You can watch this video to learn how to start pharmaceutical wholesale business and start distribution in Hindi. If you don’t want to watch video, you can continue reading this article.
This article will cover:
- Area Required
- Licenses for starting Pharma wholesale and Distributor Business
- Requirements and Documents
- How to apply
- Licensing Authority
- Investment Required
- Profit Margin
- Scope of business
- Qualification of technical Person
- Business plan
- GST registration
- Shop Registration
- FSSAI registration
Every business is conducted through a distribution channel. A Distribution Channel composes of generally with company, carrying and forwarding agent, stockiest, wholesale, distributor, retailer and customer. A distribution chain’s basic motive is to maintain product/service delivery timely and continually to its end user i.e. customer. In Pharmaceutical sector, patient and/or its care taker is end user who will demand for a medicine and drug to pharmacy against prescription of medical representative.
Pharmacy/Chemist/Retail will demand for medicines to its distributor. A distributor will get medicines from its wholesaler/stockiest. Stockiest will purchase medicine from CNF and CNF get stock from Company. In this way a distribution channel works in pharmaceutical sector.
Wholesaler, Stockiest and Distributor is an important part of distribution channel. A wholesaler, stockiest and distributor may be same and/or different at same time. There is no major difference between them. Licenses and documents for becoming wholesale, stockiest and distributor are same. Very minor line separates theses from each other depend at their method of work.
How can we define Wholesaler, Stockiest and Distributor?
Pharmaceutical stockiest, distributors and Wholesalers are the dealers or his agents engaged in sale of medicines, drugs, surgical and other pharmaceutical preparations to retailers, hospitals, dispensaries, medical, educational or research institutions or other agencies. These are engaged in the whole sale business of medicines, drugs and related products.
They purchase goods from CNF and/or Companies, and sell it to the pharmacies and chemists. They do business to business type of work. They get particular margin. They require wholesale drug license number to carry out their work. Most of stockiest and distributors also requires GST Registration Number if they have annual turnover more than 20 lac.
Carrying and Forwarding Agents also requires same licenses and procedure to start business. You can read in detail about How to start Carrying and Forwarding Agent (CNF) Business here
Here we are going to discuss in detail about how can you start wholesale and Distributor business in Pharmaceutical Sector. First discuss about requirements to start Pharmaceutical Wholesale and Distributor Business.
Requirements to Start Pharmaceutical Stockiest, Wholesaler and Distributor Business:
- Premises and Shop (Owned or Rented)
- Area Required: Minimum of 10 square meters
- Walls and Floor: Cemented
- Roof: Concrete
- Technical Person: Pharmacist or Experienced Person
- Fridge and/or Air Conditioned if required
- Wholesale Drug License
- Goods and Service Tax Identification Number if applicable
- FSSAI Registration (If doing food and dietary supplement distribution also)
- Shop Registration at local authorities if applicable
Wholesale Drug License:
Licensing Authority for Wholesale Drug Licence Number:
Licensing authority for wholesale drug license is Senior Drug Inspector / Drug Inspector and/or any person appointed by state government for purpose of granting wholesale drug licence. Licensing Authority office is present mostly at district headquarter and/or may be combined for more than one district. You have to submit your application at licensing authority for wholesale drug license
How to Apply
After completion of all documents (discussed below) and requirement, you need to visit licensing authority office for file submission. File submission is online in most of state but in few states you still have submit your file manually only. After online submission, you also need to submit your uploaded documents physically at licensing authority office. Once file submission process is completed, licensing authority will intimate you about premises inspection date and time through mail, phone number, letter and/or manually as applicable.
Inspection is carried out by Senior Drug Inspector and/or Drug inspector or person appointed by state government for granting of wholesale drug license. If all facilities, documents, technical person detail and other particulars find to be satisfactory, your application will be processed for issuing of wholesale drug license. Otherwise drug department reserve the rights to cancel, objection and/or return file for amendment and resubmission.
Documents required for Wholesale Drug License File Submission:
Application is to submit to district drug inspector/drug selling authority office in prescribed form 19 with other information forms.
