Pharmaceutical business models for foreign traders in the Vietnamese market

As of 2026, Vietnam’s pharmaceutical market has reached an estimated value of approximately USD 7 billion and is projected to grow by around 10–15% annually. This data indicates that Vietnam’s pharmaceutical market still has significant room for further development.¹ Alongside the growing demand, Vietnam is also pursuing policies to attract resources, technology, and international cooperation to further develop its pharmaceutical industry. In this regard, the country encourages research, technology transfer, and the production of original brand-name drugs, vaccines, biological products, and other high-tech pharmaceutical products.² In practice, many international pharmaceutical groups continue to demonstrate their interest in and expand their operations in Vietnam. For example, AstraZeneca has identified Vietnam as a strategic market and has undertaken various investment and cooperation activities in the pharmaceutical sector.³

Given the development potential of the market and the growing presence of international pharmaceutical companies, the need to select an appropriate market entry strategy within Vietnam’s legal framework has become increasingly significant. Against this backdrop, this article analyses several common options that foreign investors or foreign traders, being enterprises or organizations lawfully established and operating in their respective countries, may consider when entering the Vietnamese pharmaceutical market. In particular, the article clarifies the characteristics, scope of activities, and key legal considerations associated with each option.

1. Market Access Conditions and Sector-Specific Conditions for Pharmaceutical Business Activities:

1.1. Market Access Conditions:

Pursuant to Vietnam’s WTO Commitments, wholesale and retail services are sectors in which market access is not restricted. Accordingly, foreign investors may enter the Vietnamese market by establishing a foreign-invested economic organization, contributing capital to, or acquiring contributed capital or shares in, a Vietnamese company, or through other investment forms permitted by law, in order to exercise the right to distribute goods, without being subject to restrictions on: (1) The ownership ratio of charter capital; (2) The form of investment; (3) The scope of investment activities; (4) The capacity of the investor or partners participating in the investment activities; or other conditions prescribed by law.⁴

However, the distribution rights of foreign investors in Vietnam do not apply to all types of goods. Under Vietnam’s WTO Commitments, pharmaceuticals are among the goods excluded from the scope of commitments on distribution rights. Therefore, although foreign investors may still enter the Vietnamese market through investment forms permitted by law, the wholesale and retail of medicines and pharmaceutical products must comply with the conditions, scope, and restrictions prescribed under specialized pharmaceutical legislation.

This is also consistent with Circular No. 34/2013/TT-BCT dated December 24, 2013 of the Minister of Industry and Trade, promulgating the roadmap for foreign-invested enterprises in Vietnam to conduct goods purchase and sale activities and activities directly related to goods purchase and sale. Under this Circular, pharmaceuticals are among the goods that foreign-invested enterprises are not permitted to distribute.⁵

1.2. Sector-Specific Legal Conditions:

As discussed above, foreign investors may enter the Vietnamese market through investment forms permitted by law. However, to conduct pharmaceutical business activities, foreign investors must also comply with sector-specific legal regulations, specifically:

Regarding the types of pharmaceutical business establishments with foreign investment, foreign investors are only permitted to establish pharmaceutical business establishments in the following forms:⁶

Pharmaceutical and pharmaceutical ingredient manufacturing establishments;

Pharmaceutical and pharmaceutical ingredient export and import establishments;

Pharmaceutical and pharmaceutical ingredient testing service providers;

Clinical drug trial service providers;

Drug bioequivalence testing service providers.

Regarding the scope of activities of pharmaceutical business establishments:

Foreign-invested pharmaceutical business establishments have the rights and obligations applicable to their respective types of pharmaceutical business establishments under the 2016 Law on Pharmacy, while being subject to restrictions on activities directly related to the distribution of medicines and pharmaceutical ingredients.

Accordingly, in principle, foreign-invested pharmaceutical business establishments are not permitted to conduct the retail or wholesale of medicines or pharmaceutical ingredients, except in certain cases permitted by law for foreign-invested pharmaceutical manufacturing establishments and establishments importing medicines and pharmaceutical ingredients. The scope of the sale of medicines and pharmaceutical ingredients in these cases depends primarily on the following conditions:

Origin of medicines and pharmaceutical ingredients: Medicines and pharmaceutical ingredients manufactured, contract-manufactured, or directly imported by the relevant establishment, depending on the type of pharmaceutical business establishment;

Permitted distribution recipients: healthcare establishments, vaccination establishments, other medical establishments, drug rehabilitation establishments, wholesale establishments of medicines and pharmaceutical ingredients, or other entities as prescribed for each type of establishment;

Other conditions and restrictions prescribed by law.

