How to Start A Pharmaceutical Company? Procedure, documents, license, qualification for starting pharmaceutical marketing company.

Starting a pharmaceutical company can be a lucrative business option for individuals who possess industry experience or knowledge. A pharmaceutical company may engage in various facets such as research, manufacturing, trading, distribution, and marketing. This article specifically focuses on the process of starting a pharmaceutical company that operates in the domains of pharma marketing, trading, and distribution.

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In India, the pharmaceutical sector is highly regulated and governed by the Drug and Cosmetic Act & Rules, which oversee the import, manufacture, distribution, and sale of drugs and cosmetics. Therefore, acquiring a license from the drug office, commonly known as a drug license, is mandatory to operate any type of business in the pharmaceutical industry.

For starting a pharmaceutical company that entails manufacturing, obtaining a Drug Manufacturing License from the state drug control authority is essential. Conversely, for marketing, trading, and distribution, a Wholesale drug license number is required. For operating a retail shop or pharmacy, a Retail Drug License Number must be acquired.

This article intends to provide a comprehensive guide for establishing a pharmaceutical company in India, covering all aspects from prerequisites, registration, licenses, qualifications, investment requirements, and establishment procedures. We highly recommend individuals to have prior experience in the pharmaceutical industry or possess fundamental knowledge of the pharmaceutical field before embarking on the journey of setting up a pharmaceutical company.

Depending on an individual’s area of expertise, the type of pharmaceutical company that should be established can vary. Individuals with experience in pharmaceutical manufacturing should consider setting up a manufacturing plant. Conversely, those with sales and marketing experience should consider starting a marketing company, while individuals with experience in research and drug development may opt for a pharmacy company related to their field.

Prerequisites:

Starting a pharmaceutical company requires several prerequisites. These include:

• Prior experience or knowledge: It is essential to have prior experience or knowledge of the pharmaceutical industry before starting a company in this field. This will help individuals make informed decisions and navigate the complex regulations and requirements.
• Business plan: Developing a comprehensive business plan is crucial for a successful pharmaceutical company. The business plan should cover all aspects of the company, including financial projections, marketing strategies, and operational procedures.
• Registration: The first step in starting a pharmaceutical company is registering the business. This involves obtaining a unique company name, registering with the Registrar of Companies, and acquiring a PAN card and TAN number.
• Licenses: Acquiring the necessary licenses is vital for operating a pharmaceutical company. This includes obtaining a drug license, drug manufacturing license, wholesale drug license, and retail drug license number, depending on the type of company.
• Qualified personnel: Hiring qualified personnel is crucial for the success of a pharmaceutical company. This includes hiring pharmacists, chemists, sales representatives, and administrative staff.
• Location: Choosing the right location is essential for a pharmaceutical company. The location should be easily accessible, have adequate infrastructure, and comply with all regulatory requirements.
• Investment: Starting a pharmaceutical company requires significant investment. Individuals should have a clear understanding of the financial requirements and secure funding from investors or financial institutions.

Step wise process to open a pharma company:

1. To establish a pharmaceutical business, one should possess experience in pharmaceutical sales and marketing or recruit staff with relevant experience.
2. Preparing a project report or consulting with pharmaceutical experts can help develop a comprehensive business plan.
3. Choosing a suitable location, whether rented or owned, that meets government regulations in terms of space and necessary licenses and stock is crucial.
4. Financing options should be explored, including personal savings, bank loans, or investments.
5. Conducting research and compiling a list of molecules and combinations, such as general, pediatric, cardiac, and oncology, is essential in determining the products to be offered.
6. Selecting a unique company name and brand names for products, avoiding similarity with existing companies or brands in the market, is necessary. The names can be verified using the search function available at http://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx, with trade names classified in class 5 and company names in class 35.
7. You can choose to Register the business as a private limited, one-person private limited, limited liability partnership, or a firm, such as proprietorship or partnership.
8. Recruitment of a registered competent person or pharmacist, as per norms, is necessary as an authorized person for taking drug licenses.
9. Application for a drug license number must be submitted with all required documents at the district drug control office, either manually or online, in compliance with state policies, using the same name as the company or firm registration.
10. Once the drug license number is received, application for a GST number is necessary.
11. Identifying third-party manufacturers or contract manufacturers or loan licensee.
12. Make an agreement/contract with the manufacturer.
13. Finalizing packaging, design material, completing payment and other formalities, and transportation should be coordinated with the manufacturer.
14. After the products are ready, the manufacturer will inform and send a Performa invoice, which typically takes around 30 to 45 days for new products.
15. The remaining payment is required before dispatching the product to the billing address, and marketing, promoting, and distributing the pharmaceutical products can begin.

