The challenges for implementation of good manufacturing practices by local pharmaceutical manufactures in vietnam

The challenges for implementation of good manufacturing practices by local pharmaceutical manufactures in vietnam

THE CHALLENGES FOR IMPLEMENTATION OF GOOD MANUFACTURINGPRACTICES BY LOCAL PHARMACEUTICAL MANUFACTURES IN VIETNAM

Previous degree: Bachelor of Chemical Engineering

Bachelor of Computer Sciences EngineeringHCMC University of Technology

Ho Chi Minh City, VietnamScholarship Donor: Government of Switzerland

Asian Institute of TechnologySchool of Management

Bangkok, ThailandMarch, 2001

First of all, I would like to express my deep gratitude to Dr Do Ba Khang, who is myadvisor for this research paper, for his kindness and willingness as well as valuable commentsand advice that help me well in conducting this paper Moreover, I am also greatly indebted toDr Cao Minh Quang and Dr Pham Thi Binh Minh, who are chief officers of Vietnam’sMinistry of Health for their whole-hearted supports and helps in giving me the necessary andbeneficial knowledge and data concerning Vietnam’s pharmaceutical industry Besides, I trulyappreciate the enthusiastic contribution of Dr Sang-kon Lee and Prof N Ramachandran, whoare extremely willing to give me helpful advice for improving this research paper

Secondly, without the loves and sacrifices of my parents, I could not be here to have achance of conducting this research Thus, it is my full pride to show my everlasting gratitudeto them.

Thirdly, my acknowledgement is included here to the government of Switzerland, whogranted me the scholarship for finishing my MBA at AIT.

And finally, I would like to send my thanks to all of my teachers as well as friends, whomake my life - not only in AIT but everywhere - more valuable and enjoyable

Good Manufacturing Practices (GMP) guidelines or regulations for pharmaceutical, food,cosmetic, and some other industries aim at ensuring that products are consistently producedand controlled to the quality standards appropriate to their intended uses and as required bythe marketing authorizations or product specifications

In pharmaceutical industry, GMP is the most fundamental element of Quality Assuranceand internationally recognized Basic standards of GMP have been published by the WorldHealth Organization (WHO) Nevertheless, many multi-national companies normally work tothe more demanding standards of GMP imposed by regulatory agencies in the EuropeanUnion and the United States Food and Drug Administration (FDA) as well as their owninternal or national GMP guidelines

In most developed countries, GMP has become force of law, while in Vietnam, GMPguidelines that based on ASEAN GMP guidelines are not enforceable Therefore, puttingGMP into regulation is the concern of Vietnam’s Ministry of Health, as there are existedconstraints relating to the current local circumstances as well as local pharmaceuticalmanufacturers’ capabilities

Thus, this research identifies and describes the challenges and difficulties faced bypharmaceutical manufacturers, especially local firms in Vietnam towards implementing GMP.These challenges can be classified into two categories: internal factors and external factors.Internal factors comprise the financial shortage, qualified-personnel shortage and inability ininformation accessing External factors include government lagged and inappropriate policies,customer attitudes and behaviors, and rivals’ influences.

F Circular 12 BYT-QD providing a guide 64 for implementing ASEAN GMP

Good Prescribing PracticesGCP Good Clinical Practices

SOP Standard Operating Procedures

FIP International Pharmaceutical FederationCFR Code for Federal Regulations

CHAPTER 1INTRODUCTION

1.1 Background

Facing the increasingly fierce competition and rapid globalization trend, companiesaround the world have to ensure their products’ quality by complying with some types ofquality assurance standards or regulations, which are internationally or globallyrecognized In pharmaceutical, food, cosmetic, and some other industries, the GoodManufacturing Practices (GMP) regulations are mostly used

 What is GMP?

In pharmaceutical industry, GMP is a quality assurance system for ensuring thatproducts are consistently produced and controlled according to quality standards, and itis designed to minimize the risks involved in any pharmaceutical production that cannotbe eliminated through testing the final product Those main risks are:

- Unexpected contamination of product, causing damage to health or even death.- Incorrect labels on containers, which could mean that patients receive the wrong

Figure 1.1: Ten major contents of GMPGeneral

 Why GMP?

Two levels are mentioned hereunder as the reasons for implementing GMPstandards: the macro level relating to the national policies and benefits, while the microlevel concerns the firm’s benefits.

 Social and humane aspects:

+ Implementation of GMP is an investment in good quality medicine, that helpsimprove the health of individual patients as well as the community in terms ofpatient safety, recovery times and the like.

- Micro level (firm-level):

+ Making poor quality products does not reduce costs In the long run, it ismore expensive in finding mistakes after they have been made than preventingthem in the first place and first time GMP is designed to ensure that mistakes donot occur, thus, helps firms reduce production costs significantly in the long term.

+ Making and distributing poor quality medicines leads to loss of credibility foreveryone: both public and private health care as well as the manufacturers GMPhelps firms build their credibility through producing quality products

In Asian region, many countries have not enforced the GMP compliance ofpharmaceutical manufacturers while merely encourage them to implement the GMPguidelines for their own competitive advantages Moreover, there is not a mutualrecognition for national GMP guidelines and regulations among members of ASEAN,which is a considering obstacle to the pharmaceutical market opening process in theregion

In Vietnam, the Drug Administration formed in August 1997 is responsible forestablishing the GMP guidelines and granting the GMP - compliance certificates.However, these certificates are effective only in Vietnam, as they are not recognized inother countries From 30 October to 1 November, 2000, there is a meeting of ASEANmembers in Hanoi – Vietnam, relating to pharmaceutical issues, includes a discussion ofapproaches to the mutual recognition of ASEAN GMP certificates in the region However,this issue is out of this research’s scope, hence, it is not mentioned in detail herein

1.3 Objectives

In this research paper, the following objectives are supposed to be attained:

 To review the general concepts of quality assurance as well as ASEAN GMPguidelines for pharmaceutical industry.

 To compare GMP standards and ISO 9000 series of standards

 To present a broad view of the current situation of Vietnamese pharmaceuticalindustry and GMP compliance of pharmaceutical companies in Vietnam

 To outline pharmaceutical manufacturers’ difficulties and constraints relating tothe GMP compliance in Vietnam

 Based on external benchmarking and internal auditing, to proposerecommendations to:

- Firms for overcoming the challenges and successfully implementing GMP- Government for promoting pharmaceutical firms’ GMP compliance

1.4 Scope of study

This research paper focuses only on the GMP guidelines and regulations forpharmaceutical industry in general, as well as the GMP implementation situations inVietnam, which concentrated on finding out both internal and external challenges faced byfirms in the process of obtaining GMP conformity

1.5 Methodology

This research is conducted based on three critical tasks:

 Theoretically reviewing the quality assurance in pharmaceutical industry ingeneral,

 Data collecting about Vietnamese pharmaceutical manufacturers in terms ofrevenues, GMP compliance, labor forces, capitals as well as the Vietnamesegovernment’s policies towards firms’ GMP conformity, and

 Finally, basing on the collected information, recommendations are made tofirms, government (Ministry of Health) and further studies.