Accordingly, foreign investors are not permitted to freely distribute medicines and pharmaceutical ingredients in Vietnam, but may only conduct such activities within the scope permitted by law for each type of pharmaceutical business establishment.

Therefore, the choice of market entry method should be considered based on various factors, such as the investor’s capabilities, financial resources, intended scope of activities, and ability to cooperate with partners in Vietnam. On this basis, foreign investors may consider the following three common options:

Option 1. Establishment of a Representative Office of a Foreign Trader in Vietnam.

Option 2. Merger and acquisition (“M&A”) of a pharmaceutical company in Vietnam.

Option 3. Establishment of a new company in Vietnam.

2. Option 1 – Establishment of a Representative Office of a Foreign Trader in Vietnam:

2.1. Implementation Method:

In terms of its definition, a Representative Office of a Foreign Trader is a dependent unit of a foreign trader, established in accordance with Vietnamese law to conduct market research and carry out certain trade promotion activities permitted under Vietnamese law.⁷

Accordingly, under this option, the foreign investor would register a Representative Office of a Foreign Trader in Vietnam without establishing a company. This option is suitable at the initial stage when the foreign trader primarily seeks to conduct market research, promote trade, and maintain a presence in Vietnam, but does not yet intend to directly conduct business activities or establish an independent operational structure in Vietnam.

*Note: It should be noted that although Vietnamese law permits foreign traders to establish branches or representative offices to conduct trade promotion activities in Vietnam, Vietnam has not yet made a market access commitment for the establishment of branches as a form of commercial presence in the goods distribution sector. Accordingly, the establishment of a branch by a foreign trader to conduct goods distribution activities in Vietnam may not be approved by the competent state authority.

2.2. Establishment Conditions:⁸

Pursuant to the applicable regulations, a foreign trader must satisfy the following conditions to establish a Representative Office in Vietnam:

The foreign trader must be established and registered for business in accordance with the laws of the country or territory participating in an international treaty to which Vietnam is a party, or be recognized under the laws of such country or territory;
The foreign trader must have been in operation for at least one year from the date of its establishment or registration;
If the foreign trader’s Business Registration Certificate or equivalent document specifies an operating term, such term must have at least one year remaining as of the date of submission of the application;
The activities of the Representative Office must be consistent with Vietnam’s commitments under the international treaties to which Vietnam is a party;
If the activities of the Representative Office are not consistent with Vietnam’s commitments, or if the foreign trader is not from a country or territory participating in an international treaty to which Vietnam is a party, the establishment of the Representative Office must be approved by the relevant Minister or Head of a ministerial-level agency responsible for the relevant sector (hereinafter collectively referred to as the Minister in charge of the relevant sector).

2.3. Advantages:

The establishment procedure takes less time than under Options 2 and 3, approximately 7–10 working days.

The establishment procedure is relatively simple, requiring only compliance with the statutory conditions, compared with Options 2 and 3.

Tax and accounting procedures are simpler than those applicable to Options 2 and 3.

Suitable for foreign traders seeking to enter the Vietnamese market to conduct market research, establish relationships with Vietnamese partners and customers, and promote trade, without the purpose of conducting business or generating profits.

2.4. Limitations:

c. With Respect to Commercial Activities in General:

May not directly engage in profit-generating activities in Vietnam (Article 18 of the 2005 Law on Commerce).

Limitations on Scaling Up Operations: A foreign trader may not establish more than one Representative Office under the same name within a province or centrally governed city (Article 3 of Decree No. 07/2016/ND-CP). If the foreign trader wishes to expand its operations, it should consider transitioning to a company structure.

Limitations on the Duration of Operations: The License for Establishment of a Representative Office of a foreign trader has a term of five years, but may not exceed the remaining term of the foreign trader’s Business Registration Certificate or equivalent document, where such document specifies a term (Article 9 of the 2005 Law on Commerce). If the foreign trader wishes to continue its operations, it must periodically carry out the procedures for renewal of the license.

d. With Respect to Pharmaceutical Business Activities:

A Representative Office is not entitled to register medicines or pharmaceutical ingredients under its name. Only a pharmaceutical or pharmaceutical ingredient business establishment of the foreign trader located abroad may be the applicant for such registration (Clause 3, Article 54 of the 2016 Law on Pharmacy).

Ineligible to conduct pharmaceutical business activities. (Clause 18, Article 3 of the 2005 Law on Commerce).