Qualification and Eligibility for EP or competent person:

A Competent person is a person that is authorized to conduct all operation of pharmaceutical marketing company. He/she should possess either one qualification from followings:

• Registered pharmacist under state pharmacy council or 
• Minimum one year experience at wholesale drug licensed firm after graduation with proof acceptable by drug licensing authority.

licenses required for pharmaceutical company in India:

To set up your pharmaceutical company and start marketing, trading, and distributing your products, you’ll need to obtain various registrations and licenses. The most crucial ones are the Wholesale Drug Licence (D.L. No.) and Goods and Services Tax (GST) registration. Additionally, it’s highly recommended that you obtain voluntary licenses and registrations, such as Company or Firm Registration, Trade Mark Registration, and FSSAI Registration etc

Wholesale Drug License:

Wholesale Drug License is the licence to sell stock or exhibit or offer for sale, or distribute by wholesale means. It also covers distribution, trading also. Marketing and promotion can be done with any restriction but when it come to receive medicines from pharmaceutical manufacturing company, stocking it,  supply to stockiest, distributor, retail pharmacies etc, you will require to have a wholesale drug license to raise invoice to them.

Some companies receive stock and invoice at any other pharmaceutical wholesale firm. This could be one another way to skip wholesale drug license but authenticity of doing business by this mean in not confirmed (whether legal or not) but being conducted by many pharmaceutical companies.

You will require taking different licenses for wholesale depend at Schedule under Drug and Cosmetic Act & rules in which a drug is covered marketed by your pharmaceutical company. List of these licenses are as follow:

• Licence on Form 20-B for wholesale of drugs other than those specified in Schedule C, C(1) and X and application is to be submitted on Form-19.
• Licence on Form 21-B for wholesale of drugs specified in Schedule C & C(1) and application is to be submitted on Form-19.
• Licence on Form 20-G for wholesale of drugs Specified in Schedule ‘X’ and application is to be submitted on Form-19-C.

Documents and Requirements for Drug License:

District Drug Control office would provide you full details of requirement for a whole sale drug license. Few we are describing here. Procedure and details for applying for D.L. number may be changed with respect to any governmental policy change.

• Application will be submitted in form no. 19 with other detailed information forms. 
• You or your partner (if any) should be a registered pharmacist or Experienced Person (Duly registered under local authorities) or competent person. If you don’t have any of above qualification than you can appoint or hire a registered pharmacist or EP (Experienced Person) and make him authorized to handle all work on your behalf ( Appointment letter will be submitted with application) 
• Premises size should have minimum of 10 square meter area (requirement of area may vary) and should have single premises. 
• Affidavits 
• Fees ( mode of fee and prescribed fee may vary) 
• Blue print or layout of Premises 
• Freeze purchase bill copy with complete address 
• Air Conditioner if applicable 
• Ownership or Rent agreement deed of premises. 
• Electricity bill of premises. 
• Affidavit of proprietor, partner, pharmacist, EP etc. 
• Firm registration receipt in case private limited firm. List of directors, address proof, article of association etc is also to submit with application form 
• Partnership deed if any 
• Any other documents as asked by local drug controller etc. 

After submission of documents, inspection will be carried out by local drug authority for accuracy and correctness of detail submitted with the application form. Drug authority reserves the right to approve or reject your application if not satisfy with application.

If Drug officer is satisfied with your application, he/she will precede further it for issuing of drug license. After issuing of drug license number for sale of drugs for which you have applied will be granted.  After that you are permitted to sale, purchase, distribute, supply of drugs at wholesale basis.

Goods and Service Tax Identification number

Goods and Service Tax Identification number, in short ‘GST number’ is mandatory for turnover above 40 lakhs or inter-state supply of goods. In both cases, either you have above 40 lakhs turnover or have stockist or distributors in other states to whom you have to supply then you have to apply for Goods and Service Tax number. If you don’t fall under these terms then you can skip to take GST number

But we will recommend having both Wholesale Drug License number and Goods and Service Tax Number by name of your pharmaceutical company.

Licensing authority for wholesale drug license is District Drug Control Officer or any other officer appointed by state drug control authority. GST number can be applied by visiting GST portal provided by state government or centre government.

Documents and Requirements for Goods and Service Tax Registration (GST) for Pharma Company:

For applying for GST Registration, you need to visit GST portal and apply for it. But if you want to reduce burden for applying GST number by yourself you can apply through any sale tax accountant or chartered accountant. They will charge a minimal fee and will apply GST number for your firm/company.