The research methodology framework is presented in the following diagram:

From Internet, books, journalsFrom Internet, books, journalsFrom Internet, books, journals

Describe general concepts of QualityAssurance in Pharmaceutical Industry

Review ASEAN GMP

Compare GMP vs ISO

Theoretical Review

From secondary data, available at theDrug Administration of Vietnam

Review and describe thecurrent situations ofpharmaceutical industry inVietnam, focusing on GMP

GMP Implementatio

n in Vietnam

Recommen-For firms, for government, andfor further studies

Figure 1.2: Research framework of this paper

1.6 Overview

The entire research paper is divided into four chapters as the following:

Chapter 1: presents a general overview of the background information, currentproblems, objectives and scope of the research study as well as the methodology forconducting this research paper.

Chapter 2: discusses briefly the quality assurance concept in pharmaceutical industryand ASEAN GMP guidelines A comparison of GMP versus ISO 9000 series standards isincluded as well Last but not least, some pros and cons of quality standards are alsoconsidered

Chapter 3: outlines the actualities of pharmaceutical industry in Vietnam in terms ofmarket structure and governmental policies Moreover, the GMP compliance in Vietnam,as well as governmental policies relating to GMP implementation is also included Asidefrom those, the internal and external challenges faced by firms in implementing GMP arealso presented

Chapter 4: presents the recommendations to firms for overcoming the challenges andbetter practicing in implementing GMP standards Also the recommendations togovernment for speeding up the GMP compliance of pharmaceutical manufacturers areaddressed

CHAPTER 2

THEORETICAL REVIEW

2.1 Quality Assurance in Pharmaceutical Industry

Quality assurance in pharmaceutical industry is a broad concept embracing researchand development through manufacturing, quality control, storage and distribution, to theinformation provided to the prescribers and the patients It is the sum total of the organizedarrangements made with the objective of ensuring that medicinal products are of thequality required for their intended use Quality assurance therefore incorporates GMP plusother factors illustrated by 5g-P principle mentioned hereafter

According to Kathy Constantine (2000), the system of quality assurance appropriate forthe manufacture of medicinal products should ensure that:

i medicinal products are designed and developed in a way that takes account of therequirements of GMP and GLP (Good Laboratory Practices);

ii production and control operations are clearly specified and GMP adopted;iii managerial responsibilities are clearly specified;

iv arrangements are made for the manufacture, supply and use of the correct startingand packaging materials;

v all necessary controls on intermediate products, and any other in-process controlsand validation are carried out;

vi the finished product is correctly processed and checked, according to the definedprocedures;

vii medicinal products are not sold or supplied before a qualified person has certifiedthat each production batch has been produced and controlled in accordance with therequirements of the marketing authorization and any other regulations relevant tothe production, control and release of medicinal products;

viii satisfactory arrangements exist to ensure, as far as possible, that the medicinalproducts are stored, distributed and subsequently handled so that quality ismaintained throughout their shelf life; and

ix there is a procedure for self-inspection and (or) quality audit which regularlyappraises the effectiveness and applicability of the quality assurance system.

The figure hereunder is the 5g-P principle or 5gxP principle developed by WHO in1998 (GMP – Good Manufacturing Practices, GLP – Good Laboratory Practices, GSP –Good Storage Practices, GDP – Good Distribution Practices, and GPP – Good PharmacyPractices) in quality assurance for pharmaceutical products (Cao Minh Quang, 2000) Toensure the quality of medicinal products from the starting materials through many otherprocesses or stages, to the consumer, a good and cooperative relationship is neededbetween the manufacturer, whole-sellers, pharmacists and the like Hence, the focus ononly GMP while neglecting other four good practices (GLP, GSP, GDP, and GPP) is

ineffectual to the product’s quality The brief concepts of the other four good practices areexplained hereunder

Figure 2.1: 5g-P Principle in Quality Assurance of Pharmaceutical productsSource: Dr Cao Minh Quang, 2000.

It should be noticed as well that the quality assurance of clinical therapy (includingGood Clinical Practices and Good Prescribing Practices) is not less important than the 5g-Pprinciple in quality assurance of pharmaceutical products in offering the best services tothe patients

 What are the other four Good Practices (GLP, GSP, GDP, and GPP)?

a Good Laboratory Practices: GLP regulations set forth in either Title 21 Code for U.S.

Federal Regulations (CFR) Part 58, Title 40 CFR Part 160 or Title 40 CFR Part 792.GLP conditions are required for conducting studies that support or are intended tosupport applications for research or marketing permits for products regulated by theFDA or the Environmental Protection Agency (EPA) It is a method to ensure that thequality and integrity of data generated in the course of a study are adequate to meet theFederal requirements In brief, a study is in compliance with GLP regulations when it

Quality Assurance of Pharmaceutical products

Quality Assurance of Clinical Therapy

Quality Assurance in Pharmaceutical Industry

has a sound protocol, qualified personnel to run the study, standard operationprocedures, proper and adequate facilities, calibrated and maintained equipment, fullyretrievable raw data and overviewed by all independent quality assurance officer.Pharmaceutical manufacturers are required that all non-clinical studies submitted forthe development of a new drug to be conducted under GLP conditions

b Good Storage Practices: it is not an enforceable regulation at this moment, however, it

is now been considering by drug administrations in many countries For instance, inVienna FIP (International Pharmaceutical Federation) Congress 2000, from 26 to 31August 2000, Good Storage Practices is one of the topics discussed The following isan illustration of the GSP guidelines for storing and handling vaccines

- Designate one person within each clinic or office to coordinate storage anddocumentation of vaccines

- Provide information to all personnel handling vaccines regarding appropriatestorage and documentation practices.

- Check all vaccine shipments for any evidence of heat damage upon receipt; checkcold chain monitor cards if appropriate

- Routinely check all refrigerators or freezers to ensure proper working order.

- Place a thermometer in the refrigerator and maintain a daily log of refrigeratortemperatures to document compliance with manufacturers' recommendations.- Avoid storing any food in the same area with vaccines.

- Store vaccines in an area away from refrigerated or frozen medications to avoidconfusion.

- Do not store vaccines in the refrigerator door shelf where temperature fluctuationsmay be greater.

- If possible, store bottles of chilled water in refrigerators and ice in freezers tominimize temperature fluctuations in the event of brief electrical power outages.- Perform a monthly inspection of opened and unopened vials for out-of-date

c Good Distribution Practices: as GSP, GDP is not a regulation Moreover, there is no

official GDP guidance However, it is one of the issues to be considered by drugadministrations as the quality of drugs depends significantly on the way they aredistributed For example, quality of pharmaceutical products can be badly affected onthe way they are transported due to the under-qualified hygienic transportation means.It is also currently considered by IPEC (International Pharmaceutical ExcipientsCouncil Europe) that can be referred to by accessing to the following web site: <http://www.ipec.org/newsjan.pdf>

d Good Pharmacy Practices: in 1993 FIP produced international Good Pharmacy

Practice guidelines in order to raise the quality of pharmaceutical care provided bypharmacists These have been, or are in the process of being adopted by many countriesaround the world Recent minor changes have been included in consultation with WHO

and these guidelines were adopted by WHO in 1997 The details can be found at thefollowing web site http://www.fip.nl/pdf/gpp.pdf.

Aside from those four good practices in quality assurance of pharmaceutical products,the other two good practices in quality assurance of Clinical Therapy are also brieflypresented herein

e Good Clinical Practices: FDA guidelines for GCP are explained in 21 CFR part 54.