2.5. Assessment and Recommendations on the Suitability of the Option:

As analyzed above, this option is suitable where the foreign investor primarily seeks to conduct market research, expand relationships with partners and customers, or carry out trade promotion activities in Vietnam, without yet having a need to directly conduct business activities. Where the foreign investor establishes relationships with partners, pharmaceutical importers, or distributors in Vietnam, commercial transactions may, in principle, still be conducted directly between such parties and the foreign investor overseas, rather than through the Representative Office.

With respect to pharmaceutical business activities, in addition to the limitations arising from the nature of a Representative Office’s activities, a Representative Office is also not entitled to be the entity named as the applicant for the registration of medicines or pharmaceutical ingredients. However, the establishment of a Representative Office does not prevent the foreign investor itself, as an entity established overseas, from being named as the applicant for a marketing authorization if the foreign investor fully satisfies the conditions prescribed under Vietnam’s specialized pharmaceutical regulations.

In the future, if the foreign investor intends to directly conduct business, expand its operations, or establish a long-term commercial presence in Vietnam, Option 2 or Option 3 would be more suitable for consideration.

3. Option 2 – Merger and Acquisition (M&A) of a Pharmaceutical Company in Vietnam:

3.1. Applicable Forms of M&A in the Pharmaceutical Sector:

With respect to the forms of M&A that may be applied in the pharmaceutical sector, foreign investors may choose from various forms, specifically:

Direct capital contribution to an enterprise (contributing capital to the charter capital of a limited liability company or purchasing newly issued shares of a joint stock company to increase its charter capital);

Acquisition of existing members’ contributed capital or shareholders’ issued shares (without increasing the charter capital, but resulting in a change in the ownership structure);

Merger of enterprises (one or more companies transfer all of their assets, rights, and obligations to the surviving company, and the merged company ceases to exist);

Consolidation of enterprises (two or more companies combine to form an entirely new company); and

Division or separation of enterprises.

In the Vietnamese market, since 2024, major M&A transactions in the pharmaceutical sector have primarily been structured as acquisitions of existing shares or contributed capital interests from existing shareholders of listed or public target pharmaceutical companies, or as a combination of acquiring existing shares and newly issued shares to both obtain ownership and provide additional capital to the target company.

3.2. Legal Conditions Applicable to Foreign Investors Acquiring Shares in the Target Pharmaceutical Company:

When the buyer is a foreign investor, a primary and recurring concern is whether Vietnamese domestic law and/or international treaties to which Vietnam is a signatory permit the foreign investor to acquire shares or equity interests in a target pharmaceutical joint-stock company. If permitted, key considerations include the allowable foreign ownership limit, the requisite statutory conditions, and any operational or business restrictions imposed on the foreign investor.

Pursuant to Article 20.1(a) of the 2025 Law on Investment, an economic organization is required to satisfy the conditions and follow the investment procedures applicable to foreign investors where a foreign investor holds more than 50% of its charter capital. Accordingly, once an M&A transaction results in a foreign investor holding more than 50% of the charter capital of the target company, the target company will be subject to the investment conditions and procedures applicable to foreign investors. From that point onward, it must comply with the restrictions applicable to foreign-invested enterprises in the pharmaceutical sector, including where, prior to the transaction, the company had been entitled to exercise distribution rights as a domestic enterprise.

Pursuant to Article 21 of the 2025 Law on Investment, a foreign investor must carry out the procedure for registering its capital contribution, share purchase, or purchase of contributed capital prior to the change of members or shareholders if the transaction results in an increase in the foreign ownership ratio in an economic organization conducting business in a sector subject to conditional market access for foreign investors, or results in a foreign investor holding more than 50% of the charter capital.

3.3. Legal Due Diligence

Before the foreign investor decides whether to enter into a share purchase or capital contribution transfer agreement, legal due diligence is a crucial step aimed at determining the value of the target company, identifying potential risks, and assessing the target company’s compliance with applicable laws, thereby minimizing potential risks that may arise after completion of the transaction.

Accordingly, the foreign investor should conduct a comprehensive due diligence review of the target company. The key areas of review include:

a. Due Diligence on the Ownership of Shares/Contributed Capital

Before accepting the transfer, the foreign investor should verify that the seller has lawful ownership rights over the shares or contributed capital proposed to be transferred. In this regard, the foreign investor should verify whether the transferring shareholder has fully paid for the subscribed shares and whether the shareholder has been duly recorded in the company’s shareholder register.

Next, the foreign investor should then review any restrictions on the transfer that may arise under applicable law, the company’s Charter, or agreements among shareholders. In particular, for ordinary shares held by founding shareholders during the statutory period, the transfer to a person who is not a founding shareholder may be subject to approval by the General Meeting of Shareholders.

