How to Start A Pharmaceutical Company

For every ambitious pharmacy professional setting up a Pharmaceutical company is a dream project to them. Most of them haven’t start own pharmaceutical venture due to lack of knowledge and courage to start their pharmaceutical firm. If you have experience in the niche there is nothing better than this. In the backdrop of encouragement given by the Government of India to start-up businesses, it becomes relatively easy. Here we will try to help you to start your own pharmaceutical company. The two basic types of pharmaceutical companies are Pharmaceutical Manufacturing Company & Pharmaceutical Marketing Company. Based upon their marketing, sale and work basis irrespective of marketing and/or manufacturing type the company can fall under any categories of

Generic
Franchise
Pcd
Branded/Ethical
Speciality company e.g. Derma, ophthalmic, cardiac etc
Export or Import
OTC
Distribution

According to Experts, primarily there are five steps to start any pharmaceutical company.

Out of the five steps, the first three are mandatory to start.

Company Registration (in case of proprietorship you can skip this process)
Wholesale Drug License Obtain Drug License Number
Generate Goods and Service Tax Number
Get the trademark registered
FSSAI Registration (In case of selling Food and Dietary Supplements also)

Resources Requirements:

Well furnished Premises (Cemented floor and concrete roof, walls, etc)
Competent Person i.e. Pharmacist or Experience Person
Administration and Office Accessories
Electricity and Water Supply
Freeze and Air conditioner (optional)

Procedure and Sequence to proceed

Write a Business Plan and find a Company Name
Brand Names and Choice of molecules
Design of Company Logo and Printing/Promotional Material
Fix the infrastructure (place, premises and building) for setup
Fund generation (own, loan, investment etc)
Company Registration
Trade Mark Registration (Optional)
Wholesale Drug License (For both Marketing and Manufacturing Company)
Manufacturing License (For Manufacturing Company)
Goods and Service Tax Identification Number (GSTIN)
FSSAI License (If required)
Search for Vendors (For marketing Companies, Third Party/Contract Manufacturers or Loan license manufacturers. For Manufacturing Companies, Packing material suppliers, raw material & bulk drug suppliers and other requirements fulfillers)
Finalize Packaging and Packing, Design Material for medicines boxes, label, foils etc
Start manufacturing in the case of a manufacturing company
Place order to a manufacturer on basis of third-party manufacturing/ contract manufacturing/ Loan Licensing in case of a marketing company. When the products are ready to sell, initiate marketing and promoting products.

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Pharmaceutical sector is regulated in every country. In India, Drug and Cosmetic Act & Rules regulate the import, manufacture, distribution and sale of drugs and cosmetics. For conducting any type of business in pharmaceutical industry, we will require to obtain a license from drug office which is known as drug license.

In case of pharmaceutical company, we will also require to take a drug license. For starting pharmaceutical manufacturing company, we will require Drug Manufacturing License from state drug control authority. For marketing, trading, distribution, we will require having a Wholesale drug license number. For retail shop and pharmacy, we will require having a Retail Drug License Number.

In this article will provide you complete insight about how to start a pharmaceutical company in India. We will discuss all aspects from initial stage to final stage i.e. prior experience required, how to register, licenses required, qualification required, investment required, how to establish etc.

Before preceding to set-up a pharmaceutical company whether manufacturing or marketing, we will recommend having prior experience in pharmaceutical industry or at least you should have basic fundamentals knowledge of pharmaceutical field.

Which type of experience you have, will decide which type of pharmaceutical company you should start. If you have experience in pharmaceutical manufacturing field then your best choice will be to set-up a manufacturing plant but if you have sales and marketing experience in pharma sector then we will recommend you to start with marketing company. In case of research and drug development experience, you can choose to start pharmacy company related to your field.

Every State of India has almost same formalities. Only minor requirement could vary state to state. You should first visit at your district Drug Inspector office to confirm about starting pharmaceutical marketing 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.

