How to Start Generic Medicine Drug Store?

Query:
Our charitable trust want to open generic medicines drug store in Gurudwara sahib. We need to know the whole procedure for license requirements and legal formalities.
Response:
For Generic medicine store, you also need to take Retail Drug License as required for a general chemist shop. You should have minimum of 10 square meter area in shop or room where you want to open medicine store. All requirements, licenses and procedure for opening medicine store, you can read at our article: How to start Chemist Shop in India?
One most important person you will require for it is a Pharmacist. You have to visit Drug Inspector Office (will be situated in your district head quarter) first to know complete procedure for opening medicine shop in your area.
Hope above information is helpful to you…

For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com

Query related to online b2b pharma company Portal

Query:

It  was very enlightening to have read your article. I am a founder of
an online b2b pharma company that sells medicines in terms of credits to retailers from wholesalers instead of cash. After reading from your article I guess that the money spent on marketing and sales by wholesalers can be effectively reduced by using my website. Now being from a non pharma I have a very big issue in determining the profit margins of the 5 players in distribution hierarchy.
So,
1. Can you please send the price list of all medicines currently
available and their margins to each player?
2. I find very difficult to settle on a ecommerce margin that can be
collected from wholesalers. Can you please suggest a margin?
3. Should I collect different margins for different medicines or a
uniform margin for all medicines?
4. How would I know the profit margins if I were to fix different
prices for different medicines?

Thanks in advance.

Response:

Congrats for your B2B Portal for retailer and wholesaler. Before proceeding further, please conduct complete research in pharma market, so it become easy to acquire market.

Wholesale to retail transaction is already in credit, No Pharmacy and Chemist give payment in cash to wholesaler in India. Payment term is 30 to 45 days. In many cases, it crosses 45 days mark. You need to keep in mind this aspect to associate retailers and wholesalers with you.

Second aspect, wholesaler, distributor and stockist doesn’t spend at marketing. It’s company responsibility to spend at marketing and sale.

Retailers and wholesalers are key costumer only in case of generic medicines. If you also want to sell branded and ethical medicines, Retailers and wholesalers are not key costumers to decide price and margin.

  1. Margins and prices vary according to company and its marketing type, so it’s not possible to send price list of all available medicines and their margins.
  2. A wholesale charge generally 10 percent margin. A wholesaler can give your margin from this 10 percent margin. You can decide 1%, 2% or maximum of 3% that can be afford by a wholesaler against your services.
  3. You can charge differently for different type of margins according to market demand and market competition.
  4. You margin will vary according to market demand and competition. You have to fix it accordingly.

Hope above information is helpful to you…

For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com

Related: Best Ayurvedic Herbal Products Online

How to start Online Pharmacy in India?

Query:

What is the procedure to open a online pharmacy in India?

 

Response:

In India, There is no special provision or act present that can describe, regulate and specify online pharmacy. Online Pharmacies also follow drug and Cosmetic Act and Rules made there under. Along with Drug and Cosmetic Act, it should also follow the rule and regulation mentioned under Information Technology Act.

For setting-up online pharmacy, you will require to either set-up own online pharmacy website/mobile app or need to create seller account at existing online pharmacy portals.

Before setting-up own online pharmacy website/app or making seller account at existing online pharmacy portal, you need to set-up a physical pharmacy as in case of traditional pharmacy. Requirement and document will be same for online pharmacy as we have discussed in our article: How to start Pharmacy in India?

You will require a pharmacist at your online pharmacy for receiving and processing prescription uploaded by patient or his care taker. Offline Pharmacy set-up is mandatory for selling medicine online with complete documents and procedure.

Here we take a short look at documents and necessities for starting Offline Store First and then sell medicine online.

Licenses required:

  • Retail Drug License
  • GST number

Retail Drug License:

Retail drug license is issued by District Drug Control Officer who provide drug license as per guidelines issued by State Drug Control Officer. You need to visit district drug control office for applying retail drug license number. Procedure for applying retail drug license may be online or offline as per state policy, you are going to apply.

Requirement and documents for Setting UP Online Pharmacy:

  • Area required: Minimum of 100 square feet
  • Registered Pharmacist: All related documents photocopy will be attached along with Drug License application form
  • Rent agreement or ownership proof of premises
  • Blue print of premises (3 copies)
  • Address Proof of Premises
  • Refrigerator and Air conditional Purchase Bill

Goods and Service Tax Number (GST):

GST is mandatory for firm having annual turnover above 20 lac but in case of online sale GST may be compulsory for all firms/persons having any amount of annual turnover. Read complete detail about applying Goods and Service Tax Identification Number here

After taking retail drug license and GST number, you need to set-up online presence. Online presence could be set-up by either building own e-commerce pharmacy website/app or creating a seller account at already present online pharmacy websites/apps.

