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How to start a Pharmacy Business


How to Start a Pharmacy Business

Pharmacy business is an evergreen business in India that is not affected by the economic cycles. Further, the increasing popularity of corporate hospitals and multi-speciality hospitals in India has brought about tremendous growth to the healthcare and pharmacy business in India. Requiring minimal capital investment and space, pharmacy business is ideal for many Entrepreneurs across India. In this article, we look at the procedure for starting a pharmacy business in India.

Business Registration

Pharmacy business can be divided into four types based on the store format as follows:

Pharmacy Business Types

In India, majority of the pharmacy businesses fall under the category of standalone pharmacy operating in the unorganized sector. However, slowly the concept of chain pharmacy or township pharmacy are catching up; but is still a long way behind. Hospital pharmacy, chain pharmacy and township pharmacy are usually set up under a larger corporate entity or the hospital – mostly a private limited company constitution. The standalone pharmacies are usually set up under a proprietorship or a partnership. However, as LLP registration can now be obtained for just Rs.8000/- through, it is advisable that standalone pharmacy businesses also be started as LLP or Private Limited Company. Setting up a standalone pharmacy business in an LLP or Private Limited Company constitution will ensure that the business is transferable, scalable and limits the promoters personal liability.

Tax Registrations

GST registration is required in India whenever goods or products are being sold by a business. Pharmacy businesses are required to obtain GST Registration and pay GST.

Pharmacy License or Drug License

To start a pharmacy business, a drug license is required. The Central Drugs Standard Control Organization and State Drugs Standard Control Organization control the issue of drug license in India. Drug license for setting up a pharmacy business is usually under the purview of the State Drugs Standard Control Organization and the list of State Drugs Standard Control Organization can be downloaded below:

List of State Drugs Control Organization

Normally, the Drug Control Organization issues two types of licences for operating a pharmacy business. One is the Retail Drug License (RDL) issued to run a general chemist shop. The other is the Wholesale Drug License (WDL) issued to persons or agencies engaged in wholesale of drugs and medicines. In most states, a retail drug license is only issued to persons who possess a degree or diploma in pharmacy from a recognised institute or university after depositing the requisite fee on account of the fact that it is a specialised job and only qualified persons can handle it. But the above conditions are relaxed in case of procuring a Wholesale Drug license (WDL).

Requirement for obtaining Drug License

The following are minimum requirements for obtaining drug license or starting a pharmacy in India:

  • Area: The minimum area of 10 square meters is required to start a medical shop or pharmacy or wholesale outlet. In case, the pharmacy business combines retail and wholesale, a minimum of 15 square meters is required.
  • Storage Facility: The store must have a refrigerator & air conditioner in the premises. According to the labelling specifications certain drugs like vaccines, Sera, Insulin Injections etc., are required to be stored in the refrigerator.
  • Technical Staff:
    • Wholesale – The sale of drug by wholesale shall be made either in the presence of registered pharmacist or in the presence of a competent person who shall be a graduate with 1 yr experience in dealing in drugs or a person who has passed S.S.L.C with 4y ears experience in dealing in drugs, specially approved by the department of drug control for the purpose.
    • Retail – The sale of the drug by retail must be made in the presence of registered pharmacist approved by the department, the Registered pharmacist is required throughout the working hours.

Documents required for obtaining Drug License

The documents required for starting a pharmacy business varies from state to state. However, the following is an indicative list of documents required for obtaining drug license in India.

  1. Application form in the prescribed format
  2. Covering Letter with the intent of the application signed with the name and designation of the applicant
  3. Challan of fee deposited for obtaining drug license
  4. Declaration form in the format prescribed
  5. Key plan(Blueprint) for the premises
  6. Site plan (Blueprint) for the premises
  7. Basis of possession of the premises
  8. Proof of ownership of the premises, if rented
  9. Proof of constitution of the business (Incorporation Certificate / MOA / AOA / Partnership Deed)
  10. Affidavit of non-conviction of proprietor/partners/ directors under the Drugs and Cosmetics Act, 1940
  11. Affidavit of a registered pharmacist or competent person working full time
  12. Appointment letter of registered pharmacist/competent person, if the employed person.

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