written by Sourish | March 30, 2021

How To Start A Pharmacy Shop In India?

Medical stores are usually unaffected by economic changes. It makes the industry an evergreen business. Also, speciality hospitals are increasingly becoming popular in India. It has resulted in increasing scope in the pharmacy and healthcare business in the country. If you have sufficient capital for investing apart from space, then setting up a medical store in India is a great option. However, it is essential to note that you must plan properly before starting a medical store to succeed in the business.  

How to set up a medical store in India

Documents Required for Obtaining a Medical Store Licence 

The documents are almost the same for most states. However, some states may require some extra documents and information. Given below is a suggestive list of some of the important documents that would be required to be submitted to the Drug Control Department of the state to set up a medical store:  

  1. Pharmacy Licence Application form in the prescribed format as provided in the Act 
  2. Covering Letter duly signed with the details of the name and designation of the applicant along with the intent of the application  
  3. Challan of the fee deposited for obtaining the registration 
  4. Declaration form in the format prescribed in the Act 
  5. Blueprint or Key plan for the premises 
  6. Site plan (Blueprint) for the premises 
  7. The basis of possession of the premises (rented or owned) 
  8. Identity proof and photos of owner/partners of a medical store 
  9. Proof of ownership of the premises, if rented.
  10. Proof of constitution of the business (Incorporation Certificate / MOA / AOA / Partnership Deed) 
  11. Affidavit of non-conviction of proprietor or partners or directors under the Drugs and Cosmetics Act, 1940 
  12. Affidavit of a registered pharmacist or competent person willing to work full time 
  13. Appointment letter of a registered pharmacist or competent person, if employed.

Pre-requisites for Obtaining Loan for Medical Shops in India :  

  • Identity Proof of the owner or partners or directors, as the case may be 
  • Proof of Indian Citizenship and residence proof 
  • Age Proof (age must be between 25 to 66 years) 
  • Business Registration Proof 
  • Financial Documents like Bank Statements and Income Tax Returns 

Also Read: All You Need To Know About Net Present Value 

Decide the type of Medical Store  

The first step is to decide what kind of medical shop you want to set up. You can choose from the below-given options.  

  • Hospital Pharmacy The medical store is set up inside a hospital to attend to the hospital's in-patient needs mainly. It may also serve outpatient needs too. 
  • Standalone Pharmacy These are Medical stores set-up in residential areas to serve the residents’ needs. It is the most commonly followed option. 
  • Chain Pharmacy These are popularly known as Franchise Outlets as they are Franchises of large medical store companies. These medical stores are established in main shopping areas and malls. They may also be set up around the hospital and other central areas. 
  • Township Pharmacy These are types of medical stores that are set up inside a housing township. It mainly attends to the people inside the township in which it is set up. 
  • Government Premises Pharmacy These medicine stores are set up under various government schemes and policies and are directly under government control. 

Hospital pharmacy, a chain pharmacy, and township pharmacy are usually established under a larger corporate entity or hospital, i.e., generally, a company. The standalone pharmacies usually are set up as sole proprietorship businesses or partnership firms. Once the decision about the type of medical store to be set up is made, the next step is to fulfil the necessary government requirements.  

Requirements to be fulfilled before the Registration of Medical Store: 

1. Pharmacy Licence

The first requirement before Medical Store registration is a degree in Bachelor of Pharmacy or Master of Sciences of Pharmacy. If the person starting this business is not a qualified pharmacist, he must employ a pharmacist with a pharmacy degree. 

The pharmacist's qualification proof, be it owner or employee, is required to acquire a Medical Store License for starting a pharmacy. 

  • Wholesale – The sale of the drugs by the wholesaler must be in the presence of a professional. A professional may be a qualified pharmacist or competent person. Any person who is a graduate with 1-year of experience in dealing with drugs or a person who has a Secondary Level School Certificate and has four years of experience in the field is competent.
  • Retail – The retail sale of the drugs shall be made in the presence of a registered pharmacist approved by the department. The registered pharmacist shall be required to work full-time in the store.

2. Land Registration

The next step before applying for a Pharmacy license is to secure land registration. The minimum store area required for setting up a retail, medical shop, pharmacy or wholesale outlet is at least 10 square meters. In case you are looking to start a combined wholesale and retail business under the same roof, then an area of at least 15 square meters is necessary.

Now, the decision to buy or rent comes into the picture. Depending on the budget, you can choose to buy a shop or take a rented shop. In the case of a rented shop, a copy of the rental agreement has to be submitted.

On the other hand, if you decide to buy the shop, you must submit a copy of the sale deed. If necessary, you should get legal help. Also, an application for a loan to start a medical store may be taken from banks. 

3. Registration of Pharmacies

All the Medical Stores or Pharmacies present inside the country must be registered as per The Indian Pharmacy Act, 1948. The Act provides that a person who is wishing to apply for registration of the medical stores must submit the required documents to the state's government with all the details. After submission, the registration tribunal set up under the act may grant registration if all the conditions are fulfilled. They shall also decide on any other matter about its registration.