Prior Requirements:

Experience: Either you or one of your partner should have experience in pharmaceutical sector especially in sales and marketing along with basic business fundaments knowledge etc.

Project Report: Project report includes summary, facts, target vs actual accomplishments, analysis, action to be taken, risk and issued, resources, budget, schedule etc.

Business Plan: From where to start, which specialization to cover, products to launch, investment required, investment available, other resources, sales team required, licenses and NOC required, territory to cover and much more.

Territory Knowledge: You should have good knowledge of territory in which you want to start business. Number of doctors present, your core proposed customers, distributors, retailers, hospitals, pharmacies etc available in that territory.

Financial Resources: Establishing a business require time and effort. You should adequate finance to start, operate and run it till it starts to earn enough profit to pay own and your expenses. Financial resources may include a loan, own saving, mortgage, part time income source etc.

Important Step (Procedure and Sequence):

Take Experience in pharmaceutical sales and marketing and/or recruit experienced staff
Prepare a project report or take advice of pharma experts
Make a Business Plan
Choose Location for Business set-up. Search for shop/building/premises for office, licenses and stock. It may be rented or owned but there should be adequate space as per government norm.
Finance Source (Own Saving, Bank Loan, Investment etc.)
Research and Prepare list of all molecule and combinations depend at specialization (General, Paediatric, cardiac, oncology etc.) in which you want to enter.
Finalize Company Name and Brand Names of all products. Be sure these don’t resemble to any other company or brand already working in Market. Due to presence of thousand of brands and companies, it becomes difficult to choose unique name but you should try your best. Already registered or in process Trade Name and Company Name you can search at http://ipindiaonline.gov.in/tmrpublicsearch/frmmain.aspx . Trade name in class 5 and Company name at class 35.
Register as a company (as a private limited, one person private limited or Limited Liability Partnership etc) under Company act or work as a firm (proprietorship, partnership)
Recruitment of registered competent person or registered pharmacist as per norms. (In case if you or any of partners are not EP or Pharmacist). A Competent person or pharmacist is required as authorised person for taking drug license. Qualification of competent person we will discuss below in article.
Apply for Drug License Number. You have to prepare a file with attaching all required documents and have to submit at district drug control office (manually or online depend at your applying state policy). You should apply for drug license with same name as you have company registration or firm registration. If you have registered your company as a ABC Pvt Ltd then take license with same name.
After receiving drug license number. Apply for GST Number.
Search for Third Party manufacturer or Contract Manufacturer. If you want to show manufacturing by address also of your marketing company then you can contact pharmaceutical manufacturer and apply for loan license.
Place Order to Manufacturer
Make an agreement/contract
Finalize Packaging and Packing, Design Material
Complete payment and other formalities (Generally 25% Advance and 75% against Performa invoice)
Then all work will be done by Manufacturer
When products will be ready, manufacturer will inform you and will send Performa invoice (Time taken for new products is approximately 30 to 45 days)
After remaining payment manufacturer will dispatch the product to your billing address
Transportation
Receive
Start marketing, promoting and distribution your pharmaceutical products

Along with applying for above registrations, you can move upward with following steps. Following work, you should finished before issuing registration certificates, so you can save your time and you can meet with your deadlines.

Designing of Logo
Company Website and social media accounts
Preparation of Visual Aids
Preparation of Product cards and other promotion materials

Now you have products with your own brand names and your company name. Have a quick look at documents required for particular registration and licenses:

Qualification and Eligibility for EP or competent person:

A Competent person to be authorised to conduct all operation of pharmaceutical marketing company should possess either one from following:

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:

Following registrations and licenses, you will require to set-up your own pharmaceutical company at marketing, trading and distribution basis.

Most important licenses and registrations are

Wholesale Drug Licence number (D.L. No.)
Goods and Service Tax ( GST ) Registration

Voluntary but necessary licenses and registrations are:

Company or Firm Registration
Trade Mark registration
FSSAI Registration

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