These guidelines require among other things, a complete written protocol that describesin details the design of the study, and methods for selection of subjects, collection andstatistical analysis of the data, and the like GCP guidelines are followed by drugcompanies in many clinical studies needed for new drug applications

f Good Prescribing Practices: established in 1994 by WHO due to the following

Bad prescribing habits lead to ineffective and unsafe treatment, exacerbation orprolongation of illness, distress and harm to the patient, and higher cost They alsomake the prescriber vulnerable to influences, which can cause irrational prescribing,such as patient pressure, bad example of colleagues and high-powered salesmanship.Later on, new graduates will copy them, completing the circle Changing existingprescribing habits is very difficult Thus, good training is needed before poor habits geta chance to develop GPP includes four parts hereunder:

Part 1: The process of rational treatment: Rational treatment requires a logical approachand common sense that includes many other components, such as specifying thetherapeutic objective, and informing the patient

For further references, the detailed information can be found at this web-site<http://www.med.rug.nl/pharma/who-cc/ggp/homepage.htm>

For other products, the quality can be evaluated as “good”, “beautiful”, or “excellent”,and these evaluations are vague and immeasurable, while the quality of drug is definedclearly and specifically as the following:

- correct identification,- correct content,

- without contamination or damage,

- right packages,- right label, and- intact container.

The following figure shows an illustration of drug quality concept

Figure 2.2: Illustration of Drug QualitySource: Dr Cao Minh Quang, 2000.

2.2 ASEAN GMP

ASEAN GMP is developed almost ten years after the first GMP was published byWHO Therefore, it is more useful to introduce briefly about the other famous and formerGMP such as WHO GMP, U.S GMP before mentioning ASEAN GMP

2.2.1 Introduction of other GMPs

 WHO GMP:

The first World Health Organization (WHO) draft text on good manufacturingpractices (GMP) was prepared at the request of the Twentieth World HealthAssembly (resolution WHA20.34) in 1967 by a group of consultants It wassubsequently submitted to and was accepted by the Twenty-first World HealthAssembly under the title "Draft requirements for good manufacturing practice inthe manufacture and quality control of drugs and pharmaceutical specialties".

Then, the first GMP text published by WHO was revised in 1975 In the 1980sand early 1990s, several national and regional drug regulatory authorities issued orrevised guidelines reflecting the ongoing elaboration of the concept of GMP Inaddition, the WHO Certification Scheme on the Quality of Pharmaceutical Products

Moving in International Commerce was extended in 1988 Together, thesedevelopments necessitated an update of the existing guidelines on GMP publishedby WHO.

Revised and expanded GMP guidelines were prepared during 1989–90,approved by the WHO Expert Committee on Specifications for PharmaceuticalPreparations in late 1990 and published by WHO in 1992 Part One of these revisedand expanded guidelines sets out the philosophy and essential elements of GMPwhile Part Two deals with good practices in production and quality control Thesetwo parts together represent the "core" of the GMP guidelines published by WHO. U.S GMP

GMP regulations in the United States of America were developed by the FDAin 1975 and issued in the U.S Code of Federal Regulations Chapter 21 The GMPregulations were revised and updated in 1978 and became official and wereenforceable by law in March 1979 These regulations present the minimumrequirements to be met by pharmaceutical industry for the manufacturing,processing, packaging, and storage of human and veterinary drugs.

2.2.2 ASEAN GMP

The ASEAN GMP guidelines were developed and were adopted by the FifthMeeting of Technical Cooperation on Pharmaceuticals in 1984 The first edition, whichconsisted of general and practical guidelines, was revised in 1993.

The second edition of ASEAN GMP guidelines consisted of ten chapters, namelyGeneral Provision; Personnel; Premises; Equipment; Sanitation and Hygiene;Production; Quality Control; Self Inspection; Handling of Product Recall, ProductComplaint and Returned Drug Products; and Documentation

In accordance with the report of Thirteenth Meeting of the ASEAN Working Groupon Technical Cooperation on Pharmaceuticals in 1994, Indonesia as the coordinatingcountry on GMP has established a team to revise the second edition.

The third edition was published in 1996 and the fourth or the latest edition of GMPguidelines is available at the Eighteenth Meeting of Technical Cooperation onPharmaceuticals held in Hanoi at the end of October 2000 The detailed ASEAN GMPcan be found in appendix A.

In general, irrespective of different GMP sources, they all have the common basis asmentioned hereunder:

 Hardware: infrastructure system

 Software: Standard Operating Procedures (SOP) system, and The system of ensuring and controlling the quality

Figure 2.3: GMP concept

A typical organizational structure of GMP-complied firm is illustrated in appendix B.Also in appendix C, the list of ASEAN and other national GLP and GMP authorities can befound While in appendix D, some web-sites relating to some of GMP regulations areaddressed

2.3 GMP in comparison with ISO 9000 series of standards

The two standards have common grounds, and the implementation of both standardswill provide a good balance between management systems required for consistency andspecific system requirements relating to the manufacturing which are essential for thecontrol processes Even though both documents make indirect reference to productrequirements and standards, the two are in effect system standards, which do not mentionany specific details of product quality control elements of the products beingmanufactured.

The ISO 9000 Quality Management Systems series of standards are series of standardswhich have been developed for the control of management processes in a broad range ofindustries which include airlines, banks, engineering firms and manufacturing (includingdrugs, food and cosmetics) The implementation of this standard may provide more thanenough control for industries where quality is less critical However for industries wherequality is paramount in preserving or maintaining human life, such as the manufacturing ofmedicinal products, medical devices and cosmetics, nuclear applications, and aerospace,these common control systems do not provide enough information for the standardizationof acceptable manufacturing methods for the relevant sector In this context, GMP isrequired.

With regards to the lawful issue, ISO 9000 series of standards is not required by federalor governmental authorizations ISO 9000 series of standards is optional for companies toimplement for their own sakes While GMP regulations are or will be required by federalor governmental authorizations Pharmaceutical manufacturers have to implement GMPstandards to be allowed to produce medicinal products Moreover, ISO 9000 series ofstandards are recognized internationally as it is the standards developed by ISO

Hardware

Software

Quality ensuring & controlling systems

Consistent and quality-

met productio

n processe

s

(International Standard Organization) and it is not varied in different countries However,there is not only one GMP standard but many national, regional GMP standards that lead tothe non mutual recognition among them

According to Carl Goodier (1999), the most important factor of ISO 9000 series ofstandards is commitment while that of GMP is documentation As ISO 9000 series ofstandards focus on achieving the optimal productivity, effectiveness and efficiency of theproduction processes and they require a continuous monitor, involvement andcommitments of the management However, in GMP standards, the main factor isdocumentation as the targeted industries for GMP are pharmaceutical, food, and cosmeticindustries which are all relating to human’s health Thus, an extreme carefulness is neededin every stage of the production process, and documentation can help well in establishingthe SOPs and tracking back in case of some failures happened

Regarding to the registrars, there is the difference between the two quality standards aswell Quality system registration or approval involves the assessment and periodic audit ofthe adequate of a manufacturer’s quality system by a third party, known as a quality systemregistrar When a particular company’s quality system conforms to the registrar’sinterpretation of an ISO 9000 or other appropriate standard, the registrar issues thatcompany a “certificate of registration” Note that the company’s quality system but not anindividual product is registered Consequently, quality does not imply product conformityto any given set of requirements While conformity assessment, as in the case of GMPstandards, a more comprehensive term, is the systematic evaluation of a product, process,or service to determine to what extent to which it complies with specified requirements.Conformity assessment activities include quality system registration, product or servicetesting and certification, laboratory, certification body or quality system registraraccreditation

