Facilitate technology transfer in pharmaceutical manufacturing

In this article, our Managing Partner Nguyen Van Phuc and Lawyer Nguyen Nhat Duong will address the difficulties and obstacles associated with technology transfer in the pharmaceutical manufacturing. The article was published in The Saigon Times (No. 50-2023), published on December 14, 2023. Below is the English version:

In an article titled "It is time for foreign-invested pharmaceutical companies to expand" on December 6, 2023, the author mentioned that one of the continuing restrictions in the law that limits technology transfer in the pharmaceutical sector is the regulation that prevents foreign-invested pharmaceutical companies from distributing drugs produced by the pharmaceutical technology transferee. However, this is only one of the problems faced by pharmaceutical manufacturing technology transfer enterprises. In fact, pharmaceutical manufacturing technology transfer still faces many difficulties and obstacles, which require competent agencies to quickly provide solutions and specific instructions.

On the registration procedure for the circulation of pharmaceuticals

Currently, the registration for drug circulation is regulated by Circular 08/2022/TT-BYT dated September 5, 2022 and Circular 16/2023/TT-BYT dated August 15, 2023.

According to Circular 08/2022/TT-BYT, the time limit for a pharmaceutical company to obtain a drug circulation certificate is 12 months from the date of receipt of the complete application. However, this Circular also provides that in some cases, the issuance of a drug circulation certificate will be carried out according to the expedited examination procedure. Specifically, for processed or technology transferred drugs in Vietnam, such as cancer treatment drugs, vaccines, bioproducts, new generation antiretroviral treatment drugs, new generation antibiotics, immunosuppressive drugs used in organ transplantation, the drug circulation certificate will be issued to the pharmaceutical enterprise under the expedited appraisal procedure within 06 months from the date of receipt of the complete application is received. However, it should be noted that this deadline applies if the application submitted by the pharmaceutical enterprise is sufficient and valid. If the application needs to be amended or supplemented, this period may be extended.

Meanwhile, on August 15, 2023, the Ministry of Health issued the Circular 16/2023/TT-BYT to specifically regulate the pharmaceuticals circulation registration of processed pharmaceuticals and technology transfer pharmaceutical in Vietnam. Accordingly, for technology transfer pharmaceuticals in Vietnam, including pharmaceutical chemicals, vaccines, bioproducts, and medicinal drugs, pharmaceutical enterprises will be granted pharmaceutical circulation certificates within 03 months from the date of receipt of sufficient application if pre-technology transfer pharmaceuticals already have valid circulation certificates in Vietnam at the time of submission; or within a maximum of 09 months from the date of receipt of complete application if pre-technology transfer pharmaceuticals do not have circulation registration certificates in Vietnam or the pharmaceutical circulation certificate has expired at the time of submission.

It can be seen that the promulgation of Circular 16/2023/TT-BYT has significantly shortened the time for issuing drug circulation certificates for technology transfer drugs to pharmaceutical enterprises. However, the registration of technology transfer drugs remains difficult in practice for the following reasons:

First, according to Circular 16/2023/TT-BYT, in the case of drugs without drug circulation certificates before technology transfer, it will take up to 09 months for the pharmaceutical enterprise to obtain drug circulation certificates from the date the Drug Administration of Vietnam receives sufficient applications. In fact, technology transfer is mainly carried out between foreign pharmaceutical enterprises or foreign-invested pharmaceutical enterprises to domestic enterprises to produce drugs when investing in drug factories in Vietnam may not be their strategy. Therefore, it is common that technology transfer drugs have not received drug circulation certificates. Therefore, it will be very rare for a pharmaceutical enterprise to enjoy the regulations on the three-month issuance of circulation registration certificates, instead, this procedure will take about 09 months (according to the law).