General procedure for applying GST number is as follow:

• Go to https://www.gst.gov.in/
• There will be the two options: New User and Existing User 
• Click at New User 
• Enter your detail for apply GST 
• Enter you mobile number and Email Address of the authorized signatory of the business entity. This number and e-mail will be used for all future communication from the GST portal 
• You will receive a OTP at mobile number and e-mail id you entered in previous step 
• Enter this OTP. 
• After that follow all steps and enter information and scanned images as mentioned in Provisional registration form 

Documents required for applying for GSTIN:

• Digital Signature Certificate (Class II) 
• Address Proof of Business Entity 
• Proprietor/Partners/Directors Address Proof 
• Aadhaar Card, PAN and Image etc 
• Ownership Proof or Rent agreement 
• Partnership deed or memorandum of association/certificate of incorporation 
• Back Statement and Bank Detail 

Company Registration or Firm Registration

Company Registration or Firm Registration is not as important as above mentioned requirements. You can skip these both easily if you have a proprietorship business. You can just take wholesale drug license and gst number, and start you pharmaceutical marketing business.

But if you are two or more partners then it become more important to register your company as private limited company or Limited Liability Partnership Company or register your firm under state government act & rules. This helps and prevents any future dispute and claim if occur.

Documents and Requirements to register a Pharmaceutical Company under Company Act:

For registering a pharma company under Company Act, applying through a chartered accountant is good way. Follow documents will be require for company registration:

• DSC (Digital Signature Certificate)
• DIN (Director Identification Number)
• PAN (Permanent Account Number) Card
• TAN (Tax Deduction and Collection Number)
• Identity Proof (Electronic ID / Aadhar Card / Passport / Driving License)
• Passport Photo
• Address Proof (Bank Statement / Mobile Bill / Telephone)
• Rent Agreement (Notarised: For rented property) or Ownership proof
• Latest Electricity Bill
• MOA(Memorandum Of Association) or/andAOA (Article Of Association)
• NOC if required

Trademark Registration

Trademark Registration is not compulsory but an essential aspect to prevent use of your intellectual property i.e. company name, brand name by any other individual or company. You should apply for trademark registration for at least your company name and major brand names.

Documents and Requirements for Trademark Registration:

• TM-48 Form
• Assignment Form
• Name and/or Logo with description
• Owner Detail (Individual/Firm/Company)
• Nature of Product/Service
• Class in which want to apply

FSSAI registration or license

FSSAI registration or license will be required to obtain if you are also dealing in food and dietary supplement products along with pharmaceutical products. Some of commonly used food supplements by pharmaceutical company are lycopene products, omega 3 fatty acid, calcium supplements, vitamin preparation, enzymatic products etc. You should apply for FSSAI registration if you deal in any one of food supplement product.

Documents and Requirements for FSSAI Registration/License:

Documents to be enclosed for New Application for License to State Licensing Authority:

• Form-B Duly completed and signed
• List of Directors/Partners/Proprietor
• Photo I.D and address proof issued by Government authority of Proprietor/Partner/Director(s)/Authorised Signatory
• List of food category desired
• Authority letter  with name and address of responsible person nominated
• Proof of possession of premises. (Sale deed/ Rent agreement/ Electricity bill, etc.) (op_onal)
• Partnership Deed/Affidavit of Proprietorship/Memorandum & Articles of Association
• Food Safety Management System plan or certificate (if any)

Investment Required for Starting Pharmaceutical Company:

Three types of investment is generally required for pharmaceutical marketing company:

• Fixed Investment
• Capital Investment
• Inventory Investment

Fixed Investment for pharma marketing company includes Premises/shop/office, Furniture and accessories, Computer and electronic equipments, Fitting and Furnishing, Amount paid for licenses and registration, any other requirements cost etc.

Capital investment includes rent and bills, staff salary and daily expenses, bank loan instalments, promotional and marketing expenditure and others.

Inventory investment includes much investment at Stock of goods.

Check in detail about investment required is here

How to establish a pharmaceutical Company?

There are many marketing and promotional ways you can establish your pharmaceutical company. But you need to decide which type of marketing you want to do and establish your marketing strategy effectively. You can choose either one or two or more from ethical/branded medicine marketing, generic medicine marketing, franchise distribution, supply to institutions, over the counter marketing, supply to pharmacy chains, online pharmacies or export etc. Below in scope section we have provided links to know more about each marketing type and get more knowledge about these.
Read: How to be successful in pharma business?
Check out: How to build brand and boost pharma sale?

Third Party Manufacturing, Contract Manufacturing and Loan License Manufacturing:

Getting Manufactured own brand name products from pharmaceutical manufacturer is an integral part of pharmaceutical marketing company. For manufacturing of own brands from manufacturer, we can choose from either of third party manufacturing, contract manufacturing or loan licensing. Third party manufacturing and contract manufacturing is easiest and simple way, and similar in many aspect where as loan licensing is somewhat difficult and requires lot of formalities.

Third Party manufacturing is a way to get manufactured own medicines brand products from pharma manufacturer at specification available at manufacturer where as in contract manufacturing, marketing company get manufactured products at customized terms and specifications.

