Indian pharma industry is gigantic providing employment to hundreds and thousands of people. It ranks 4^th in the world by volume and 13^th by value in the global pharmaceutical market.  Moreover, the industry earns for India valuable foreign exchange totaling more than USD 2.6 billion every year.

In the present article, I will discuss the important facts about starting a medical wholesale business in India. In a consulting career spanning 15 years, I have advised hundreds of entrepreneurs set up chemical plant, oxygen gas production plant, fertilizer plants and many other businesses.

Moreover, India also has huge domestic pharmaceutical market. Many types of pharmacies are doing business in India including chain pharmacies, standalone and hospital. All of them can be registered under partnership or a private limited company.  

I would recommend that you must go through the article before taking concrete decisions. It is important to have solid information of the business before venturing. Once you get the basic idea then you can focus your target market, arranging finances, etc.  

 Let’s now start discussing the ten steps to start a medical wholesale business in India:

Legal Procedure to Start a Wholesale Pharmacy

There are stringent requirements for starting a drugs business in India. The Drugs and Cosmetics Act, 1940 (amended in 1945) regulates importing, manufacturing and distribution of drugs in India. The act contains everything related to the regulation of drug business in the country.

In order to start a medical pharmacy business it is necessary to obtain a license from the Central Drugs Standard Control Organization (CDSCO) or State Drugs Standard Control body under form No. 19.  The applicant should have a degree or diploma in pharmacy from a recognized institution or university with one year of experience of working with drugs. The pharmacist must also obtain GST registration for making transactions.

Documents needed for getting license

• Application form in the prescribed format
• Covering letter with the intent of application signed with the name and designation of the applicant
• Challan of fee deposited for obtaining drug license
• Declaration form in the format prescribed
• Proof of ownership of the premises, if rented
• Key plan (Blueprint) for the premises
• Site plan (Blueprint) for the premises
• Basis of possession of the premises
• 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

Legal prescriptions doe not vend here. In fact, the pharmacies are subject to inspections by a pharmacy inspector under the leadership of CDSCO, which enforces standards of sale, storage, display of drugs.

Premises to Stock the Medicines

You must also submit the verifiable documents of space used for storage of drugs.  Having the land as per requirement is necessary for pharmacies. However, the requirements might change when wholesaler is also doing the retail.

The space must also house adequate refrigerating & air-conditioning which are essential for minimizing damage to the injections, medicines and vaccines.  The space must meet high hygienic sanitary standards.

 Investments to Set up a Pharmacy Wholesale

Starting a medical wholesale business needs a significant amount of capital. In the beginning investment will depend on the size of the company. Other expenses include maintenance charges and drugs.  However, we can break up expenditures under different headings and sub-headings.

Documentation and License

These expenses will be around Rs 30,000 including registration fee.

Furniture

Great deal of furniture will be needed starting from cupboards, shelves, air conditioner and refrigerator. The expenses might reach INR 3 lakh.  

 Computer system –Rs 40,000

Premises (if rented)

Office expenses

 Salary of working staff, pharmacist and two employees will be approximately Rs90, 000. You would need investment of around one crore for starting the business.  However, it would depend on the stock required.

Investment includes the cost of drugs stored in the store. However, you will always have medicines costing between Rs 25 lakhs to 50lakhs distributed to retailers on loan basis. It is the way the business works in this sector.  

Awareness Related to Current Trends in Drug Dealing

The Schedule B (Rule 98) of the Drugs and Cosmetics Act (1948) defines the shelf-life life of drugs which is mostly 1-5 years. The rule also determines the condition for storage of medicines.  We ought not to use medicines beyond the expiry date in order to avoid toxicity.

It is important for the pharmacist to be careful about the expiry dates of stored medicines and their different schedules. To give an example, schedule H comprises of only prescription drugs which can be sold only against a prescription issued by a registered medical practitioner.

On the other hand, over the counter (OTC) drugs are easily available. Even a grocery store can sell them.  However, you must remain aware of drugs banned by the government.  And, you must know the drugs popular with medical practitioners to stock them in sufficient quantity. Storing medicines or cosmetic products not popular with the physicians might expire worthless.

Network with Local Clinics, City Hospitals, and Health Centers

Cultivate networking with local clinics and city hospitals with offer of high quality drugs at lower prices. And, you can also offer incentives for getting more customers.  Medical stores in tier-2 or tier-3 cities prefer cheap drugs from alternate pharmaceutical companies.  

However, the medical stores in the metropolitan cities prefer big discounts with no compromise on the quality.  And, collaborating with the new stores, local hospitals and pharmacies is important for constantly increasing sales to generate profits.

Follow Government Policies

The government aims to provide generic or cheaper medical drugs to people under the Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP) scheme. India pharmaceutical sector accounts of 70% of generic drugs and 21% of OTC medicines.

Moreover, the government also issues the National List of Essential Medicines (NLEM) which fixes the price of drugs under the First Schedule of Drugs.

For starting a medical wholesale business in India you will require adequate capital, follow the legal procedure and study the market for getting better Challan of fee deposited for obtaining drug license; Covering letter with the intent of the applif profits.