While in the case of GMP standards, the third parties are belonged to the Ministries ofHealth or Federal Agencies while the third parties (registrars) for ISO 9000 series ofstandards are non-governmental organizations In 1989, the Registrar Accreditation Board(RAB)1 was established as an organization to develop a program to evaluate the quality ofservices offered by ISO 9000 series of standards registrars

In general, a company that obtained ISO 9000 series of standards certificate can not besure that its products are met the quality requirements A certificate of meeting ISO 9000series of standards just ensure that the company achieves the effectiveness in controllingthe production processes and other processes in running its business While if a company iscertified with GMP compliance, it ensures that the company’s products are met thepredefined quality requirements

1 Information on the RAB program is available from: RAB

611 East Wisconsin Ave.

P.O Box 3005, Milwaukee, WI 53202Phone: 414-272-8575; Fax: 414-765-8661

Key comparison points: GMP and ISO9000 series

The above figure explains clearly the common area and other individual areas interms of scope between GMP standards and the ISO 9000 series of standards.According to the figure, GMP focuses more on the system or process requirements,either specific or general requirements, while less focus on total involvement as ISO9000 series of standards One more critical point is that GMP mentions more aboutsafety and environment issues as it is used for industries relating to human’s health  Physical and Mental health of employees

Although ISO 9000 does not specifically address the physical and mental health ofemployees, it does mention the identification and use of suitable resources, and ifphysical and mental health were an important parameter of quality control, then itwould be considered as a requirement For instance, the physical and mental health ofcommercial pilots and personnel assembling and dismantling nuclear weapons wouldbe considered as an important part of quality control in such industries The effects ofthis part of the GMP standards are far reaching in the sense that there would have to beperiodic assessment of these characteristics of personnel who are subjected to thisclause

Figure 2.4: Comparison of GMP and ISO 9000 series standardsSource: Carl Goodier, 1999

 Hygiene and cleanliness of employees and environment

As could be expected hygiene and cleanliness is considered a critical element in theoperation of a drug, food and cosmetic manufacturing plant Some of the critical pointsmentioned are washroom cleanliness, use of protective clothing, shoes, gloves, capsand masks where required to reduce the risks of contamination There is also mentionof the selection of equipment, production facilities and finishes to ensure that they areeasy to clean, do not retain contamination and induce contaminants such as machinelubricants into the produced products Such requirements are also mentioned inISO9000 under clause 4.9 and 4.15.2 of the standard (Carl Goodier, 1999), although itis less specific than the code of GMP on this issue

 Environment Protection & Safety of personnel

This requirement in the code of GMP is not a compulsory item of ISO9000 as thespecific focus of ISO9000 is to ensure that products produced meet the requirements ofthe customer and are delivered on time Polluting the environment or lack of safety ofemployees would not be of a concern to ISO 9000 unless it was specified as acontractual requirement by the customer This requirement of the code of GMP wouldtherefore be moving toward a Total Quality Management (TQM) type of requirementwhere other considerations are brought into perspective rather than just product qualityand customer satisfaction This requirement would impose further complications to theimplementation of the code as it implies that the persons implementing the code andthe persons assessing companies against the code should have a clear understanding ofnational environmental and safety acts and practices

 Documentation

ISO 9000 series of standards have a general approach to the documentation in theorganization, and the corner stone of the standards is that procedures and records aregenerated where they are required by the standards, and where they are necessary forthe control of the processes in the organization In addition to the requirements of ISO9000, the code of GMP goes deeper into the types of documentation required in anorganization wishing to meet the requirements and the type of information to beconveyed in the documentation

 Heavy emphasis on complaint handling

There are several portions of the GMP standards, which define the necessity ofrecording and acting on customer complaints, which is critical for damage or liabilitylimitation and customer satisfaction Similar to the code of GMP, there are severalportions of ISO 9001, which mention the handling of customer complaints, howeverthere is a strong emphasis on the prevention of complaints by the definition and controlof process characteristics and ensuring that personnel are suitably trained for allocatedtasks ISO 9001 contains also a clause "Preventive Action" (4.14.3.) (Carl Goodier,1999) that is considered as a very important part of the standard as it specificallyaddresses problem prevention

 Additional ISO 9000 series requirements

In general terms, the Code of GMP heavily leans towards production control andquality inspection, thus, it is therefore less emphasis on staff related functionscompared with ISO 9001 topics such as management structures, managementresponsibility, design, R&D (Research and Development) control, documentationcontrol, purchasing controls, and statistical techniques

 Implementation

Although the implementation of the code of GMP could follow a similar methodutilized with implementation of ISO9000, there are some elements of the code, whichwould require some further attention for companies wishing to implement the code

For instance, the requirement to procure and utilize equipment as well as facilitiesthat can be adequately maintained and operated from a hygienic perspective, wouldrequire an extensive assessment of suppliers capabilities to ensure the delivery ofequipment or the design of the facilities in accordance with the requirements of the codeof GMP This may require the education of suppliers to allow them to meet these morestringent requirements, and potentially the removal of certain suppliers from theapproved suppliers list if they are not capable of meeting the requirements as spelt out inthe code

 Potential Future Trends

Since the worldwide spread quality management systems there has been aconcerted effort by the international community to standardize on the essential controlelements of a good quality management system, which resulted in the development ofthe ISO 9000 Quality Management Systems series of standards In addition to this, therehas been an extensive drive by ISO 9000 certification bodies world-wide to standardizeon their understanding of the implementation of the standards, and methods of assessingits implementation

Therefore, the most cost effective and comprehensive solution for implementingthe code of GMP would be to merge the various standards on EnvironmentalManagement Systems (ISO 14000), Safety Management Systems, and QualityManagement System (ISO 9000) together with the code of GMP into one managementsystem which can be applied to the entire organization As these standards have manycommon points which are required for effective control of the defined parameters,which may differ per standard, the development of separate stand alone systems will notaid an organization with long-term quality improvement objectives, and could only beconsidered as a short term solution

As many organizations have difficulty with the implementation of ISO 9000 in itsraw format, so the simultaneous implementation of all of the above standards and codesmay prove too complex for most organizations, and could possibly result in the failureof implementation It is suggested that the development of a common base from which

the other standards and codes could be attached to at a later stage As ISO 9000 could beconsidered as a base system for all the above mentioned standards and codes, it wouldbe an appropriate vehicle to form the foundation of the system, upon which the otherrequirements could be attached later, further building the system into its required finalformat

The following table presents an overview of the common points and the differences ofthe two standard systems

Table 2.1: Common points and the differences of GMP and ISO 9000 series ofstandards

Common features of GMP and ISO 9000 series standards

 Implementation of both standards will provide a good balance between managementsystems required for consistency and specific system requirements relating to the

manufacturing which are essential for the control processes

 For industries where quality is paramountin preserving or maintaining human life Focus more specifically on: physical and

mental health of employees, hygiene andcleanliness of employees andenvironment, environment protection &safety of personnel, complaint handling,and the like

 Be or will be a force of law

 Non-mutual recognition over the world First established in 1967 by WHO Most important factor is documentation Certified by Drug Administration

2.4 Pros and cons of implementing quality standards

Standards can be politicized, or unduly influenced by special interests, especially whenwritten into laws and regulations This can give certain producers or health care providers amonopoly, which drives up prices and which can make products unaffordable to thosewhom would otherwise have the means to buy them In the extreme case, they can cause aproduct to be removed from the market, even when it is quite safe This deprivesconsumers of the opportunity to benefit from the product and can be financially devastatingto producers who have invested in its production

However, some standards provide clear benefits at little cost because they serve anobvious need, are well established and straightforward, are less controversial, and aretherefore easier to establish These include things like dissolution standards and theinclusion of lot numbers and expiration dates on product labels These standards seemextremely simple and commonsense, however, they help very well in making productionand controlling much more effective and efficient

The following table addresses the general pros and cons of quality standards.

