaceutical sector is undergoing significant transformation, driven by innovation, research & development (R&D), and strategic partnerships. With advancements in biopharmaceuticals and high-tech drug manufacturing, the country is emerging as a key player in Southeast Asia's pharmaceutical landscape.

According to CGMP Vietnam, domestic drug production in 2024 has significantly expanded in scale and influence, playing a vital role in the national drug consumption market. Currently, 238 pharmaceutical factories meet GMP-WHO standards, with 19 facilities certified for EU-GMP or equivalent drug production, reinforcing Vietnam’s commitment to high-quality manufacturing and global competitiveness.

The industry has also achieved self-sufficiency in essential medicines, producing all 13 WHO-classified essential drug groups and over 800 active ingredients. Advanced dosage forms, such as long-acting drugs, freeze-dried injections, and effervescent tablets, further highlight its growing capabilities in specialized pharmaceuticals.

Vietnam’s pharmaceutical sector continues to grow steadily, with annual production increasing by 12-15%. Between 2016 and 2023, the number of manufacturing facilities rose from 167 to 238, while the share of domestically produced drugs increased from 20% in 2015 to nearly 50% by value. By 2022, domestic drugs accounted for 70% of the market.

Global exports are also on the rise, reaching $280 million in 2024, with Vietnamese pharmaceutical products now entering high-standard markets such as the United States, the EU, Japan, and South Korea. Meanwhile, the integration of digital health solutions and telemedicine, supported by government-backed digital infrastructure investments, is creating new opportunities for pharmaceutical companies to enhance drug distribution and improve patient accessibility.

With a strong foundation in domestic production, increasing exports, and a growing focus on digital healthcare, Vietnam’s pharmaceutical sector is well-positioned to become a leading force in the global pharmaceutical value chain.

Global Partnerships: A Catalyst for Growth

Collaborations between local pharmaceutical firms and international corporations are transforming Vietnam’s biopharmaceutical sector. These partnerships facilitate the exchange of technology and resources, allowing local players to constantly improve on their capabilities. By co-developing new drugs, conducting clinical trials, and enhancing production capabilities, these alliances are fuelling the sector’s growth while ensuring compliance with international standards.

These collaborations also foster knowledge transfer, empowering local pharmaceutical companies to build long-term capabilities in R&D, manufacturing, and regulatory compliance. By adopting best practices from global partners, local firms can enhance their innovation capacity, ensuring sustainable growth and a stronger presence in the international market. This synergy not only accelerates sector development but also contributes to the overall advancement of Vietnam’s healthcare system.

Vietnam’s Development Strategy

The draft implementation plan for National Strategy for Pharmaceutical Development to 2030, with a Vision to 2045, is awaiting approval, but once enacted, it is expected to significantly accelerate the growth of Vietnam’s pharmaceutical industry. This strategy outlines bold and transformative goals to enhance domestic drug production, boost exports, and establish Vietnam as a key player in the regional pharmaceutical sector (GMPC Vietnam JSC, 2024).

Key Development Goals:

• Enhancing Domestic Drug Production: Vietnam aims to meet 80% of domestic pharmaceutical demand and account for 70% of the market value with locally produced medicines. Additionally, the country is targeting 20% self-sufficiency in raw materials for drug production.
• Becoming a Regional Pharmaceutical Hub: The strategy envisions Vietnam as a high-value pharmaceutical production centre, with the export value of domestically produced drugs projected to reach $1 billion. The country will acquire and transfer technology for at least 100 original branded drugs, vaccines, biological products, and essential medicines that are not yet produced domestically.
• Advancing Herbal Medicine and Sustainable Cultivation: Plans include developing eight sustainable medicinal herb exploitation areas and two to five large-scale medicinal herb cultivation zones. Additionally, Vietnam will restore, import, and cultivate 10–15 medicinal plant species that are currently in high demand, ensuring that 100% of medicinal raw materials are standardized for domestic drug production.
• Strengthening Drug Quality and Safety: The strategy targets 30% of generic drugs (excluding locally acting drugs and systemic drugs requiring bioequivalence) to be domestically produced and assessed as bioequivalent to reference drugs. Furthermore, 100% of drugs circulating in the market will be fully monitored and regulated for effectiveness and safety in accordance with Ministry of Health guidelines.

By implementing these initiatives, Vietnam aims to enhance self-sufficiency, increase global competitiveness, and ensure a safer, more reliable pharmaceutical supply chain. This strategy not only benefits the domestic market but also strengthens Vietnam’s position as a leading pharmaceutical producer in the region.

Success Stories

Vietnam’s pharmaceutical industry is bolstered by notable achievements and groundbreaking collaborations.

Nanogen, a leading Vietnamese pharmaceutical company, developed Nanocovax, Vietnam's first homegrown COVID-19 vaccine, showcasing significant innovation in vaccine technology and development.

