Indian pharmaceutical companies operating in Vietnam is under the threat of losing their businesses to multinational drug companies after the Vietnamese Government issued certain new regulations, particularly harmful to the Indian interests. The Indian companies, under the banner of a newly formed Indian Pharmaceutical Companies' Association in Vietnam, have represented the case before the governments of India and Vietnam.

The regulatory changes introduced by the Vietnamese Government that are adversely effecting Indian companies operations include the insistence for 'brand name search report before registering the brand with MoH and a declaration specifying the retail price of the product in the country of origin, import price to Vietnam (CIF) and proposed MRP in Vietnam.

The government has instructed that the difference between CIF price and MRP in Vietnam should not be more than 30 per cent and the MRP in Vietnam should be less than the MRP in country of origin. Whenever there are deviations from the above the companies are supposed to submit explanations for the same.

Indian companies say that it was too difficult for them to give such explanations for each product at the time of registration or re-registration of the product.

Explaining the difficulties faced by Indian companies on the brand name search front, the Association says that in Vietnam, the brand search is based on the phonetical expression of the brand thereby ruling out all similar sounding brands.

"Many a times we are asked to change the brand name only for Vietnam, leading to many problems including getting COPP for the new brand. We have requested the MoH Vietnam to accept the COPP of our brand in India and grant registration to the special brand name we select for Vietnam. They answered that it is not possible for them to accept that," Indian companies lament.

Interestingly, in countries like Thailand, the local authorities issue COPP for the local brand, and in bracket they mention as Brand Name for Vietnam. While this kind of COPP is accepted by MoH Vietnam, the companies are not getting similar help from Indian regulatory authorities. "When we enquired with our regulatory departments regarding this possibility, they said it is cannot be done in India," they opine. The companies wanted a consensus between Indian and Vietnam drug authorities in this regard and help them solve the problem.

"These developments can seriously hit Indian pharma exports to Vietnam, as many companies exporting to Vietnam are selling the products with promotion and distribution rights to the buyer. Recently there are many news reports citing the difference of CIF prices and MRP in Vietnam, alleging that the medical practitioners are being corrupted by pharmaceutical companies offering economic benefit proposals. This has led to VN government fixing ceiling for Margins within Vietnam," they point out.

With regard to the pricing, Indian companies say that in Vietnam, the major competition is from ORCs, European Generic Companies and Generic companies from Philippines, Thailand and Korea. In all other countries, the drug prices are higher than Vietnam, due to different economic situation in their countries, so they are not affected by the new clause.

"But for Indian companies, we could not compete effectively with the other countries if we have to keep the MRP below Indian MRP (where the prices already very low - due to lower operating costs & big batches production)," they say.

One of the major reasons for higher cost of medicines is the cost of promotion. It is much higher in Vietnam than India. Although statutory salary of a medical representative is 250 US$, the total cost to the company comes to an average of 320 US$ on account various rules of land. Marketing expenses within Vietnam is also higher than India, whether it be advertising, promotional materials or seminars. Other factors adding to costs are Cost of transportation, manufacturing costs are higher for small quantities as the orders are not of batch sizes, special packaging (Like alu-alu packing, that has become a norm in Vietnam), cost of company registration, product registration etc.

The companies said that the Indian regulatory bodies as well as concerned export promotion arms should take up this matter at the highest level.

The companies who have registered their complaints with the Vietnamese authorities include Zydus Cadila, Alembic Limited, Torrent Pharmaceuticals, Themis Medicare Pvt Ltd, Sun Pharma, Macleods Pharma, Medley Pharmaceuticals and Cadila Pharma.

Commenting on the development, Lalit Jain, chairman, Pharma Panel, Chemexcil, said that the government should support the industry through appropriate intervention. "The central government should ensure that the Indian companies are able to market their products with a price tag which includes Indian MRP, freight charges to Vietnam, and all other promotional expenses to make exports competitive," he opined.