Table 2.2: Pros and cons of quality standards

 Some standards provide clear benefits at little cost because they serve an obvious need, are well established and

straightforward, are less controversial, andare therefore easier to establish

 Help firms save money with the quality principle of “do it right at the first time”

 They can be inflexible and force producers to make products a certain way when other options are just as good, sometimes better, than what a standard dictates

 If adopted into law, they become even harder to change, either to meet the demands of the marketplace or to reflect new scientific knowledge

 Standards can be politicized, or unduly influenced by special interests,

especially when written into laws and regulations

 Require firms to spend more on consultants, external auditing, certifications and the like.

With regards to GMP regulations, the pros of them can be outlined as following: Help ensure the medicinal products’ quality to protect human’s health. Help save money on contaminated products that would be destroyed.

 Help pharmaceutical manufacturers to penetrate their markets to other countriesHowever, GMP implementation also bring some cons mentioned hereunder:

 Requires firms to invest largely at the initial stage in terms of financial as well aspersonnel resources

 Deepens the gap between developed and developing countries as developedcountries set their own GMPs and do not recognize others’ GMP certificateswithout the persuasive and clear evidence that the other GMP standards are under-qualified

 Non-unified GMPs bring the new issue of mutual recognition that is considered bymany countries and regions.

CHAPTER 3

PHARMACEUTICAL INDUSTRY AND GMP IMPLEMENTATION IN VIETNAM

3.1 Overview of pharmaceutical industry in Vietnam

According to M Doyle (1999), in 1998, the Vietnamese drug and pharmaceuticalmarket was modest at an estimated $325 million However, it has shown continuousgrowth on a year-on-year basis Per capita spending on pharmaceuticals is believed tobe $4.25, representing a 21% growth in the past two years and triple the per capitaspending rate of a decade ago While the per capita consumption of pharmaceuticals byAmericans or Japanese is more than U.S.$300 per year, Singaporeans - $45 per yearand Indonesians - $10 per year

There are approximately 10,000 pharmaceutical products legally sold in Vietnam to6000 pharmacies, 900 hospitals or clinics, and thousands of private doctors Thepharmaceutical market is fragmented and highly competitive, with most majorinternational pharmaceutical companies operating in Vietnam, and most of thesecompanies have representative offices Imports account for 85% of all dollar sales.Domestic production is limited and losing ground to imports Furthermore, the marketis poorly regulated for production and distribution.

Specialty drugs represent 70% of the market and are the best prospect forimportation The government recognizes domestic production cannot meet demand inspecialty drugs and, therefore, are likely to grant most favorable conditions toimporters Generic product accounts for half of all unit sales They are produceddomestically and imported from Western and Asian countries.

According to the above reference, foreign imports account for roughly 85% of alldollar sales and 70% of unit sales while locally made product accounts forapproximately 15% of dollar sales and 30% of unit sales It is estimated that nearly2500 products are currently imported and more than 7500 products are madedomestically Generally, local products do not meet international standards and maynot meet ASEAN GMP quality standards.

The Vietnamese government stated it plans to raise investment in healthcare fromthe current 3% of budget to 5% by the year 2000 and 8% by 2020, with the intent todecrease the rate of infectious diseases, raise health conditions, reduce infant mortalityand prolong life expectancy Drugs that treat epidemic-prone diseases (malaria,encephalitis, tuberculosis, AIDS, etc.) and common environmental illnesses (diarrhea,dysentery, respiratory, etc.) will be in demand Additionally, preventative healthcare(e.g vitamins, condoms) and childhood treatments (e.g nutritional supplements) willrise in importance.

Domestic manufacturers produce topical creams, generic antibiotics, analgesics,anti-inflammatory, respiratory and cardiovascular pharmaceuticals, and specialty drugsto a small extent The government has stated interest in producing basic medicines,such as painkillers, cold medicine, vitamins and antibiotics However, foreignmanufacturers consider locally produced drugs sub-standard Price-oriented rather thanquality-oriented, local producers are known to use lower quality raw materials, reduceactive ingredients and alter the overall composition of formula, in order to maintain agiven price In 1997, local producers cut prices below cost, causing product dumping,serious profit losses and a price war in the marketplace.

In 1999, the pharmaceutical sector is home to some 20 state-owned enterprises,more than 100 local producers and 180 liability limited companies (including joint-ventures, joint-stock and 100 per cent foreign-owned companies) Generally, the sectoris performing poorly In 1996, its total sales revenues were only equal to those of oneor two enterprises of other sectors With a seriously degraded material base andoutdated technology, the entire sector operates unprofitably and inefficiently Almostall drug-stores and ware-houses are inadequate for the preservation and sales ofmedicines Many stores have been cited by the Ministry of Health for not followingsafety conditions To respond to the local and export demands for pharmaceuticals,more than a few enterprises have boldly joined hands with foreign producers To theend of the year 1999, there are 21 foreign-invested drug production projects licensed bythe Ministry of Planning and Investment with 11 joint-ventures, nine wholly foreign-invested companies and one business co-operation contract Seven have startedproduction, but report modest results The Vietnam Pharmaceutical Corporation alonehas five foreign-invested projects, but only Sanofi Pharma Vietnam (SPV) has turned aprofit.

A list of local pharmaceutical manufacturers and their relevant data can be found inthe appendix E Current demand for pharmaceuticals is U.S.$0.8 - 1 billion in 2000 andshould rise to U.S.$1 - 1.5 billion in 2005 This is viewed as both a challenge as well asan opportunity for the development of the pharmaceutical sector With such actualities,the government’s role is needed to establish a sound market with a sound competitionto ensure to quality of pharmaceuticals as well as to guide and support the localpharmaceutical manufacturers in reinforcing their production capabilities in order tolessen the imported drugs quota and promote exportation

 Governmental policies towards drug quality management:

Prior to September 1996, no formal drug policy existed, creating an abundance of product and sub-standard imports However, some tougher regulationswere promulgated, aimed at protecting domestic production and the general populace,focus on pricing, license registration, distribution and patent and trademark protection,such as:

over- In an effort to protect local production and encourage on-shore foreignproduction, the government banned 62 drugs from importation and is to beconsidering additional 50 compounds for elimination.