Second, with the characteristics of products that directly affect consumers' health, the composition of the application for drug circulation registration is extremely complicated, including administrative records, quality records, preclinical and clinical records, clinical data requirements, etc. Documents of safety, efficacy, documents of pre-technology transfer drugs. Given the large number of compounds and their highly complex nature, it is not uncommon for a pharmaceutical company to be required to amend and supplement the application. In case the application needs to be amended or supplemented, the pharmaceutical company will waste more time in preparing the application again and waiting for the competent authority to review and re-evaluate the application. Therefore, it can be said that pharmaceutical enterprises are under a lot of pressure in the lengthy registration process for drug circulation.

Third, not only for pharmaceutical companies, but also for the competent authorities are under great pressure to meet the deadline for issuing the drug circulation certificate is high. In particular, according to the current regulations, the procedures for extending, amending and supplementing the drug circulation registration certificates must go through the same process as the issuance of the drug circulation registration certificates (only the time period is shortened). Meanwhile, due to the huge number of circulation certificates for extension that have been pending to date (it is estimated that there will be nearly 14,000 applications for extension[1] in 2023), it is inevitable that the relevant agencies will be overloaded, resulting in a delay in the processing of applications for circulation certificates for technology transfer drugs.

Therefore, from the author's point of view, the competent authorities need to find solutions to allocate resources to carry out the drug circulation registration process for technology transfer drugs by allowing the extension of the term of expired drug circulation certificates (based on the classification of each drug), extending the time for enterprises to carry out procedures for the extension of drug circulation certificates, or further shortening the duration of the process of extension, amendment and supplementation of drug circulation certificates.

About investment incentives

According to the 2008 Law on Technology Transfer and its accompanying documents, technologies for the production of new drugs, original brand drugs, generic drugs, drugs for the treatment of critical diseases, social diseases and dangerous epidemics are among the technologies encouraged for transfer.

At the same time, in accordance with the provisions of the Law on Investments, investment projects involving the transfer of technologies included in the list of technologies supported for transfer are eligible for investment incentives. The following investment incentives may be applied: (i) corporate income tax incentives, including the application of a corporate income tax rate lower than the standard tax rate for a certain period of time or for the entire duration of the investment project; tax exemptions, tax reductions and other incentives in accordance with the Law on Corporate Income Tax; (ii) exemption from import duties on goods imported for the establishment of fixed assets, raw materials, supplies and components imported for production in accordance with the Law on Export and Import Tax; (iii) exemption from or reduction of land use fee, land rent, land use tax; (iv) accelerated depreciation, increase of deductible expenses in the calculation of taxable income.

In addition, the Prime Minister's Decision No. 376/QD-TTg dated March 17, 2021, on the approval of the program for the development of the pharmaceutical industry and domestically produced pharmaceutical materials until 2030, with a vision until 2045, has also established preferential solutions for technology transfer in pharmaceutical manufacturing. At the same time, this decision also assigns the Ministry of Planning and Investment to assume the main responsibility and coordinate with the Ministry of Health and other relevant ministries in drafting a decree to guide the implementation of the Investment Law 2020, which defines the forms and subjects eligible for investment incentives or special investment incentives in the pharmaceutical industry.

However, to date, there are no specific regulations or guidelines on the conditions, subjects and forms of investment incentives for technology transfer in pharmaceutical production. This can be an obstacle for pharmaceutical enterprises if the policies to protect their interests are not specifically defined for application in practice.

The Decision 376/QD-TTg has set many targets to promote Vietnam's pharmaceutical industry, including the target to receive technology transfer to produce at least 100 in force copyrighted drugs, vaccines, medical bio-products and drugs that Vietnam has not yet produced. However, to date, nearly one-third of the time has passed, Vietnam has only about 20 brand-name drugs under transfer/in the transfer process (can start with processing production)[2]. Therefore, in the near future, the technology transfer of pharmaceutical production must be accelerated to achieve the set goals. In order to achieve this, the relevant agencies must first of all quickly take the necessary measures to promote technology transfer activities by properly allocating resources to prioritize administrative procedures for technology transfer drugs and soon issue more detailed guidelines on investment incentives.

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