- Required area of premises should be minimum of 10 sq. meter (15 sq. meter for wholesale with Pharmacy/Retail), minimum 8’2″ height. Premises should be brick built, plastered floor cemented.
- Application has to submit in Form no.19 with addition information form
- Experience person certificate or pharmacist registration certificate or appointment letter of competent person
- Fees of Rs. 3000/- (For biological & Non Biological )
- Address proof copy
- Ownership proof or Rent agreement in case of rented premises
- Refrigerator purchase bill photocopy with complete address
- Academic qualification certificate photocopy of EP/Pharmacist
- Date of birth certificate photocopy
- Affidavit of EP/Pharmacist
- Partnership deed for partnership firm
- Registration firm receipt copy for private registration firm and list of directors with address proof, Memorandum of article of association etc.
- Affidavit of proprietor/partners/directors
- Blueprint/layout plan of premises with signature in 3 copies
- Adequate storage facilities required including cupboards with glass doors, racks, pallets, refrigerator etc.
Qualification and Requirement for Technical Person:
- Either Registered pharmacistunder state pharmacy council or
- Minimum one year experience as salesman in registered wholesale drug licensed firm after graduation (With bank salary statement, appointment letter, experienced letter and resignation letter)
Goods and Service Tax Identification Registration:
Goods and Service Tax Identification Number is compulsory for all business whose turnover is above 20 lac annually. Below this figure you can do business without GSTIN. You can approach to Chartered account or sales tax advocates for applying goods and service tax. If you want to applying by your own then you can read complete procedure at our article: What is GSTIN and How to apply for it?
Food Safety and Standards Authority of India (FSSAI) Registration:
Distributing food and dietary supplements along with medicines and drug, you will need to apply for FSSAI registration online. You can read complete procedure for applying for FSSAI registration at our article: How to apply for FSSAI registration?
Shop Registration at Local Authorities:
Different areas have different laws and regulations for shop registration. This process varies according to locality. Some regions may not require to register a shop and some regions may have compulsion to register a shop before starting any business. First you need to confirm at your local authorities i.e. municipality committee, panchyat etc.
Business Plan for Wholesale, Stockiest and Distributor Business:
- Write a Business Plan
- Finalize a premises/shop (Rented/Owned).
- Make a rent agreement (In case of Rented premises)
- Contact pharmaceutical companies or CNF for Stockiestship, wholesale and/or Distribution
- Finalize all deals with Pharmaceutical Company or C&F.
- Apply for wholesale drug license to district drug control office and Goods and Service Tax Registration. (Previously Tin/Vat/CST)
- Purchase office accessories like Furniture, computer, Freeze etc.
- Drug Inspector or Concern person will personally inspect premises. If he finds all things good, he will approve your application for issuing license.
- After some time you will receive your drug licence copy and number
- Start purchasing, stocking and invoicing drug and medicines to retailers and pharmacies
Scope of Wholesale Drug License:
- Generic Medicine Distribution
- Ethical/Branded Medicine Distribution
- Over the Counter (OTC) Medicine Distribution
- Pcd and Franchise Medicine Distribution
- Institutional sale and Supply
- Hospital Supply
- Pharma Distribution Company
- Medical/surgical/health supplement distributors
- Ayurvedic/Homopathic/Unani medicine distribution
- Supply to Pharmacy Chains
- Fixed Capital Investment
- Operation Capital Requirement
- Documentation and License: approximately twenty five to thirty thousand.
- Furniture: Approximately twenty thousand
- Refrigerator: 5 to 10 thousand
- Rent of premises : Vary according to area
- Medicine and Drugs: Depend at your purchase
Read more about Investment read our article: How much investment require for starting pharmaceutical company? , Refer investment required for stock and product availability under factors Section to calculate medicines and drugs purchase investment.
Profit of a wholesale and distributor vary company to company, and marketing/sale types. Ethical/Branded companies gives a particular margin generally 8 to 12 percent. In generic medicines, distributor and wholesaler can earn more profit margin. OTC medicines also have fixed margin vary company to company or product to product. Its difficult to calculate actual profit margin of wholesale drug license firm and distributor.
A standard profit margin of wholesaler is 8 to 12 percent.
Hope above information is helpful to you…
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