 Comprehensive dossiers (as lengthy as ten books) are required in English andVietnamese Product licenses may be granted for one to five years, causingcompanies to begin the renewal process soon after licenses are registered. Only three state-owned importers are able to distribute to hospitals, reducing

any competitive channel advantage previously gained

 While the Ministry of Health has created new policies against counterfeitproducts, few have been enforced, under cutting potential sales and theperceived effectiveness of successful foreign brands Importers face a cloud ofuncertainty as the Ministry of Health legally able to reduce and controlquantities and types of product licensed for importation (M Doyle, 1999)In October 1996, the government established the Vietnam PharmaceuticalManagement Department in an effort to restore order to the pharmaceutical andcosmetic industries Also in 1996, the Vietnamese government took steps to eliminatesub-standard drugs from entering Vietnam and began enforcing stricter guidelines forimporters As a result of new regulations, several Thai and Indian pharmaceuticalcompanies have been forced out of the country and others (primarily generics) areunder scrutiny Besides, Vietnam Pharmaceutical Management Department, along withthe Ministry of Commerce, had the authority to grant or cancel pharmaceutical andcosmetic import and export licenses and were in charged of the implementation of thenational drug policy

Before 1997, Vietnam operated with no official policy on the manufacturing,distribution or selling of pharmaceuticals In 1997, sixty-two drugs have beenessentially banned from importation in order to support local production The Ministryof Health announced that by January 1998 all imported drugs must have instructions onproduct use, dosage, and expiration dates printed in Vietnamese and inserted inpackages, and a company's visa number must be printed on all packages Drugadvertising has come under scrutiny in 1998 Additionally, the Ministry of Healthbegan inspecting local drug-producing plants and the quality of medicines on sale inpharmacies nationwide in August 1997

However, the government's policy projected a shortfall of domestic product to meetdemand While $20 billion is forecasted to be invested in the pharmaceutical industryin Vietnam between 1997 and 2010, domestic medicine manufacturing will probablymeet only 50% of demand Priority will be given to imported drugs, which cannot beproduced locally Though, importers need a Bill of Laden, Certificate of Authority andspecific, individual licenses to bring product into Vietnam

To date, the government recognizes three standards of quality for drugs:1) International standards of the World Health Organization (WHO),2) ASEAN Good Manufacturing Practices (GMP) guidelines, and

3) National Standard which followed lesser Indonesian and Thai standards

However, the government has never granted an international standard license and iseliminating consideration of national standard licenses while focusing more on GMPstandards To register product, a company needs a Certificate For Sale (CFS), GMPapproval from the Ministry of Health and sample testing from five separate

committees It is imperative that all documentation be thorough and accurate Medicaldossiers must be prepared in English (or French) and Vietnamese, then notarized

Each product must be registered at a cost of $2000 per product form Approvalsmay take six months to a year or more Products are granted licenses for a specifiedlength of time Generally, three types of licenses are given depending on product’stypes.

 A one-year license is given to product that is being produced with a Vietnamesejoint venture

 A three-year license is granted to product that is imported and not produced insignificant amounts domestically

 A five-year license may be given to product, which cannot be produced locallyand is in demand

3.2 Government policies towards GMP implementation

First of all, does Vietnam need to enforce the GMP compliance in pharmaceuticalindustry? The listed reasons hereunder can lead to the answer of yes.

For the nation’s benefits:

 GMP standards help improve and control the medicinal products’ quality as well asprotect human’s health in Vietnam

 Enforcing GMP compliance can help prevent the manufacturing and selling of quality products, contaminated products, fake products and the like It also benefitsVietnamese patients in using local-produced medicines

low-For firms’ benefits:

 For firms to penetrate their markets to other countries or to franchise from foreignpharmaceutical manufacturers, GMP compliance is required by the franchisers andhost countries.

 In long term, GMP as other quality standards, can help save money by the “Do itright at the first time” principle Firms will be able to achieve the optimalproductivity, production process effectiveness by complying with GMP standards The example of Dong Thap Pharmaceutical Company – a state-owned company thatachieved ASEAN GMP certificate in June 1997 illustrates the benefits gained frominvesting on improving products’ quality

Dong Thap Pharmaceutical Company is a state-owned enterprise in Cao Lanh, DongThap province, headed by Ms Tran Thi Dao since 1986 In 1987, Ms Dao decided hercompany, a pharmaceutical importer for twelve years, could out-produce domestic drugmanufacturers by focusing on quality Her simple plan was to scrap most of themanufacturing equipment the company had bought but never used years earlier, salvagethe rest, and add new equipment from Taiwan and China where she could and key partsfrom Germany where she had to At first, the company just made two drugs as asubcontractor for a well-known company in Ho Chi Minh city In 1990, she upgraded andexpanded production to twenty drugs, this time marketing under the company's own name.The strategy succeeded, and Dong Thap Pharmaceutical Company became one of the fewlocal drug companies whose products could compete with foreign imports.

In 1998, sales revenues for Dong Thap Pharmaceutical Company were 200 billionVND (over USD 14 million) domestically, up five percent over 1997 Export revenues inits first full year of exporting were just under USD 1million What has distinguished thecompany has been Dao's disdain for conventional wisdom and ability to persuade theDong Thap provincial government to go along with her The company's fortunes continuedto improve when her success attracted European experts providing management expertiseto Vietnam who provided on-site training for her 200 employees over three years Withadditional management and equipment upgrades, the company received GMP certificationin June, 1997, and a second, new production line is about to receive it as well Thecompany is about to produce 30 products under the trademark of a foreign pharmaceuticalcompany and it hopes to establish it as a contract manufacturer for more foreigncompanies (Source: U S Department of Commerce - National Trade Data Bank,November 3, 2000).

To date, Dong Thap Pharmaceutical Company is one of the most well-known local andstate-owned pharmaceutical manufacturers in Vietnam, in terms of successes in doingbusiness and goodwill

Recognizing the importance and benefits of product’s quality, since September 1996,the Vietnamese Ministry of Health promulgated several decisions as well as official lettersregarding GMP implementation and enforcement However, it should be noticed that theaforementioned documents are not enforceable by law These decisions as well as officialdocuments are outlined hereunder, focusing on the general contents

 On September 9th, 1996, the Ministry of Health issued the Decision 1516 BYT-QDon implementing ASEAN GMP, including:

- The requirement of ASEAN GMP implementation in all pharmaceuticalmanufacturing factories.

- The compliance of ASEAN GMP is one of the basic factors to be considered inapplying for product registration and production permit.

- This decision is effective from the signed date, which is September 09th, 1996  On September 12th, 1996, the Ministry of Health issued the Circular 12 BYT-QD

providing a guidance for implementing ASEAN GMP, covering the requirementsof :

- Document set for applying for GMP approval- The dissemination and training of ASEAN GMP

- Training of GMP inspectors and their required qualifications- Inspection and result consideration procedures

The entire content can be referred in the appendix F

 On January 14th, 1998, the Ministry of Health sent the letter No 284/QLD onfavorable conditions for GMP-approved pharmaceutical factories, addressing theprivileges for the GMP-approved pharmaceutical manufacturers as following:- Be allowed to print an additional sentence of “GMP-approved Company” in the

- Be granted some favors in manufacturing the exports.

- Be allowed to cooperate and to be franchised with major well-knownpharmaceutical manufacturers in the world for some kinds of products.

- Be prioritized in participating in bidding both at national and international level,to supply pharmaceuticals for national health programs.

- Be favored in supplying the essential pharmaceuticals for hospitals as well ashealth programs, which funded by governmental funds or international aids.- Be privileged in approving the production registration, including the

pharmaceuticals belonging to the list of limited-granting products.

