Vietnam Alerted of Violations of Competition Law in Drug Market

Signs of violating the Competition Law are emerging in Vietnam’s pharmaceutical market, said Nguyen Phuong Nam, deputy director general of the Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade. At a conference in Hanoi on June 19, Mr. Nam said that the breaches could be seen in the link between foreign drug makers and local importers and distributors, adding that they can collude with one another to impose medicine prices, particularly the prices of specialty drugs. There is a fierce competition in the pharmaceutical sector with 274 drug manufacturers, nearly 2,000 drug traders and thousands of outlets, drugstores and pharmacies across Vietnam, forming a complicated distribution network with some intermediary stages. Although foreign firms are disallowed to distribute pharmaceutical products in Vietnam, they can take advantage of the legal loopholes through merger and acquisition deals and get involved in all the phases of product distribution in order to control the local drug prices. The drug market is special as each product has it own market segment and can hardly replace each other while consumers have to depend on the doctors’ prescriptions and cannot know which drugs to buy. Thus, each drug distributor enjoys its own monopoly, heightening the chance of unregulated drug pricing. Osamu Igarashi, a Japanese expert, emphasized the need to ensure that foreign invested enterprises in Vietnam can only provide logistics services such as customs, storage, transportation and they should not be allowed to possess high numbers of retailers to prevent the violations. The VCA proposed the state tighten control over the link between foreign producers and local distributors as well as merger and acquisition deals to prevent foreign companies from taking over domestic firms in order to directly and legitimately participate in the distribution system. The agency also suggested companies operating in the pharmaceutical sector should raise their awareness of the Competition Law to not inadvertently violate it and to protect their legal rights and interests. Imported medicines with expensive prices have been dominating Vietnam, a populous and developing country with an average income per capita of $1,500 a year. (vietnamnet.vn June 19, Thoi Bao Kinh Te – Economic Times June 20 p13)