In both cases, marketing company’s name and address will be shown as ‘Marketed by’, ‘manufactured for’ and other related terms. And pharmaceutical manufacturing company address and name that is providing products will be shown as ‘manufactured by’, ‘mfg by’ along with drug manufacturing license number etc. Batch number, mfg date, exp date etc will be shown by manufacturing company. MRP will be decided by marketing company or control under DPCO.

In case of loan licensing, pharma manufacturing company provides its own manufacturing facility to pharma marketing company to conduct manufacturing of own products. Marketing company works as a manufacturer in manufacturing company’s manufacturing facility. For this manufacturing company has to apply at state drug licensing authority for granting a loan license to marketing company at its premises.

In Loan licensing, ‘manufactured by and marketed by’ both will be shown of marketing company along with loan license number. Batch number, mfg date, exp date etc is also the responsibility of marketing company. MRP will be decided by marketing company or control under DPCO.

Check in detail about difference between third party manufacturing, contract manufacturing and loan licensing

Scope of Pharma marketing company:

• Branded Medicine Selling
• Generic Medicine Selling
• Pharma Franchise
• Institutional Sales i.e. supply to hospitals, colleges, departments etc
• Over the Counter (OTC) Drugs Sale
• Supply to Pharmacy Chains
• Supply to Online Pharmacy
• Pharmaceutical Product’s Export
• Pharmaceutical Product’s Import
• Active Pharmaceutical Ingredients and other raw material trading business
• Medical Devices and Surgical Dressing business

Q&A Related to pharma Company:

Q&A:

Question: How can I start my own pharmaceutical company?
Answer: You can start your own pharmaceutical company by completing licenses and documents. For marketing company, you will require having Company registration, wholesale drug license and Gst number. For Manufacturing company, you need to have company registration, medicine manufacturing license, wholesale drug license and gst number.

Question: Which degree is required to open a pharmaceutical company?
Answer: For being an owner of a pharmaceutical company, you don’t need to have any specific qualification. You can hire person having qualification required for taking medicine manufacturing license or wholesale drug license. For detail of qualification required for pharmaceutical company check here

Question: Where to register a pharma company?
Answer: You will take four licenses and registration for manufacturing company and three for pharma marketing company i.e., company registration, wholesale drug license, medicine manufacturing license and gst number. These registrations and licenses are your registration of a pharmaceutical company. By completing this you can start your pharmaceutical company.

Question: How to apply for pharmaceutical companies?
Answer: You above mentioned licenses and registrations are equal to applying for pharmaceutical company.

Question: What information is required to sell pharma products?
Answer: You need to know different parts of selling techniques and marketing types to sell pharma products. Check out: information about pharmaceutical industry to sell pharma products

Question: What is the pharma marketing company registration process in India?
Answer: For registration of pharma marketing company, first register your company under company act i.e., company registration. After that you need to take wholesale drug license and Goods & Service Tax identification number.

Question: Can a doctor start a pharmaceutical company?
Answer: Yes, a doctor can start a pharmaceutical company by same process.

Question: How to start a generic pharmaceutical company in India?
Answer: For starting a generic pharmaceutical company, you need to follow the same process. Generic and branded medicines are two marketing types, not company types. All pharmaceutical companies have same starting process, only you can choose by which marketing type you want to sell your products – whether as branded medicine or generic medicines.

Question: Area required for pharmaceutical marketing industry?
Answer: For pharmaceutical marketing company, minimum of 100 square feet area is required for completing documents and licensing process.

Question: How do I launch a new pharmaceutical product?
Answer: For launching a new pharmaceutical product in your pharma marketing company, you need to have contact with pharmaceutical manufacturing unit. You can contact them and ask for manufacturing your products at third party manufacturing basis or contract manufacturing basis. A third way, you can also adopt i.e. loan license but it will be more complex.
By sending detail of your brand name, marketed by address and finalizing your product design, and completing all other formalities, you can launch your pharmaceutical product in market.

Question: How do pharmaceutical companies decide which drugs to develop?
Answer: Pharmaceutical develop drugs at two bases:
1. To cure a disease which treatment hasn’t yet available or possible or want to improve existing drug therapy. This we can say research and development of new drugs. This is a costlier process and small & medium size companies avoid it. Only big companies or funded enterprises proceed in that way.
2. To launch an unpatented molecule which has good sale in market. Most of pharmaceutical companies launch their products at that basis and we can call them generics. They check out market size and possibility to penetrate into that molecule market and launch their products.

Other Business Opportunities

Along with pharmaceutical company, there are other business opportunities also available in healthcare and pharmaceutical sector. Have a quick look at other business opportunities:

• Top most business opportunities available in Pharmaceutical sector
• How to start Ayurvedic business, manufacturing and marketing company?
• How to Start Pharma Distribution Business?
• How to start Pharma Franchise Business?
• Ayurvedic Franchise Company in India