 On May 20th, 1999, the Ministry of Health sent the letter No 3153/YT-QLD onDrug Registration for GMP-approved pharmaceutical factories, which outlines thefavorable procedures for GMP-approved firms in applying for the productregistration

 Moreover, with the Decision No 05/TDC-QD issued on January 04th, 1997 byQuality Measuring Standards Department belonged to the Ministry of Sciences,Technology and Environment, which relates to the publishing of the generalguidelines for basic contents to implement GMP in food manufacturing factories, isan evidence of Vietnamese government’s consideration of the GMP’s importance,not only in pharmaceutical industry but also in food industry as well

3.3 Vietnam GMP guidelines for pharmaceutical industry

On September 9th 1996, Vietnam’s Ministry of Health issued the Decision No 1516BYT/QD which has decided to apply ASEAN GMP and requested all drug manufacturersto make their own plans for GMP implementation However, the mentioned GMP is onlyguideline but not regulation

Vietnam GMP is basically built followed ASEAN GMP, however, it is only true for thegeneral guidelines, while the practical and specific procedural guidelines are establishedfor the appropriateness of the local circumstances For detailed and specific requirementsof Vietnam GMP, two key persons in Vietnam Ministry of Health can be contacted via theaddresses given in the appendix G.

3.4 Major challenges faced by firms towards implementing GMP standards

Up to the end of the first quarter of the year 2000, Vietnam has only 15 pharmaceuticalfactories that are recognized as meeting the ASEAN GMP standards, accounting 13.4% oftotal pharmaceutical manufacturers in Vietnam (Ministry of Health at a Friday meeting inHCMC to review the implementation of GMP standards by drug factories nationwide onApril 10th, 2000) These include eight all-local producers, and seven foreign-ownedcompanies.

In reaching the target of 100% GMP compliance in the year 2003, there must be somedramatic changes happened, both in companies’ efforts and government’s supports toovercome the existing challenges Thus, before mentioning how to overcome thosechallenges, they must be addressed specifically Hence, what are the challenges faced byfirms in implementing GMP standards?

The challenges faced by pharmaceutical manufacturers in Vietnam in attaining GMPcompliance are divided into two groups of internal factors and external factors

3.4.1 Internal factors

Internal factors consist of three major sources mentioned hereunder, which arethe financial shortage, the qualified-personnel shortage in terms of both GMP-relating as well as technical manpower, and finally the inconvenience orincapability of firms in accessing the needed information

 Financial challenges

According to the Dr Quang, Vice Director of the Institute of Drug QualityControl, Ho Chi Minh city, Vietnam, approximately two million of U.S dollarsper production line is needed for firm to spend on GMP implementation Thatamount is a considering large amount for local pharmaceutical manufacturers,especially the small enterprises Local pharmaceutical manufacturers’ revenuesin 1999 are summarized in the graph hereunder.

Figure 3.1: Local pharmaceutical manufacturers’ revenues in 1999

Note: Data collected from Vietnam’s Ministry of Commerce

A list of firms and their relevant data can be referred in the appendix E

Firms' Revenues in 1999

0.002.004.006.008.0010.0012.00

From the above graph, there are only eight firms having the revenues exceedingtwo million of U.S.$, accounting less than 30% of total mentioned2 localpharmaceutical manufacturers There is only one firm having revenue exceedingten million of U.S.$, that is the National Pharmaceutical Co No.1 With revenuesexceeding eight million of U.S.$, there is an additional company qualified Ingeneral, assume that a company wanting to implement GMP (investment of twomillion U.S.$ per production line) needs to have revenue doubling the initiativeinvestment on GMP, thus, there are only 4 companies qualified, accounting lessthan 20% of total considered local firms

 Lack of qualified personnel

- Lack of GMP-trained personnel:

In Vietnam, the number of persons who was properly trained of GMP isinsufficient Foreign-owned firms usually send their personnel abroad forGMP training while it is hard for state-owned companies to do so due to thelimited financial budgets According to the statistics of the Ministry ofHealth, up to the second quarter of the year 2000, there are only twentylocal pharmacists trained formally by Australian trainers on GMP (SaigonTimes, August 22nd, 2000) Besides, there are few officers of the Ministry ofHealth are trained on GMP and attended meetings relating to ASEAN GMPtopics Aside form those, many persons are trained locally and informally ofgeneral information about GMP for a short period Thus, they are notqualified as key persons in promoting GMP implementation process.

- Lack of highly technical-skilled personnel:

In GMP guidelines, there are many well-defined and rather strictrequirements that need to be executed properly by qualified technical staffs,who are usually qualified pharmacists As common actualities for firmsaround the world, it is quite difficult to be able to recruit the well-qualifiedpersonnel, and it is much harder to retain them That reality is especiallytrue for state-owned firms wherein the improper organizational rules orbureaucracy procedures still exist

 Difficulties in Information Accessing:

It is a common circumstance in Vietnam that firms, especially state-ownedand small enterprises, face many obstacles and challenges in finding thenecessary information for doing their businesses It is even truer for searchingthe information relating to GMP as GMP is rather new in Vietnam for aboutfour or five years Usually firms are eager to implement GMP, however, theydo not know what to do, where to commence, to what extent, and alike In theguidelines, regulations, circulars3 alike, there is no specific detail guiding firms2 There are more smaller local pharmaceutical firms which are not included in the list due to two mainreasons:

-Not directly produce drugs-Too small compared to others

3 All of the guidelines, regulations, circulars and the like can be found at the Vietnam Ministry of Health at

on a step-by-step basis towards implementing GMP Though, this might beconsidered as an external factor Nevertheless, it is included in internal factorsfor accentuating firm’s insufficient investment on maintaining and improvingtheir intangible assets

Normally, at this moment, email is popular for firms However, Internet andits robust information resources are still beyond major firms’ reach mainly dueto the two reasons: there is no needed information available on the Internet, andthe high Internet accessing fee (Currently, the Internet accessing fee throughphone line is approximately U.S.$ 1.5 per hour).

3.4.2 External factors

Three main causes are believed to be factors that obstruct firms’ implementation capabilities They are the lack of updated as well as the propergovernmental policies towards encouraging firms’ GMP compliance, consumers’behaviors and attitudes such as self-directing habits in buying medicines, plus theirlacking of awareness of quality standards such as GMP standards, and finally therivals’ effects such as unbalanced and unsound competition, price competition andthe like.

GMP- Governmental policies:

- Regulations as well as guidelines are issued laggardly, inconsistently andnon-synchronously, bringing firms many obstacles and confusions indeciding what to do in implementing GMP standards Referring to all of theissued guidelines, regulations, circulars and the like, which are relating toGMP, there is no specific guidance on how to successfully implement GMPstandards or the listed pitfalls, key points in GMP implementation.Moreover, referring to session 3.2, it can be seen that there is nearly one anda half year lagged after the issuing of the requirement of GMP compliancein all pharmaceutical manufacturers, the privileges for GMP-complied firmswas mentioned formally Thus, firms have not many motives forimplementing GMP that costs them significantly at the initial period

- Lacking of clear favorable conditions reserved for GMP-complied firms aswell as of a proper and effective mechanism for supplying the essential andnecessary information for firms in order to encourage GMP compliance Asmentioned in session 3.2, the followings are the granted privileges forGMP-complied firms:

- Be allowed to print an additional sentence of “GMP-approvedCompany” in the label

- Be granted some favors in manufacturing the exports.

- Be allowed to cooperate and to be franchised with major well-knownpharmaceutical manufacturers in the world for some kinds of products.138A Giang Vo Street

Hanoi, VietnamTel: (844) 8461525Fax: (844) 8234758

- Be prioritized in participating in bidding both at national andinternational level, to supply pharmaceuticals for national healthprograms.

- Be favored in supplying the essential pharmaceuticals for hospitals aswell as health programs, which funded by governmental funds orinternational aids.

