Scenario: A French pharmaceutical company has operated a factory in an industrial park in Dong Nai for eight years, making drugs for the domestic market. It now plans a second factory in Hai Duong to add capacity, include cosmetics lines, and target EU exports under the EVFTA. How do EVFTA rules of origin apply to pharmaceuticals and cosmetics, do procedures differ, and how can it meet EU standards while controlling costs?
The EVFTA for pharmaceuticals and cosmetics: an EU export opportunity
France is an EU member, so goods made in Vietnam and shipped to France and other EU countries benefit from the EVFTA tariff phase-out where rules of origin are met. For pharmaceuticals and cosmetics, the rules of origin carry specific points on processing steps and the origin of active ingredients; businesses should verify per product group rather than applying one blanket reading. Current EVFTA rules of origin follow Circular 14/2026/TT-BCT (replacing Circular 11/2020/TT-BCT from 10/5/2026).
Pharma and cosmetics: two parallel standards systems
A second factory making both pharmaceuticals and cosmetics must satisfy two different standards systems: good manufacturing practice for pharmaceuticals and separate standards for cosmetics, including pre-market notification requirements for cosmetic products. Investment procedures follow the Law on Investment 143/2025/QH15 and Decree 31/2021/ND-CP; but plant design must separate production lines, input warehouses and quality control systems for the two product groups from the start, because later retrofitting costs many times more.
Research and development: do not miss the encouragement policies
French investors in pharmaceuticals and cosmetics typically pair manufacturing with research and development: formula improvement, stability testing, packaging research. If the second factory includes a research center or qualified laboratories, the investor should prepare dossiers evidencing research activities from the licensing stage, since science and technology encouragement policies are assessed on specific files. Separating research cost accounting from the start also helps the company use related tax policies transparently.
French experts and EU-standard compliance costs
French plants usually bring formulation, testing and quality management experts to Vietnam in the initial phase. The foreign-labor legal framework has changed, with Decree 219/2025/ND-CP replacing Decree 152/2020/ND-CP; work permit conditions and procedures under the current rules must be updated and paperwork started early. At the same time, compliance costs for EU quality, environmental and traceability standards trend upward; investors should carry these in the long-term financial model as fixed costs rather than treating them as incidentals.
Investment incentives and competition risks
A high-technology pharmaceutical and cosmetics project may be considered for investment incentives as a new project where encouraged-industry and location conditions are met, under the Law on Corporate Income Tax 67/2025/QH15 (effective 01/10/2025). No specific incentive level should be assumed; official written confirmation from the competent authority is needed. On risks, Vietnam’s pharmaceutical and cosmetics markets are fiercely competitive with many international brands; the second factory needs a clear product segmentation strategy, avoiding heavy capacity investment in saturated segments. The second risk is EUR/VND exchange-rate volatility affecting EU-sourced input prices and repatriated profits.
Frequently asked questions
What preferences apply to Vietnamese-made pharmaceuticals and cosmetics shipped to the EU?
The EVFTA tariff phase-out applies where the agreement’s rules of origin are met and a valid certificate of origin is held. Current rules follow Circular 14/2026/TT-BCT; verify specifically per product group.
What standards notes apply to a factory making both pharmaceuticals and cosmetics?
Two different standards systems must be satisfied, including pre-market notification for cosmetics. Plant design should separate lines, warehouses and quality control systems for the two groups from the start.
Are research and development activities in the factory encouraged?
Science and technology encouragement policies are assessed on specific dossiers. Prepare research-activity evidence from the licensing stage and separate research cost accounting.
How to handle competition risk in pharma and cosmetics markets?
Build a clear product segmentation strategy before deciding capacity, avoiding heavy investment in saturated segments; and manage EUR/VND exchange-rate risk for imported inputs and repatriated profits.
This article has been quality-reviewed by the FLAW AI Legal Council