In addition, the foreign investor should review any disputes, complaints, or judgments relating to the shares/contributed capital, as such matters may directly affect the legality of the transaction as well as the value of the target company.

b. Due Diligence on Pharmaceutical Business Licenses and Regulatory Requirements

The due diligence of pharmaceutical licenses and regulatory requirements is a critical component of M&A transactions in the pharmaceutical sector.

The foreign investor should conduct a comprehensive review of the target company’s Enterprise Registration Certificate, Investment Registration Certificate (if applicable), Certificate of Eligibility for Pharmaceutical Business, and other relevant sector-specific licenses and permits. In the pharmaceutical sector in particular, the foreign investor should focus on reviewing the following key matters:

The registered scope of pharmaceutical business activities;

The type of pharmaceutical business establishment;

The person in charge of pharmaceutical expertise;

Requirements regarding facilities, technical infrastructure and personnel;

Compliance with the corresponding Good Practice standards;

Certificate of Marketing Authorization for Drugs;

The rights and obligations of the entity named as the marketing authorization/registration holder;

The status of applications for product registration, renewal, variation, and supplementation;

The history of inspections, examinations, administrative sanctions, and product recalls;

Existing quality violations or non-compliance with pharmaceutical business regulations.

c. Corporate Legal Compliance

The foreign investor should review the Charter of the target company, including assessing whether the provisions of the Charter are consistent with the current Law on Enterprises, identifying and assessing whether there are any voting mechanisms or veto rights that may be unfavorable to the foreign investor after the transaction; and whether the organizational and management structure (the General Meeting of Shareholders, the Board of Directors, and the Board of Supervisors) complies with the Law on Enterprises. In particular, the foreign investor should review the actual business lines of the target company, as this is a factor determining the sub-licenses required and the extent of restrictions applicable when the company becomes a foreign-invested enterprise.

d. Compliance with labor, contractual, asset, and financial obligations

The due diligence should also cover the status of employment contracts, internal labor regulations, insurance obligations, and payments to employees; material commercial contracts (particularly existing distribution and agency agreements, as the validity of these agreements may be affected when the target company loses its distribution rights); the ownership status and encumbrances over material assets (factories, production lines, and intellectual property rights); and loans and guarantee obligations, particularly foreign loans.

3.8. Analysis of the Advantages and Limitations of Option 2:

a. Advantages:

First, foreign investors can shorten their market entry time. Specifically, foreign investors do not have to build a business from scratch, but can immediately inherit the target company’s existing distribution network, brand, market share, personnel, and licenses, thereby significantly reducing market entry time compared to establishing a new entity.

Second, by shortening the market entry timeline, the foreign investor has the opportunity to acquire an established business platform and valuable assets, as an operating pharmaceutical company may already possess a system of factories and warehouses, a team of specialized personnel, a product portfolio, marketing authorizations, and, in addition, an existing customer network. These are factors that would require substantial time and costs to establish if the foreign investor were to set up a new enterprise.

Third, the foreign investor can save on initial costs and administrative procedures, such as applying for investment licenses, constructing factories, obtaining GMP/GSP certificates, and, most importantly, establishing a product portfolio comprising pharmaceuticals, functional foods, medical devices, etc., for which marketing authorization by the competent authorities in Vietnam may take several years to obtain.

b. Limitations:

First, the scope of activities of the target company following completion of the transaction may result in the loss of its distribution rights. This is the most significant limitation and a distinctive feature of the pharmaceutical sector. Prior to completion of the transfer of shares/contributed capital interests, the target company lawfully enjoys distribution rights in its capacity as a domestic enterprise. However, following completion of the transfer transaction, the target company will be subject to distribution restrictions applicable to foreign-invested enterprises, directly affecting its revenue and business model after the M&A transaction.

Second, the acquisition of shares/contributed capital interests does not create a new legal entity but instead results in a change of ownership. In such case, the foreign investor may face the risk of inheriting outstanding legal liabilities. Specifically, the foreign investor may have to bear risks arising from shareholder disputes, labor law violations, financial obligations, unfavorable contracts, etc., if the legal due diligence is not sufficiently comprehensive.

Third, transaction costs are generally higher, particularly in the case of listed pharmaceutical companies, which may command high valuations due to the attractiveness of the pharmaceutical sector.

