EVFTA opportunities for German pharmaceutical products

Germany is one of the world's largest pharmaceutical producers and exporters. Meanwhile, according to a KPMG Report, Vietnam's pharmaceutical market has been growing rapidly in recent years, from USD 2.7 billion in 2015 to USD 3.6 billion in 2018. Import demand for these products also increased by 43% from USD 2.3 billion in 2015 to USD 3.3 billion in 2020. In addition, with the rapid economic development and increase of middle and upper class in Vietnam, the demand for health care, especially for high-quality pharmaceutical products also increases. Therefore, German high-end pharmaceutical products will have great opportunities to access the Vietnamese market in the future thanks to the following benefits from the EVFTA:

- Benefits from tariff reduction: Currently, Vietnam is applying MFN tariff rates ranging from 0% to 14% (average 2.19%) on pharmaceutical products. In the EVFTA, Vietnam committed to eliminating about 63% of pharmaceutical tariff lines for Germany at entry into force of the Agreement. The remaining tariff lines will be eliminated gradually after 10 years.

- Benefits from commitments on standards and transparency: Vietnam committed on transparency in legal documents, regulations, criteria and procedures related to pricing, price listing, reimbursement or medication management. Vietnam also committed to building technical regulations for pharmaceutical products and medical equipment based on relevant international standards, practices and guidelines, unless it is scientifically proven that these standards, practices, and guidelines are inappropriate or ineffective for carrying out their legitimate objectives.

- Benefits from the commitment to allowing German investors to import, build warehouses, research and introduce pharmaceutical products: Vietnam committed to allowing German FDI enterprises to import pharmaceutical products but not engage in the wholesale or retail of them and only resell to enterprises that are licensed to distribute (wholesale) pharmaceutical products in Vietnam; These enterprises are also allowed to build warehouses to store imported medicine, conduct clinical research/testing to ensure that the pharmaceutical products are suitable for Vietnamese people, and introduce information about imported medicine to medical staff in accordance with Vietnam's regulations.

- Benefits from the commitment on marketing authorization procedures: Vietnam committed to abolishing the requirement of a minimum period of existing authorization in the EU, prior to the submission of a request for marketing approval in Viet Nam, and abolishing any additional requirements relating to clinical studies going beyond those stipulated in international practices (in particular the practice of The International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use - ICH).

- Benefits from commitments on intellectual property: Vietnam's commitment on compensating for the delay of marketing authorization which causes the commercial exploitation time of pharmaceutical products that are exclusively protected to shorten, and commitment on protecting exclusive data within 5 years, etc will help German pharmaceutical products to be protected higher when circulated in the Vietnam market.

- Benefits from commitments to opening the government procurement market: For pharmaceutical products, Vietnam committed to allowing EU enterprises to participate in pharmaceutical product procurement of the Ministry of Health and 34 public hospitals under the Ministry of Health with certain conditions and schedules. This will be a very good opportunity for German pharmaceutical contractors to access Vietnam's government procurement market, which has a lot of potential and open just to a few FTA partners.

EVFTA full text for more information: https://wtocenter.vn/chuyen-de/12778-eu-vietnam-trade-and-investment-agreements 

Source: "Business Handbook: Exploiting the EVFTA  to import and export goods between Vietnam and Germany" - Center for WTO and International Trade