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Russian serialization regulations appear to be very difficult and confusing for most of the local and foreign manufacturers. The experimental phase of the extensive track-and-trace implementation concerning all Rx and OTC products is supposed to be over by the 1st of January 2020. However, most of the companies are not prepared for the upcoming changes. The recent amendment introduced by the State Duma on the 3rd of November 2019 proposes to extend the period of track-and-trace implementation until the 1st of July 2020.

Mike Cohen – Regulation.

What’s the big deal?

Back in 2017, the Russian government introduced regulatory requirements concerning the mandatory serialization and tracing of all medicinal products. Through these measures the government expects to enhance traceability and patient safety, while also avoiding a pharmaceutical grey market.

According to these requirements, a scannable code of black and white squares and 128 linear barcodes needs to be on all secondary and tertiary packaging. Secondary packs must also include a unique identifier which contains various data elements, such as serial and cryptographic codes. However, legislators proposed unrealistically short deadlines considering the very complex nature of crypto labelling together with the confusing and illogical requirements.

Only half of the local companies are ready for a big change

Most of the domestic and foreign players are struggling to comply with the new requirements. First of all, there are multiple technical difficulties which arise when concerned with the manufacturer’s infrastructure and the global nature of production, the processes of development, data exchange with the operator’s information system, including software upgrades, testing and further validation on production line. The whole process might take from 6 months to 1 year from the moment these requirements have been finalized.

Positive results of crypto labelling testing have been observed among those who have installed the latest equipment. According to recent updates from domestic companies, only 52% of 860 production lines possess such equipment. 11% of packaging lines are expected to be supplied with equipment in accordance with the signed contracts, while 37% of packaging lines are still in the process of being equipped. As for foreign players, only those who have managed to import the products before the 1st of January 2020 may freely store, transport and distribute them without a crypto label before the expiration of the shelf life.

Will the new deadline be approved?

The recent bill introduced for discussions, suggests establishing a multi-staged introduction of the labelling system until the 1st of July 2020. In addition to ensuring the stability of the drug supply to the Russian population and preventing the disruption of the supply of medicines, the bill proposes to give the Government of the Russian Federation the right to establish the procedure and timing of the labeling system implementation.

What’s coming next?

After the experimental phase has been concluded, the monitoring system will have to track about 6.5 billion packages, covering more than 1,000 manufacturers, 2,500 wholesalers and 350,000 medical & pharmacy organizations. Taking into account that only 15% of participants and approx. 8% of the medicines are currently registered in the track and trace system, the experimentation phase is not very likely to be completed on time.

Simply put, the problem with serialization has two sides of a coin. Firstly, the majority of manufacturers do not have the technological solutions and financial power to implement these modifications in such a short period of time. Secondly, the entire drug monitoring system indicates high risks of failing since it lacks a clear procedure and has not yet been fully tested on all actors of the distribution chain (manufacturers, distributors, pharmacy chains, medical institutions). As the State Duma has yet to set the dates for the official hearings to discuss the newly introduced changes into the law, companies can only hope for a positive outcome of this difficult situation regarding serialization.

As one of the few winners against the pandemic with modest financial resources, is the Vietnamese pharma market ready for international investments and colaborations?

The Covid-19 outbreaks and Vietnam’s remarkable performance in containing its spread have proven that health is, and will absolutely continue to be, a priority for most Vietnamese and as well as for the government. 

The societal shift that is creating opportunities for Vietnam’s Pharma and OTC  industry

Like most countries identified as emerging markets, Vietnam is undergoing drastic changes in terms of demographic, social, and economic aspects. Most recently, there are some significant shifts that make Vietnam more and more competent in becoming a top-of-the-list for international companies that are looking to expand their business in emerging markets. 


The first and most important factor in this equation is the fast-growing middle class in the country. Vietnam currently has the fastest-growing middle-class population in South-East Asia. This has significantly boosted the demand for high-quality and specialized healthcare services.


Subsequently, due to higher demand and affordability, the health insurance and hospital systems are expanding. Vietnam has become a coverage ratio leader within Asia and it has set a goal of covering 95% of the population with Universal Health Service by 2025. The Hospital network is also fairly extensive and the government continues to finance the construction of new hospitals. At the same time, it is also increasingly looking at investment from the private sector and international firms. 


As a result, the country recently signed the European Union Vietnam Free Trade Agreement (EUVFTA). The agreement will remove tariffs for pharmaceutical products from the EU and allow foreign companies to import and sell pharmaceuticals to Vietnamese distributors and wholesalers. 


Furthermore, there was an Amended Law on Enterprise and Law on Investment, effective January 2021, that incentivizes investment in five key sectors including healthcare. Projects in these sectors will benefit from preferred enterprise income tax, exemption or reduction of land lease fee, and credit support.

Finally, investors should also pay attention to the development of Digital Healthcare in Vietnam. Recently, the Ministry of Health approved a five-year project on remote medical examination and treatment. Apps and medical services will be developed to manage files and knowledge systems, as well as helping patients find medical information, make their appointments, and consult doctors. These measures will accelerate the digitalization across Vietnam’s hospital network. 

Overall, investors can be optimistic about the future of Vietnam’s Healthcare Industry. The societal changes, as well as the government’s regulatory activities in favor of the development of the sector, have made Vietnam one of the most attractive go-to emerging markets for companies and individual investors. 

Ho-Chi-Minh City