4. Option 3: Establishment of a new company in Vietnam:

4.1. Potential operating models:

Since the foreign investor owns 100% of the company’s charter capital, the foreign investor has full autonomy to structure the enterprise from the outset in alignment with its own business objectives, for example:

Manufacturing drugs and drug materials;

Importing drugs and drug materials;

Research and development (R&D);

Conduct of activities related to marketing authorizations for drugs;

Providing pharmaceutical services to the extent permitted by law.

4.2. Implementation process:

To proceed with the establishment of the company, the foreign investor is required to apply for and obtain the following licenses and approvals:

Investment Registration Certificate (IRC);

Enterprise Registration Certificate (ERC).

Depending on the intended scope of activities (manufacturing, import/export, or research and development only), the company must subsequently obtain a Certificate of Eligibility for Pharmaceutical Business and the corresponding Good Practice certificates (GMP for manufacturing establishments and GSP for storage facilities) before it is permitted to officially commence operations.

4.3. Scope of Permitted Rights:

The establishment of a 100% foreign-owned company does not mean that the company is free to conduct pharmaceutical distribution activities in Vietnam.

Under current pharmaceutical law, a 100% foreign-owned company with a manufacturing function is only permitted to engage in the wholesale of drugs and drug materials produced by itself. If acting as an importing entity, the company is only allowed to sell wholesale to other domestic wholesalers, and is strictly prohibited from directly engaging in retail sales or distributing products that it does not manufacture or import itself. In other words, a 100% foreign-owned company must rely on third-party domestic distributors, pharmacies, and hospitals to reach end consumers.

4.4. Analysis of advantages and limitations:

a. Advantages:

The foreign investor has full ownership and control over the business strategy and is not required to share decision-making authority with a Vietnamese partner.

Absolute confidentiality of manufacturing technologies, business know-how, and internal management processes.

Eligibility for investment incentives (if any) applicable to high-tech pharmaceutical manufacturing projects, particularly in line with the policy orientation under the 2024 amended Law on Pharmacy encouraging technology transfer and domestic manufacturing.

No need to assume outstanding legal risks associated with an existing company (bad debts, disputes, or prior violations) as would be the case under Option 2.

b. Limitations:

The longest implementation timeline among the available options: from obtaining the Investment Registration Certificate, constructing manufacturing facilities, to obtaining all necessary GMP/GSP certificates to officially commence operations, the process may take several years.

No general right to distribute pharmaceutical products, including retail distribution: the company must rely entirely on domestic distributors, pharmacy chains, or hospitals to market and sell its products, resulting in the need to share profit margins and reduced ability to control the end-customer experience.

High initial investment capital requirements, particularly for manufacturing projects requiring investment in production lines that meet international GMP standards.

No existing market share, brand recognition, or customer relationships in the Vietnamese market: these must be developed from scratch in a market with numerous long-established competitors.

^{(1) Government Electronic Information Portal, “The Pharmaceutical Market Reaches USD 7 Billion, with the Pharmaceutical Industry Aiming to Enhance Self-Reliance,” August 7, 2026, https://baochinhphu.vn/thi-truong-duoc-pham-dat-7-ty-usd-nganh-duoc-huong-toi-nang-cao-nang-luc-tu-chu-102260807184211842.htm}

^{(2) Office of the Government, “Strategy for the Development of Vietnam’s Pharmaceutical Industry through 2030, with a Vision to 2045,” October 9, 2023, https://baochinhphu.vn/chien-luoc-phat-trien-nganh-duoc-viet-nam-den-nam-2030-va-tam-nhin-den-nam-2045-102231009163821207.htm}

^{(3) Government News, “AstraZeneca Commits to Continuing Its Partnership with Vietnam,” March 5, 2025, https://baochinhphu.vn/astrazeneca-cam-ket-dong-hanh-voi-viet-nam-102250305195234196.htm}

^{(4) Article 8 of the 2025 Law on Investment.}

^{(5) Item 5 of Appendix No. 03 to Circular No. 34/2013/TT-BCT.}

^{(6) Article 53a of the 2016 Law on Pharmacy.}

^{(7) Clause 6, Article 3 of the 2005 Law on Commerce.}

^{(8) Article 7 of Decree No. 07/2016/ND-CP.}

Submission date: Aug 20 2026

Author: Dung Nguyen, Yen Le, Au Huynh

Related posts

Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Healthcare and contact our team of lawyers in Vietnam via email info@apolatlegal.com.

Nguồn: https://ift.tt/RBnETI8
Map: https://goo.gl/maps/JbCF1FiWPuD2Jsnx6
Thông tin: https://www.google.com.vn/search?q=Apolat+Legal&kponly=&kgmid=/g/11jkvqgmw_

Search This Blog

Công ty dịch vụ luật Apolat Legal