India exported drugs and pharmaceuticals worth approximately US$24.44 billion in Fiscal Year 2021. According to a report, the pharmaceutical industry of India is the third-largest in the world by volume and 11th by value, having annual revenue of US$38 billion. Presently, India is the largest provider of generic medicines and holds a share of 20% of all drug exports, and meets almost 60% of all vaccine needs. It is, therefore, an excellent strategy for founders and entrepreneurs in these challenging times to incorporate a drug store or pharmacy or to expand their existing businesses with minimum capital investment. A pharmacy license is required for starting a pharmacy business. The article explains the legal requirements for getting such a license as well as the documents needed to obtain one.
How to Start a Pharmacy Business?
The Drugs and Cosmetics Act, 1940 governs and controls any pharmacy business or drug store involved in the manufacture, distribution, and sale of drugs in India. Each state in India has almost identical formalities; however, owners must first contact their district Drug Inspection Officer to find out how to start a pharmacy. To start a pharmacy company, the following requirements are required:
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- Experience: The owner’s and other partners’ (if applicable) experience in pharmacy must be of a certain level. Either they have conducted a business in this sector or specializes in sales, marketing, business fundamentals and growth, legal knowledge, etc.
- Business Plan: The owner shall prepare a plan for the business, which may consist of, but is not limited to, a business overview, the product, business prospects, financial planning, competition, marketing strategy, distribution channels, risks, etc.
- List of Molecules: The owner is responsible for preparing a list detailing all molecules and combinations destined for placement on the market.
- Brand Name: The owner should finalize the company name and the brand name of all products and make sure these do not resemble any other companies or brands already in the market.
- Search for Premises: The owner is also required to select suitable premises for office, licensing, and stock. Depending on the adequate space required by the government, it may be rented or owned.
- Appointment: In the case where the owner or other partners (if applicable) does not have a Diploma in Pharmacy from Pharmacy Council of India, then he/she shall appoint a registered pharmacist having Diploma in Pharmacy/Bachelor in Pharma/Doctor in Pharmacy to be eligible for applying as a pharmacist registration if he/she wishes to open a drug store.
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In India, the issue of drug license is controlled by the CDSO and State Drugs Standard Control Organization, and the following are the two main drug licenses required for setting up a pharmacy business:
|Retail Drug License (to operate a pharmacy).||The component person must be a pharmacist registered with the state pharmacy council.|
|Wholesale Drug License (for persons involved in the wholesale of drugs, who sell stock or exhibit for sale, or who distribute via wholesale).||The component person must have experience working in a drug store or company.|
| Other licenses which are issued are the following:|
Import Drug License. Multi-Drug License. Manufacturing License.
The following are the most important application forms required for a drug license:
|Application forms||Issued for|
|Form 19||Sale, distribution and storage of medicines for distribution.|
|Form 19A||Grant of the license of renewal for a restricted license.|
|Form 19B||Selling Homeopathy medicines.|
|Form 20B||Sale or distribution of drugs at wholesale.|
|Form 24||Specific medicines.|
|Form 24A||Loan license.|
|Form 24B||Repacking of medicines.|
The following are the documents required for obtaining the drug license:
|List of Documents of Applicant||List of Documents for Competent Person||List of Documents for Business Premises|
|The Certificate of Incorporation or Registration.||BioData as per Proforma.||If owned: registered Sale Deed / registered GPA / Conveyance Deed in the name of the owner or case of unregistered Sale Deed / unregistered GPA supported with Electricity Bill / Water Bill/property tax receipt.|
|Memorandum and Articles of Association or Partnership Deed or LLP Agreement.||Appointment Letter of Component Person.||If rented: registered rent agreement with Rent Receipt or in case of unregistered rent agreement:a. No Objection Certificate from the owner. b. Key plan and site plan of the premises duly attested by the approved architect of the municipality.|
|PAN Card and Cancelled Cheque.||Proof of Qualification.|
|List of Directors and Major Shareholders.||Experience Certificate.|
|Photo, ID and Address Proof of Director(s).||Photo, ID and Address proof.|
|Board Resolution on the letterhead.||Affidavit.|
|Affidavit from Director(s).|
Requirements for Obtaining a License
The following are the requirements for obtaining a drug licence:
- Retail: Minimum area required is 10 sq. meters.
- Wholesale: Minimum area required is 10 sq. meters.
- Wholesale Cum Retail: Minimum area required is 15 sq. meters.
It is to be noted that the ceiling height should be at least 9.5 feet.
Storage: A pharmacy business/drug store must have a refrigerator for the storage of certain vaccines. Additionally, the drug store must have an air conditioner on the premises.
Registered Pharmacist: All pharmacies should have a registered pharmacist on staff.
The following are the registrations required by the drug store:
|PARTICULARS||GOODS AND SERVICE TAX REGISTRATION||TRADEMARK REGISTRATION||FSSAI REGISTRATION|
|Purpose||It is mandatory and compulsory.||Not compulsory but essential.be||If the owner is dealing with food and dietary supplements along with other medicines.|
|Documents required||Address Proof of business and owner(s).Aadhar card and PAN card.Partnership Deed / MOA. Bank statements.||TM-48 Form. Name and Logo of Business.Trademark class.Assignment form.||Form-B. List of Directors/owners.List of food categories desired. Authority Letter. Partnership Deed / MOA and AOA / Affidavit of proprietorship. Food safety management system plan, if any.|
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An individual can set up an online pharmacy company/drug store/web drug store or an e-pharmacy, for example, NetMeds, PharmEasy, Tata 1mg, etc. The following statutes regulate e-pharmacy in India:
- Drugs and Cosmetics Act, 1940.
- Drugs and Cosmetics Rules, 1945.
- Pharmacy Act, 1948.
- Information Technology Act, 2000.
- Indian Medical Act, 1956 and Code of Ethics Regulations, 2002.
- Narcotic Drug and Psychotropic Substances Act, 1985.
- Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954.
The following are the steps to be followed if an individual wants to start an online drug store in India:
- Hiring Pharmacist: The main priority should be hiring a qualified and registered pharmacist.
- FDA & FSSAI Licenses: E-pharmacies cannot operate without licenses from the Food and Drug Administration (FDA) and Food Safety & Standards Authority of India (FSSAI).
- Licenses from local authorities: This includes licenses from state authorities and local authorities such as municipalities and village panchayats or district administrations.
- Couriers: The owner should also make arrangements with the courier companies for pick-up and drop-off.
- Website & App: An e-pharmacy must have both its website and an app. There are also legal requirements, such as a contract with the web and app developer.
When incorporating an online or offline pharmacy company/drug store, the above requirements and specifications must be adhered to. The prices of the medicines should be in accordance with DPCO guidelines and should not exceed the listed rates.