HONG KONG – An Indian pharmaceutical company said it is still exporting its products to Vietnam as usual, disputing reports that it had been one of some four-dozen companies allegedly banned from the growing Southeast Asian market.
A leading financial daily in India reported earlier this week that Vietnam's drug regulator had decided to cut more than 60 drug suppliers out of the Vietnamese drug market, claiming their products were substandard. The report was widely circulated, and as many as 45 of the 60 companies are India-based pharma and biotech companies, including Bangalore-based generics and biopharmaceutical maker Strides Arcolab Ltd.
The drug regulator in Vietnam is the Drug Administration of Vietnam (DAV), an arm of the country's Ministry of Health (MOH). DAV is responsible for the regulation of pharmaceuticals.
But on April 22, Strides Arcolab posted a clarification announcement on the Bombay Stock Exchange, stating it is exporting to Vietnam as usual.
"There is no ban on Strides Arcolab Ltd. to supply drugs to Vietnam and the company continues to export drugs to Vietnam," the company stated. "Further, Vietnam is a low-priority market for Strides Arcolab, with sales under $200,000 per annum."
Strides Arcolab's stock (BSE:532531) rose 0.8 percent to INR464.5 (US$7.60) after the clarification announcement. The company became part of U.S. generic and specialty pharmaceutical maker Mylan Inc. in December.
A spokesperson from DAV authority declined to confirm the ban or to provide further information by press time.
The Vietnamese pharmaceutical market is worth about $2 billion. It is one of fastest-growing sectors of the national economy. But to import products into the country, foreign companies require both product approval and an import permit.
Pacific Bridge Medical (PBM), an Asia-focused medical market consultancy, said that drug regulations in Vietnam often are unclear and frequently are implemented on a case-by-case basis, which can be bad news for foreign pharmaceutical companies trying to enter the market.
"Without the right connections, long delays are typical," said PBM in its Vietnam Pharmaceutical Market Update 2013.
On the other hand, both domestic pharmaceutical companies and foreign-invested companies are allowed to manufacture in Vietnam. Foreign companies with trading licenses can register their products with the DAV. According to PBM, there were about 170 pharmaceutical companies in Vietnam in 2012. Ten percent of them were foreign-owned, and 4 percent were joint ventures.
Domestic pharmaceutical companies provide half of the drugs needed in the country, but they are almost all low-cost generics. Imported drugs are considered more sophisticated and valuable.
Banning a group of 60 foreign drug suppliers would provide an enormous opening to local drugmakers, but it is uncertain if they have the capacity to fill such a gap. The Vietnam MOH has set up funding schemes to establish new pharmaceutical facilities and upgrading aged facilities, as lack of necessary facilities is one of the reasons of domestic underproduction.
And the Vietnamese government wants to extend health care coverage to as much as 90 percent of its population of 89 million through a national health insurance system that is rolling out between now and 2020. PBM said that a typical Vietnamese citizen spent about $104 per year on drugs by 2010, and that number should more than double by 2015. At the same time, the Vietnam MOH has invested more than $2.5 billion in health care infrastructure development since 2009. So the opportunities are significant.
To file for a drug approval in Vietnam, companies have to provide very comprehensive materials, including a detailed description of the manufacturing process and the in-process quality control procedures, the GMP certificate of the company in the original country, stability data from three batches of the drug, Free Sale certificate, detailed product information, quality specifications, samples of the product and packaging materials with Vietnamese language inserts.
The drug application review process can take as long as six months and an approval is good for five years.