Nanocovax exhibits Vietnam’s ability to become a major player in biopharmaceutical innovation. The vaccine not only addresses local public health needs but also has potential for export to neighboring countries. International stakeholders, including WHO and CEPI, have noted Vietnam's progress in advancing localized vaccine innovation.

Nanocovax underscores how strategic investments in R&D, combined with modern technology and international partnerships, can enable a developing country to achieve pharmaceutical breakthroughs.

Technology Driving Sector Transformation

Advanced technologies are reshaping every facet of Vietnam’s pharmaceutical industry, from drug discovery to production. Key technological advancements include:?

Artificial intelligence is being utilized to analyze complex datasets, identify drug targets, and predict patient responses, significantly reducing the time and cost of R&D.

Automated systems are streamlining production processes, ensuring high precision and compliance with quality standards.

Blockchain technology is enhancing supply chain transparency, improving traceability, and minimizing the risk of counterfeit drugs.

These innovations not only enhance operational efficiency but also address global challenges such as affordability and accessibility to essential medicines.

Towards Development

While Vietnam’s pharmaceutical sector holds immense potential, several challenges continue to hinder its growth. Regulatory hurdles make it difficult for foreign pharmaceutical companies to compete effectively, while the high costs of R&D and a shortage of skilled professionals further slow industry development. Moreover, the transition from chemical drugs to biological and biosimilar drugs requires major technological advancements and a stronger capacity for technology transfer and adoption. At the same time, the slow pace of digital transformation in the sector adds another layer of complexity, underscoring the urgent need for coordinated policy reforms and a strong commitment from businesses to modernize and enhance competitiveness (Mary, 2024).

To address the challenges facing Vietnam’s pharmaceutical sector, the government has taken decisive steps to support industry growth. One of the most significant measures is the recent amendment to the 2016 Law on Pharmacy, aimed at removing regulatory barriers and fostering a more competitive environment for domestic pharmaceutical production.

Currently, innovative drugs account for only 3% of the total pharmaceutical market in Vietnam but represent 22% of the market’s value, with the majority being imported (VNN, 2024). According to the Drug Administration of Vietnam (DAV), very few medicines are researched, developed, or produced domestically, and technology transfer for local drug production remains limited. Recognizing this gap, the government is prioritizing policies that encourage domestic R&D and advanced pharmaceutical manufacturing.

One major initiative is the proposed Investment Support Fund, introduced by the Ministry of Planning and Investment in July 2024. This fund aims to strengthen Vietnam’s high-tech industries, including pharmaceuticals, by offering financial incentives to companies engaged in high-tech production and R&D activities. Under the proposal:

• High-tech enterprises, pharmaceutical manufacturers, and R&D centers will receive training cost support of up to 50%.
• R&D projects will be eligible for funding support of up to 30%.

By reducing financial barriers and incentivizing innovation, this policy is expected to create a more favorable environment for businesses to invest in R&D, enhance technological capabilities, and drive sustainable growth in Vietnam’s pharmaceutical sector.

This proposed Investment Support Fund is expected to significantly benefit the pharmaceutical sector, enabling businesses to invest more aggressively in R&D and advanced manufacturing practices. As a result, domestic pharmaceutical enterprises such as Hau Giang Pharmaceutical, Imexpharm, Ha Tay Pharmaceutical, Bidiphar, and Cuu Long Pharmaceutical are already making strides by investing in EU-GMP standard factories. This marks a positive shift for Vietnam’s pharmaceutical industry, not only as a race to improve product quality but also as a strategic move to strengthen the position of domestic enterprises and reduce reliance on imported drugs.

The Path Ahead

Vietnam’s journey toward pharmaceutical excellence is powered by innovation and strategic partnerships. By embracing cutting-edge technologies and cultivating international partnerships, the country is poised to establish itself as a leader in pharmaceuticals. As Vietnam continues to prioritize innovation, the sector is set to play a crucial role in addressing regional and global healthcare challenges. If you wish to explore this promising sector, Viettonkin Consulting offers a full-service package for you to penetrate the Vietnam market and establish your business with ease.

References:

GMPC Vietnam JSC. (2024, December 11). Vietnam Pharmaceutical Industry Report for 2024 (Details). C?ng ty c? ph?n GMPc Vi?t Nam. https://gmp.com.vn/bao-cao-nganh-duoc-pham-viet-nam-nam-2024-n.html

Mary, K. (2024, November 20). Vietnam’s Pharmaceutical FDI Policies Explained. HARLEY MILLER LAW FIRM (HMLF). https://hmlf.vn/trade-inter/unlocking-opportunities-vietnams-pharmaceutical-fdi-policies-explained/

VNN. (2024, November 4). Vi?t Nam aims to produce innovative medicines. Vietnamnews.Vn. https://vietnamnews.vn/society/1666269/viet-nam-aims-to-produce-innovative-medicines.html