The owner should determine the medical store business model. If a person wishes to open a stand-alone medical store, he may opt for a proprietorship business or a partnership firm. Limited Liability Partnership (LLP) has also become popular in recent times. This is mainly because LLP offers some additional benefits to the partners. However, the Hospital Medical Stores, Chain Stores, and Township Pharmacies are preferably set up as a company.  

4. Registration of business 

Registering the business as a sole proprietorship, partnership firm, or private limited company is significant as it is required for obtaining a drug license. The following options are available to choose from depending on the model preferred to operate the business: 

  • Proprietorship   
  • Partnership Firm 
  • One person Company 
  • Private Limited Company 
  • Limited Liability Partnership

5. Establishment Registration 

Depending upon which local body the store is to be located in, the owner must get its shop registered as per the local body rules to run the store.

6. Tax Registration

To operate any business in India, Goods and Service Tax (GST) registration is required if it exceeds the specified turnover. Operating a medical store is no exception to this. The limit as specified by the GST Council is Rs.40 lakhs for all states other than special category States where the threshold limit is Rs.20 lakhs. Check the limits specified by your state before you proceed.

7. Registration for Drug Licence

The last legality before beginning operations is that every medical store, be it big or small, will require a drug license irrespective of its turnover. The responsibility for issuing below mentioned two major drug licenses is entrusted to the Central Drugs Standards Control Organization (CDSCO) and State Drugs Standard Control Organization (SDSCO), 

  • Retail Drug License (RDL): RDL is issued to run a general chemist shop. Since it is a specialized job and only qualified persons can handle it, a retail drug license is only issued to persons who possess a degree or diploma in pharmacy from a recognized institute or university after depositing the requisite fee.  
  • Wholesale Drug License (WDL): WDL is issued to medical stores or agencies engaged in the wholesale of drugs and medicines. The conditions to be met for acquiring WDL are not as stringent as required for RDL.  

Some Key Points to be noted for Operating a Medical Store successfully:   

1. Location

An integral point to consider before you start is to choose a great location. This is not as easy as you think. It would be best if you considered several factors.  It is essential to select a place without many medical stores to keep away from the competition. Also, if the medical store is near a hospital or private clinic of any doctor, it would ensure a regular flow of potential customers. If you do not choose a good location, it will be tough for your shop to do well and sustain. 

2. Contact the local wholesaler or manufacturing company

Contact a medicine manufacturing company or the local wholesaler to get the products for your shop. Going in for direct company supply will give you better profit margins, but it’s important to keep in mind that they would want a higher order quantity. If you’re starting and minimising risk, it’s better, to begin with, a medicine stockist. 

3. Tie-up with a doctor

An informal tie-up with a clinic or doctor will help your business in a big way and increase your chances of doing well. 

4. Purchase a franchise

Purchasing a franchise is another great way of doing well in this kind of business as the franchise provider will take care of most of the things for you.  

5. Hiring skilled personnel

Though it’s not mandatory for a person starting a medical store to be a pharmacist, some requirements are prescribed by the Drug Control Department that need to be fulfilled. One of those requirements is that if you are not a pharmacist yourself, it is important to employ a registered pharmacist for your drug store.  

6. Storage Facility

Your drug store must be equipped with a refrigerator and air conditioner. This is important since labelling specifications require certain drugs like insulin, liquid antibiotics, vaccines, and other medications to be stored at lower temperatures. Cupboards and drawers are also an important requirement to store different drugs and other products in your shop, so business can be carried out faster, easier, and more organised.

7. Promote your Medical Business

You can start promoting your business by giving advertisements in the local newspapers or distributing pamphlets in your store's area or nearby places. Some great value-added services like online order systems and home delivery service make it more attractive. It would be appreciated not just by the elderly customers but also by others who would find such offers helpful. Offering discounts on the maximum retail price of the medicines can also help with your shop's promotion. Another way to go about it is by giving promotional gifts for a certain amount of purchase.  

8. A computer for the medical shop

Without technology, managing business activities like accounting, billing, inventory, bookkeeping, bill-generating and stock-updating become challenging. It can also result in a lot of inefficient manual work. Hence, a computer is a necessity to run a business. Further, GST implementation is much easier with the help of software rather than calculating manually. Also, the use of technology reduces the chance of error. 

Also Read: How to Choose the Right Billing Software

Conclusion   

The healthcare industry has shown tremendous growth over these years and is expected to continue in the future. If proper steps are taken, and above stated important points are followed before starting your business venture, the medical store business will succeed.

Frequently asked questions

Is there any special license for selling Ayurvedic, Unani, and Homoeopathy medicines? 

Yes, a license from the Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH) Ministry must be obtained to sell Ayurvedic, Unani and Homoeopathy medicines.

Is any special license required for selling dietary supplements? 

Yes, you require the Food Safety and Standards Authority of India (FSSAI) registration and license to sell dietary supplements in the store. 

Can a doctor or a nurse run a pharmacy?

No, doctors or nurses aren't officially permitted to run a medical shop (based on Medical Ethics). Any Drug licenses for the hospital are allotted in the name of a Pharmacist and not the Doctor or even the Hospital owner.

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