Completing above step, you can start selling medicines and drugs online.

What’s coming new:

Government is in process to regulate online sale of medicine by making amendment in Drug and Cosmetic Act and Rule. For knowing new regulations and amendments, we have to wait for new government policy.

Online Pharmacies could have to follow following provisions:

  • Requires a valid Prescription
  • Online Pharmacy should have Physical Address so drug authority can inspect quality and standards of online pharmacy store
  • Government is planning to launch a common portal where all online pharmacies must have registered their self.
  • Online Pharmacy License will be issued by State Drug Control Authority.
  • Presence of Pharmacist is must for collecting prescription and answering the questions of the consumers.
  • Pharmacy can’t dispense habit forming medicines and schedule X drugs.
  • Prescription Drugs (Schedule H and Schedule H1) can only be sell out against a valid doctor prescription.
  • Online Pharmacies have to comply with e-commerce standards covered under IT act, 2000.

Hope above information is helpful to you…

For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com

Profit margin in Pharmaceutical Sector (Manufacturer to Retailers)

Query:

I am a 3rd year B. Pharmacy student and want to know about What are the profit margins of a pharma business? Kindly Explain in a particular cycle i.e. Profit from a manufacturing company to retailer?

Response:

Profit margin in pharmaceutical business vary company to company. We can’t estimate any company’s margin just by analyzing from outside. We have to involve deeply with company business strategy to calculate the margin in pharmaceutical sector. Profit Margin of chemists, pharmacies, stockists  and Carrying and Forwarding agent (CFA) also vary depend upon many factors like branded/prescription medicine, generic medicines, brand value of medicines, otc product, company status, ethical/unethical practice etc.

Here we are going to explain a general profit margin cycle from manufacturer to retailers. First you need to know about distribution channel in pharmaceutical sector through which profit share divides. A distribution channel includes mainly following parts:

Profit margin should be divide between above five firms/individuals. But actually profit margin will be distributed in another individuals also. That we will discuss later in article. First we start from bottom side. The reason from starting bottom side is that their margins are some what fixed if profit margin is taken ethically.

In case of unethical practice, profit margin may be many times greater than actual profit margins. Unethical practice means selling a medicines by much higher than its actual cost after adding own profit e.g. selling generic medicines at MRP (Maximum Retail Price) but in actual its cost is 4-5 times less than MRP.

Company’s margin vary according to its expenses. A company will handle a big sales team, executives, staff members, workers etc. Company has to invest at stock, machinery, plant, advertisement, promotion and other aspects. How much bigger their expenses, they have to set profit margins accordingly. Sale turnover also affect profit margin.

Bigger sale turnover will provide bigger profit so company can compete in market by taking low margins. Competitors also play role in mrp, trade rates fixation hence profit margins. Many factor affects the profit margin of a company.

Nothing is fixed in pharmaceutical sector. Below margin’s explanation is based upon standards margins. These can be vary as we discussed above and according to company marketing type like branded marketing, generic marketing, franchise marketing, pcd marketing etc.

A retailer/Pharmacy margin is approx. 16-22% percent ethically. Along with margins they also get benefits of scheme and offers provided by companies. Retailers/pharmacies also enjoy credit facilities provided by companies and/or stockists.

A Distributor margin is approx. 8-12%. Distributors could also enjoy some benefits scheme and offers. At distributor level credit facility could be enjoyed.

A Stockist margin is approx. 6-10%. At stockist level  less chances of scheme/offers. Majority of cases a stockist has to invest in distribution channel by providing advance payment to company/CFA and/or credit facility to distributors.

Carrying and Forwarding Agent (CFA) margin is approx. 4-8%. CFA plays middle man role in majority of cases. They receive stock from company in bulk and distributes it to stockists in small quantity.

Company profit margin is difficult to fix and/or calculate. Many factors affect profit margin fixation. At pharmacy, stockist, distributor and cfa level, there is fixed expenses and running cost. Hence fixed margins don’t affect their money circulation.

But at Company hand lot of things to consider. As we discussed above company profit margin depend at many factors. What could be the possible profit margin that we will understand with a simple example according to their marketing types.

