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How to start a Pharmacy Business in India

Shivani Jain

| Updated: Mar 11, 2020 | Category: Drug License, Government Registration

How-to-start-a-Pharmacy-Business-in-India

To start a Pharmacy business, the entrepreneur needs to choose or create a business idea, as this is a crucial step for those who want to go ahead with their plan of having a pharmacy business. Nowadays, online Pharmacy business is rapidly increasing on a large scale all over the world. This is happening because Pharmacy business is a lucrative job, as it is not influenced by the cyclic economic downfall. Further, in India, online pharmacies have drastically increased due to the phase of growing E-commerce. Moreover, the numbers of private hospitals and clinics are mounting all over the country. Hence, this is the main reason behind the growth in healthcare and pharmacy industry in the country.

Status of Indian Pharmaceuticals Industry in Foreign Market


The Indian pharmaceuticals market is the third-largest in the world because of its volume and the thirteenth-largest in terms of value. Also, India is one of the largest suppliers of generic drugs internationally, as it covers around 20 per cent of the total drugs exports.

Further, India enjoys an important place in the global pharmaceuticals sector. As, the country has a large number of engineers and scientists working in this sector, who have the potential to take this sector to the next level. At Present, over 80 per cent of the antiviral drugs used worldwide to cure AIDS is supplied by the Indian Pharmacy Industry. Moreover, The Indian pharmacy industry has been rising at a CAGR (compounded annual growth rate) of more than 15 per cent over the last five years and also has significant growth opportunities.

According to Mr Arun Singh, Indian Ambassador to the USA, the Indian pharmacy market is estimated to grow to 55 billion dollars by the end of 2020; hence, becoming the sixth-largest pharmaceutical market globally.

The Decision regarding the Type of Pharmacy Business

Before going for a traditional pharmacy, the concerned entrepreneur must decide on the type of pharmacy that he or she wants to run. Following listed are the types of available pharmacy from which one can choose or decide for the type of pharmacy business he or she wants to go for –

  1. Hospital Pharmacy – This type of pharmacy is set-up inside a hospital to furnish the in-hospital needs of medicines.
  2. Standalone Pharmacy – This is the most commonly used pharmacy set-up, and it includes all the pharmacies that are operating in a residential area.
  3. Chain Pharmacy – This type of pharmacy is usually present in malls and is part of a chain of pharmacies.
  4. Township Pharmacy – If in case a pharmacy is set-up in a township area, then it is considered as the township pharmacy.

Registration of a Pharmacy Business

The registration of a traditional pharmacy business is governed and administered by the Indian pharmacy Act of 1948. This act states that a pharmacist must register all of his required particulars to the state government by way of an official gazette. Also, after the due submission of documents, a registration tribunal will decide on the registration.

Normally, the chain, hospital, and township pharmacies are incorporated as a private limited company whereas the standalone pharmacies are incorporated either under the proprietorship or partnership constitution.

At Present, the business structure named Limited Liability Partnership (LLP) has gained immense popularity and recognition among the standalone pharmacists as it encourages the rights of partners, unlike a partnership firm.

Obtaining Drug License

Before selling medicines in a market, a drugstore is required to obtain drug license both from the Central Drugs Standard Control Organization (CDSCO) and the State Drugs Standard Control Organization. Normally, there are two types of drug license that are issued by the Drugs Control Organization –

  1. Retail Drug License – This type of drug license is required for running a general chemist shop. Further, for obtaining this license, the applicant must deposit a prescribed fee and must possess a diploma or a degree in pharmacy from a recognized institute or university.
  2. Wholesale Drug License – This type of license is issued to those people or agencies who desire to set up a wholesale pharmacy business for drugs and medicines. Further, unlike Retail Drug License, there are no stringent laws and conditions to obtain this license.

Minimum Conditions to be followed by Pharmacists

Following are the requirements that are to be fulfilled by the Pharmacist to obtain drug license –

  1. For opening a retail drugstore, the minimum area required is 10 square meters, and moreover, an area of 15 square meters is required for a common retail and wholesale pharmacy.
  2. A drugstore must need to have an air conditioner and a refrigerator.
  3. Both retail and wholesale pharmacies should have a registered pharmacist, who must be present at the shop while selling the medicines.

GST Registration

In India, obtaining GST (Goods and Service Tax) registration is mandatory and compulsory whenever the goods or products are being sold by a registered business. Further, Pharmacy businesses are obligated to obtain GST Registration and timely pay GST.

Documents Required for Obtaining Registration

Following are the documents that are required for obtaining a Drug License Registration –

  1. Application forms
  2. Challan of fee deposited
  3. Declaration form
  4. Site plan (Blueprint)
  5. Key plan (Blueprint)
  6. Basis of possession of the premises
  7. Proof of the ownership of the premises, if in case it is rented
  8. Proof of the constitution of the firm (in the form of Certified copy)
  9. Affidavit of non-conviction of the Proprietor, Partners, Directors under the Drugs and Cosmetics Act,1940
  10. Certified copy of Registration Certificate of the state Pharmacy Council or the Experience Certificate of the Registered Pharmacist or the Competent person with qualification certificates
  11. Bio-data form
  12. A duly attested affidavit of the Registered Pharmacist or the Competent person about full-time working with the firm.
  13. Appointment letter of the Registered Pharmacist

Additional Legal Procedure for starting an Online Pharmacy Store

Any individual can start an online drugstore only if he or she is registered with a drug license or if he or she has partnered with a licensed dealer to carry out the online orders. Following listed are the zones describing the practices which are to be followed and the ones that are not to be followed and are illegal –

1: Green Zone – This zone basically depicts the practices that are legal for online pharmacies as per the Indian Law–

  • Apart from over the counter drugs, all other drugs need a prescription.
  • The contact details of an online drugstore must be of the state from which they have obtained the drug license.
  • The licensed drugstore has to validate and confirm the delivered drugs.

2: Grey Zone – This zone depicts those practices that are uncertain according to the Indian Law –

  • Shipping of the medicines from one state to other states
  • The practice of taking money prior to delivering the medicine.

3: Red Zone – These Practices are illegal according to the Indian Law –

  • Selling of the Schedule X and Schedule H medicines without any prescription
  • Selling medicines to minors
  • Selling those medicines that are not approved by the State Drug Control Organization
  • Exporting medicines without any prior approval from the drug department of the concerned country.

Conclusion

Though traditional pharmacies fulfil the medicinal needs of India’s major population, still there is an urgent need for online pharmacy stores that fit into the Indian Legal system as these online pharmacies create a beneficial situation for both the consumers as well as pharmacists.

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Shivani Jain

Shivani has completed her B com LLB (Hons) and has the experience of writing various research papers during her college time. Earlier she was working as an Associate in a law firm, but her interest in writing made her pursue content writing as a career. Her core area of interest is in writing about various legal enactments, tax and finance.

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