- Be privileged in approving the production registration, including thepharmaceuticals belonging to the list of limited-granting products.(Note: the above favors for GMP-complied firms are entirely quoted from theletter No 284/QLD issued on January 14th, 1998 by the Ministry of Health onfavorable conditions for GMP-approved pharmaceutical factories).

The ambiguousness of these favors are analyzed hereunder:

- Be allowed to print an additional sentence of “GMP-approved Company”in the label What does it benefit the company while the local consumers are

not aware of GMP quality standards? What does it benefit the localproducers while doctors and pharmacists keep on recommending thepremium-price or imported medicines to end-consumers for gaining highercommission?

- Be granted some favors in manufacturing the exports Which favors are

granted specifically? Tax-reduction? Prioritized in bidding? Allowed tofranchise? However, the ultimate issue is that how to find markets for theirexports? Does the government help GMP-complied firms find foreignmarkets for their products? Does this encourage firms to implement GMP iftheir focused market is local market?

- Be allowed to cooperate and to be franchised with major well-knownpharmaceutical manufacturers in the world for some kinds of products.

Actually, this mentioned favor is unnecessary, as the franchisers themselvesalways require their franchisees to have GMP-complied certificates.

- Be prioritized in participating in bidding both at national and internationallevel, to supply pharmaceuticals for national health programs Be

prioritized to what extent? In this case, does price affect the final decision?It should be noticed that it is supplying medicines to funded national healthprograms, and there are much red tape and bureaucracies in funded nationalprograms that may consider the price as the first priority in selecting thesuppliers Moreover, it is normal that GMP-complied firms may have higherproduction costs than non GMP-complied manufacturers at the first severalyears Thus, GMP-complied firms surely loose their advantages in biddingfor price-sensitive cases

- Be favored in supplying the essential pharmaceuticals for hospitals as wellas health programs, which funded by governmental funds or internationalaids As in the previous analysis, to what extent and in which categories

GMP-complied firms are favored?

- Be privileged in approving the production registration, including thepharmaceuticals belonging to the list of limited-granting products Does it

encourage all pharmaceutical manufacturers to implement GMP if theirmajor and targeted products are just the general medicines? However, theMinistry of Health is on the process of banning non GMP- complied

pharmaceutical manufacturers from producing any kinds of medicines Itmeans that GMP is going to be regulation in 2003.

Moreover, with regards to the lack of a proper and effective mechanism forsupplying the essential and necessary information for firms, there is no GMP-focused web-site now in Vietnam In this IT era, Vietnam is surely capable to builddatabase and web sites for GMP-related contents However, it has not been doneyet as the importance and usefulness of IT is not properly appreciated ingovernmental organizations

 Consumers’ behaviors and attitudes:

Consumers can be classified into two groups: end-users (patients) andinfluencers (doctors, pharmacists)

- End users: Consumers are usually influenced by the media advertisements

due to lacking of professional knowledge in medicines Therefore, the realquality is not as important as the advertised-quality in theirs buyingdecisions This habit hinders pharmaceutical manufacturers to investsignificantly on improving product quality by implementing GMPstandards, as GMP-implementing execution requires huge financial andmanpower investment Moreover, the price sensitiveness is still most ofVietnamese’s character due to the low-income level and most of theindividual consumer does not aware of GMP quality standards Thus, itcontributes to the indifferences of GMP-approved firms and non GMP-approved pharmaceutical manufacturers Last but not least, up till now,fondness of imported goods is still the character of Vietnamese’s majoritythat hinders local firms’ potentials.

- Doctors and pharmacists: While the patients are the ultimate end-users,

pharmacists and private or public doctors are usually key buyers anddecision-makers And normally their profit is directed related to the price,thus, premium-priced foreign products tend to be recommended to patientsregardless of their quality

 Rivals’ Influences

- Price competition from sub-standard generics, parallel imports, smuggleddrugs and copycat products obstruct firms from investing capital onimplementing GMP Moreover, at the very first stage of GMPimplementation, the production costs will be increased significantly

- Unsound and unequal competitions among immature local pharmaceuticalmanufacturers and joint-ventures with giant worldwide corporations orfinancial-strong as well as technical-strong FDI companies in the conditionsof lacking proper governmental ruling or guiding regulations Without aproper support from the government, local firms may be kicked out of themarket

3.5 Government's responsibilities in supporting firms’ GMP compliance

As written before, the Vietnamese government realized the importance of GMPcompliance for pharmaceutical manufacturers, especially local firms in terms of:

- Supplying consumers with consistent and good quality medicinal products, ashuman’s health is greatly critical.

- Penetrating local firms’ markets into other countries to promote exports and reducethe import quota for drugs.

Thus, with certain approaches, the government is on the process of encouraging firm’sGMP compliance, such as:

- Issued some decisions and regulations concerning the promotion of GMPimplementation of pharmaceutical manufacturers throughout the country.

- Granted some privileges for GMP-approved firms in their production registrationand cooperation with foreign pharmaceutical manufacturer corporations as well asparticipation in bidding.

However, there is no specific guidance is built to help firms step-by-step successfullyimplement GMP standards and those granted privileges are vague and too general inmeanings Thus, further government’s efforts are obviously needed to improve the existingcircumstances to meet the defined target of 100% pharmaceutical manufacturers meetingthe ASEAN GMP standards in the year of 2003

The role of government is significantly important in Vietnam’s business environment,as it is still a “market economics with the guidance and monitor of the government”.Therefore, to increase the GMP-compliance ratio (number of GMP-approved firms to totalnumber of pharmaceutical manufacturers in the country, which is less than 15% in the year2000) and reach the 100% ratio, Vietnam’s government has to do the best in enforcingfirms’ GMP-compliance while still support local firms in fostering their capabilities indoing their businesses Some recommendations concerning the policies are mentioned inthe next chapter

In most developed countries, GMPs have become regulations and some mutualrecognition agreements have been established among them such as United States ofAmerica and European Union, Canada and European Union, Australia and EuropeanUnion and the like However, in Asian region, although there was a unique GMPguidelines called ASEAN GMP, in each country there is a national GMP standards systemthat is generally based on ASEAN GMP, and there is no mutual recognition for GMP-approved certificates among ASEAN members

In Vietnam, the Vietnam’s GMP is basically followed ASEAN GMP but with someadditional specific measures and requirements that are suited to the local actualities.However, pharmaceutical manufacturers, especially local firms are facing many challengesin struggling to achieve GMP conformity due to many sources of factors including theimmature capabilities and lack of proper, on-time supports and guidance from thegovernment Some typical examples of those are:

- The lacking of financial budget for GMP implementation (estimated at U.S.$ twomillion per production line)

- The shortage of qualified personnel in GMP-relating fields as well as technicalfields

- The unavailability of necessary information for deciding what to do, how to do, towhat extends, and the like in implementing GMP standards

- The regulations as well as guidelines that are laggardly, inconsistently and synchronously issued lead to the confusions and troubles in firm’s GMPimplementation

non The lack of clearly distinctions in government’s favorable treatments betweenGMP-approved firms and non-GMP-approved companies that lessen firms’willingness to achieve GMP certificates

In summary, to be able to meet the defined target of 100% GMP-qualifiedpharmaceutical manufacturers in Vietnam in the year of 2003, more significant effortsfrom Vietnam’s government (Ministry of Health) are needed This is the main objective ofthis research paper, for examining the existing challenges and recommending someconsidering points for both firms and the government to take into account when thinking ofGMP-implementation and GMP-compliance promotion