  • Branded/Prescription Marketing Type Company
  • Generic Marketing Type Company
  • Franchise/Pcd Marketing Type Company
  • Over The Counter (OTC) Marketing Type Company

Suppose a Medicine’s cost after adding all manufacturing expenses* is 30 Rs. Now margin in each type of marketing will be different.

In Branded/Prescription marketing type, profit margin will be calculated after adding all sales and marketing expenses like Sales Team Salary/Tour Expenses, Doctor’s expenses*, transportation, office staff salary and expenses, promotional expenses and related expenses.

Practically all these expenses cost could not been added in any single product but expenses calculation verses profit margin is based upon all products included in company’s product list.

In Generic Marketing Type, company don’t spend at sales team, doctors etc. Company Fixed a particular margin like 5%, 10%, 20%, 30% etc and dispatch to CFA and/or Stockist. Now their turn how they distribute it at how much profit margin.

In Franchise/Pcd Marketing Type, Company do the same as in Generic marketing Type and fix a particular margin and dispatch goods to CFA and/or Stockist. But in Franchise/Pcd marketing , stockis/CFA has to calculate their profit margin based upon factors we discussed in Branded marketing type like sales team salary/tour expenses, doctor’s expenses, transportation etc.

In Over The Counter Marketing (OTC) Type, company fixed its margin based upon factors like advertisement expenses, sales team salary/tour expenses, transportation, promotion expenses and other related expenses etc.

Above we have discussed about marketing type. That will be applicable for both pharmaceutical marketing company and pharmaceutical manufacturing company when they will sell and/or market their products. Now we will try to find out profit margin of a Pharmaceutical Manufacturing unit/company at manufacturing end.

Pharmaceutical Manufacturing unit get profits by two ways: By Own Marketing and/or By Third Party/Contract Manufacturing/Loan Licensing. By Own Marketing profit margin will be calculated as we discussed above in Marketing type.

Manufacturing companies who reliable at third party/contract manufacturing calculate their margin depend upon batch size, cost of raw material, plant capacity etc. Generally 25-40% margin is added by manufacturing unit at their cost sheet of third party/contract manufacturing rates.

Loan License manufacturing profit margin is different from above mentioned details. In loan license, a manufacturing unit is hired/rented by loan licensee. Loan licensee can manufacture own product at manufacturing unit by own self. Generally rent and manufacturing process expenses is given by loan licensee to manufacturing unit.

Same Profit margin is applicable for Ayurvedic, Food and Dietary Supplements and Cosmetic Industry

Hope this article will be helpful for you to know about profit margin in Pharmaceutical Sector.

For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com

How to Change Wholesale Business Proprietorship?

Query:
How to I change medicine distributorship proprietorship from My mother name to my name?

Response:

For changing proprietorship of medicine distribution agency, you have to apply for change of proprietorship of agency at local Drug Inspector Office. Visit your local Drug Inspector office and apply for change of proprietorship of distribution agency. Affidavit of your Mother and yours will be attached with file. You need to submit all documents related to your wholesale drug license. Read documents for wholesale drug license by clicking here

Difference Between Wholesaler and Retailer

Wholesalers and retailers are important part of distribution channel in every sector. Wholesalers and Retailers are interconnected and dependent at each other for their requirements. To differentiate between these two, first we have to understand about both of them:

Wholesalers: Wholesalers are the dealers or his agents who deals in supplying products to retailers, pharmacies, chemists, hospitals, institutions, dispensaries medical, education and research institutions or related dealers. They work at wholesale basis (Business to Business Type). Wholesalers don’t sell products directly to patients. For pharmaceutical sector wholesale business, one must have wholesale drug license Number

Retailers: Retailers are the dealers or his agents who are engaged in selling goods to patients and Doctors. They work at retail basis (Business to Customer Type). For Pharmaceutical Retail business (Also known as Chemist/Druggist/Pharmacy), one must have Retail/Pharmacy/Chemist Drug License Number

Difference Between Wholesaler and Retailers:

