The Pharma industry in India today ranks 4th in volume and 13th in value in the global pharmaceutical market, with exports worth US Dollars 2.6 billion besides domestic sales of over US Dollar 4 million worth. India’s different types of pharmacies are a standalone, hospital, chain pharmacies, and township pharmacies. All of these can be registered under the partnership or as a private limited company and thus can easily be transferred, or profits can be shared among the partners.
Before you proceed any further, I would recommend you to also go through our article on the basic steps of starting a business after reading this one to get a wide view of deciding your target market, fundraising, etc.
Now let’s proceed to how you can start your own medicine wholesale business n India easily.
1. Legal Procedure to Start a Wholesale Pharmacy
The Drugs and Cosmetics Act, 1940 (amended in 1945) states the guidelines for importing, manufacturing, and distributing drugs in India. It contains provisions for the classification of drugs under given schedules. To start a medical pharmacy business, one needs to get a license from the Central Drugs Standard Control Organization (CDSCO) or State Drugs Standard Control body, under form No. 19. The person should have a degree or diploma in pharmacy from a recognized institution or university with one year of experience in dealing with drugs. The pharmacist must also get the GST registration for any payment transaction.
Documents required while applying for the license-
- Application form in the prescribed format.
- Covering letter with the intent of the application signed with the name and designation of the applicant.
- Challan of fee deposited for obtaining drug license.
- Declaration form in the format prescribed.
- Key plan (Blueprint) for the premises
- Site plan (Blueprint) for the premises
- Basis of possession of the premises
- Proof of ownership of the premises, if rented
- Proof of constitution of the business (Incorporation Certificate/ MOA/AOA/Partnership Deed)
- Affidavit of non-conviction of proprietor/ partners/ directors under Drugs and Cosmetics Act, 1940.
- Affidavit of a registered pharmacist or competent person working full-time
- Appointment letter of registered pharmacist/competent person, if an employed person.
The legal bindings do not end here. Regular inspections by a pharmacy inspector are held under the supervision of CDSCO, headed by the Drug Controller General of India. GN Singh being the current DCGI, makes it strict for all the local, retail or wholesale pharmacies to maintain the standards of sale, storage, and display of drugs.
If you want to know some more details on India’s company registration process, you can Click Here.
2. Premises to Stock the Medicines
It is mandatory to submit the proper verifiable documents regarding the pharmacy’s area to be started. The apt space for a wholesale pharmacy is a prerequisite. The requirements change when both retail and wholesale are combined. Refrigerators and air-conditioners are a must for obvious reasons that concern the biomolecular damage to the vaccines, sera, insulin, injections, etc. The place should be kept clean and rodent free to ensure proper hygiene.
3. Investments to Set up a Pharmacy Wholesale
With an initial investment as per the demands of the startup, the otherwise expenditures may include maintenance charges and buying of medicines and drugs.
- Documentation and License:- Approximately 25OOO/- including Rs 3000/- as registration fee
- Furniture:- Shelves and cupboards, air conditioner, and refrigerator may add up to 2 lacs
- Computer system- Rs30,000
- Premises (if rented)
Working staff, including a pharmacist and 2 employees for 24*7 (70,000 / month). An investment of 40-80 lakhs is required in establishing a wholesale business, considering the quantity of stock required.
The cost of drugs stocked in the pharmacy store is included in this. Whereas medicines costing around Rs 20 lakhs – Rs 50 lakhs need to be distributed to the retailers on a loan basis in order to establish a healthy professional relationship.
4. Awareness Related to Current Trends in Drug Dealing
In India, the Schedule B (Rule 98) of the Drugs and Cosmetics Act (1948) specifies the ‘shelf-life’ (mostly 1-5 years) of drugs and the conditions of storage. Beyond the expiry date, the various drug formulations must be discarded to avoid toxicity. The pharmacist or the dealer should be vigilant about the life period of stored medicines and their different schedules. For example, schedule H lists the ‘prescription drugs’ that can be sold only against a prescription issued to a patient by a registered medical practitioner.
The ‘non-prescription’ or ‘over-the-counter’ (OTC) drugs can be sold even by grocery stores. It is important to stay in touch with the ongoing trials of drugs held by the government to be informed of the banned medicines. It also helps to know about the drugs popular with the medical practitioners so that they can be stocked adequately. The medicines or cosmetic products which are not popular tend to decrease the profits as they, when stocked, may expire with time and need to be removed from shelves. Segregation of medicines pertaining to age groups can ease the functioning of the pharmacy.
5. Collaboration with the Local Clinics, City Hospitals, and Health Centers
Collaboration with existing medical stores is very beneficial when the dealer can come up with more exciting offers and benefits. Providing the local clinics or the pharmacies with drugs of better quality at the same price or larger incentives at the same selling price can guarantee a wider market for the business. Cheaper drugs from alternate pharmaceutical companies are preferred by pharma stores of tier-2 and tier-3 cities, while medical stores of metropolitan cities prefer larger discounts without reducing the MRP, provided quality is not being compromised.
For Example, if drugs from Ranbaxy are more popular with the pharmacies in an area, but Cipla manufactures similar drugs at a cheaper price. Then, convincing the medical store owners to sell Cipla drugs can help establish the clients.
Collaboration with the local clinics/ hospitals, new medical shops or pharmacies in the area will ensure profits; this is largely based on the trust and professional ethics of the dealing parties.
6. Associating with Government Policies
Under the Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP) scheme, the government aims to provide generic or cheaper medical drugs to the people. Generic drugs form the largest segment (70%) of the Indian pharmaceutical sector, with OTC medicines (21%) and patented drugs forming the remaining 9%. The National List of Essential Medicines (NLEM) states that the prices of drugs under the First Schedule of Drugs are fixed uniformly for all branded and generic medicines containing the same active molecule. In the case of non-scheduled mode, manufacturers are free to increase the Maximum Retail Price (MRP) by more than 10% of MRP. Selling generic drugs cannot improve the margin so much, but this can help avail the government’s benefits in association with the scheme training of the pharmacist or the other staff members, discounts in prices.
The organized computer-based program helps to reduce investment in resources like human labor and capital. Pharmaceuticals and healthcare companies employ medical sales representatives. They endorse the drugs manufactured by their employer companies by distributing free samples to various clinics and healthcare units. This saves the pharmacist the expenditure on advertising a new brand or equipment. Working with Carrying And Forwarding Agents, more popularly known as C&F dealers, is another feature of the pharmacy wholesale business. They purchase medicines from pharmaceutical companies and sell these to wholesalers. A company can have 2-3 CFAs in each Indian state and then pay them as per the turnover of products in a year. The pharmacy business is an excellent startup if it religiously follows the rules and regulations. With minimum investment, it turns over significant profits. After all, health for all matters!