  1. Wholesalers deals with retailers, pharmacies, chemists, hospitals, institutions, dispensaries whereas Retailers deals with Patients and Doctors.
  2. Wholesaler should have wholesale drug license whereas Retailer should have retail drug license number.
  3. Wholesaler purchase goods from direct company or Cnf whereas Retailer purchase goods from the wholesalers.
  4. Profit margin of wholesalers are 8% to 12% whereas Retailers margin vary from 16% to 24%.
  5. Wholesaler shop’s location doesn’t affect its sale whereas Retailer shop should be prime location for good sale.
  6. Wholesaler deals in bulk quantity whereas Retailer deals in small quantity.
  7. Pharmacist is not compulsory to get Wholesale Drug License (EP is also eligible) where Pharmacist is compulsory for Retail Drug License.
  8. Wholesaler can’t sell medicines directly to patients whereas Retailers can’t sell medicines at business to business basis.
  9. Wholesale Business could be managed at part time basis where as permanent sitting is required for pharmacy retail success.
  10. 10. Area covered by wholesalers/Distributors are large whereas retailers can sell only in its surrounding.
  11. Doctor’s Prescription is not necessary for selling at wholesale basis whereas Doctor’s prescription is compulsory to sell medicines to patients.
  12. Working hours for wholesale business is flexible whereas retail business requires strict working hours
  13. Wholesaler sell at Price to Retailer basis whereas Retailers sell at Maximum Retail Price Basis
  14. Wholesaler can supply products to hospitals and institutions whereas Retailers can’t supply products to hospitals or institutions.
  15. GST registration required for Wholesaler as it deal inter state where as retail don’t need GST registration if its turnover less than 25 lakh.

Related Article:

Difference Between Wholesaler and Distributor

Query:

Please provide actual difference between Distributor & wholesaler in Pharma Sector.

Response:

Distributor and Wholesaler are two corresponded words. we use both word for each other. There is very difficult to differentiate between these two. Distributors and wholesalers are an important part of Distribution Channel. Both are not in direct contact with consumers. There is same procedure for set-up wholesale and distribution in India But still we can differentiate between these two.

Distributors are upper part of distribution Channel. Where as Wholesalers are Lower parts of Distribution Channel. A distributor deals directly with company or CnF and purchased goods directly from them. Distributors stock the goods in its Godown. Whereas wholesaler deals with Distributors. They purchase goods from Distributors and sell to the retailers.

Distributors don’t supply directly to retailers i.e. Chemist/Druggist/Pharmacies. Distributors will supply medicines to wholesaler or stockists. Wholesaler will supply products to retailers. Both deals in distributing, stocking and supplying of goods, only customer type is changed. We can say if a wholesaler is supplying to wholesalers then he is a distributor but if a wholesaler is supplying to retailers then he is a simple wholesaler. but there is no restriction of work they can do. They can do opposite work at many circumstances.

Distributors deals in large quantity whereas wholesaler deals in small quantity. Area covered by distributors are large whereas area covered by wholesalers are small. For small cities we can’t differentiate much in both distributor and wholesaler. Distributor do the wholesaler work and wholesaler do the distributor work.

Hope Above information is helpful to you…

What is the margin of pharma retailers in India?

Query:
Is the margin of pharma retailers in India based on MRP inclusive GST or excluded of GST ? What is the margin of retailers in India?

Response:

Retailer margin in India is based at PTR (Price to Retailer), not at MRP. Suppose if retailer margin is 20% then it would be calculates as per price to retailers. Margin is calculated at price whereas vat is different thing.

Retailers margin in India varies from 16% to 22% depend at area and location.

Hope above information is helpful to you…

For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com

How can a wholesaler Sell medicines directly to patients?

Query:
I need to know, can I start wholesale business only for cardiac care while providing medicine to patient directly. Also have partnership with local doctors to send patients directly to my wholesale unit only for cardiac care as it provides medicine at lower prices to patients directly.

Response:

Whether cardiac or any other section, you can’t sell directly to patients from your wholesale store…
A wholesaler can only supply medicines to pharmacies, chemists, hospitals, institutions and other retail outlets only. Can’t dispense to patients directly…

read in detail about wholesale distribution here

For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com

How many CnF could be in a State?

Query:
Is there any limitation set by companies in the number of c&f in one state or whosoever wants to establish in a state irrespective of no.s of c&f in state…. Actually wants to that if suppose in Sri Nagar there are already 5 or 6 c&f in … Can any company permits me to establish CnF. What be the minimum project cost for CnF?

 

Response:
Number of CnF in one state is depend at company turnover, sale, market coverage and other things. There is not any restriction or limitation at number of CnF. But there is some conditions and agreement between companies and C&f regarding area cover and supply of goods. Generally a particular area is given to a CnF for supplying goods where other c&f can’t supply goods to prevent one’s fundamental rights. You can contact to the companies who don’t have any CnF in Sri Nagar or who want to expand own business. Companies who need c&f will definitely give c&f to you. Minimum investment as c&f depend and vary company to company. Read requirements for starting c&f read by clicking here

For any query and suggestion, mail us at pharmafranchiseehelp@gmail.com