Hero Benefits:
Complete roadmap from business structure selection to drug license acquisition.
Regulatory compliance with CDSCO, State Drug Control, and GMP requirements.
Access to India’s growing pharmaceutical market worth over $50 billion.
Meta Description: Step-by-step guide to starting a pharmaceutical business in India. Learn about company registration, drug licenses, GMP compliance, capital requirements, and regulatory approvals for manufacturing, wholesale, and retail pharma operations.
How to Start a Pharmaceutical Business in India
India ranks third globally in pharmaceutical production by volume and is the largest provider of generic medicines worldwide. The domestic pharma market exceeds $50 billion and continues growing at over 10% annually. This presents tremendous opportunities for entrepreneurs looking to enter the pharmaceutical sector through manufacturing, wholesale distribution, marketing, or retail operations.
Starting a pharmaceutical business requires navigating a complex regulatory landscape governed by the Drugs and Cosmetics Act, 1940. From selecting the right business structure to obtaining multiple licenses from CDSCO and State Drug Control authorities, each step demands careful planning. This guide walks you through the complete process of establishing a compliant and successful pharmaceutical venture in India.
Types of Pharmaceutical Businesses
Drug Manufacturing: Production of allopathic, ayurvedic, homeopathic medicines, and cosmetics. Requires manufacturing license, GMP-compliant facility, and qualified technical staff.
Wholesale Distribution: Bulk supply of medicines to retailers, hospitals, and other distributors. Includes PCD (Propaganda Cum Distribution) pharma franchise models.
Retail Pharmacy: Direct sale of medicines to consumers through chemist shops, pharmacies, and healthcare facilities.
Third-Party Manufacturing: Contract manufacturing for other brands using loan license arrangement. Lower capital requirement with faster market entry.
Pharma Marketing Company: Marketing and distribution of pharmaceutical products manufactured by third parties under own brand name.
Choosing the Right Business Structure
The business structure you choose impacts liability protection, funding ability, and regulatory compliance. For pharmaceutical businesses, Private Limited Company Registration is the most preferred option due to limited liability, separate legal entity status, and credibility with regulatory authorities. Banks and investors also prefer lending to Private Limited Companies, making it easier to raise capital for infrastructure and working capital requirements.
Why Private Limited Company for Pharma Business:
• Limited liability protects personal assets from business risks
• Easier to obtain drug licenses with corporate structure
• 100% FDI allowed in pharmaceutical sector under automatic route
• Better credibility with hospitals, distributors, and government tenders
• Perpetual succession ensures business continuity
Step-by-Step Process to Start Pharma Business
Step 1: Company Incorporation
Begin with incorporating your company through the MCA portal using SPICe+ form. You’ll need minimum two directors (one Indian resident), DSC and DIN for directors, registered office address proof, and MOA/AOA. For detailed guidance on the complete process, refer to Pharma Company Registration in India which covers all registration requirements specific to pharmaceutical businesses.
Step 2: Obtain GST Registration
GST registration is mandatory for pharmaceutical businesses involved in interstate supply or having turnover exceeding ₹40 lakh. Apply through the GST portal with company incorporation certificate, PAN, bank account details, and address proof. GSTIN is required for issuing tax invoices and claiming input tax credit.
Step 3: Apply for Drug License
Drug license is the most critical requirement, issued under the Drugs and Cosmetics Act, 1940. The type of license depends on your business activity – manufacturing, wholesale, retail, or loan license. Applications are submitted to the State Drug Control Authority or CDSCO based on license category.
Types of Drug Licenses
| License Type | Form | Purpose | Issuing Authority |
| Manufacturing License | Form 25/28 | Manufacture drugs | State Drug Authority |
| Wholesale License | Form 20B/21B | Wholesale distribution | State Drug Authority |
| Retail License | Form 20/21 | Sell to consumers | State Drug Authority |
| Loan License | Form 25A/28A | Third-party manufacturing | State Drug Authority |
| Import License | Form 10/10A | Import drugs to India | CDSCO |
Eligibility for Drug License
Competent Person Requirements:
• Registered pharmacist under State Pharmacy Council, OR
• Graduate with minimum 1 year experience in drug handling/sale
• For manufacturing: B.Pharm/M.Pharm with relevant experience
Premises Requirements:
• Wholesale: Minimum 15 sq. meters with AC and refrigerator
• Retail: Minimum 10 sq. meters with proper storage
• Manufacturing: GMP-compliant facility with separate zones for production, QC, storage, and packaging
Capital Requirements
| Business Type | Estimated Investment |
| PCD Pharma Franchise | ₹50,000 – ₹2 lakh |
| Pharma Marketing Company | ₹2 lakh – ₹10 lakh |
| Wholesale Distribution | ₹5 lakh – ₹25 lakh |
| Retail Pharmacy | ₹3 lakh – ₹15 lakh |
| Manufacturing Unit (Small) | ₹50 lakh – ₹2 crore |
| Manufacturing Unit (Medium) | ₹2 crore – ₹10 crore |
Additional Licenses and Registrations
FSSAI License: Required if marketing food supplements, nutraceuticals, or dietary products along with pharmaceuticals.
Import Export Code (IEC): Mandatory for importing raw materials or exporting finished pharmaceutical products.
Pollution Control NOC: Required for manufacturing units from State Pollution Control Board before commencing operations.
Trademark Registration: Protects your brand name and product names from infringement.
Patent Registration: Protects new drug formulations and manufacturing processes for 20 years.
GMP Compliance for Manufacturing
Good Manufacturing Practices (GMP) compliance under Schedule M of Drugs and Cosmetics Rules is mandatory for manufacturing licenses. WHO-GMP certification enhances credibility for exports. Key requirements include separate manufacturing and QC areas, HVAC systems for temperature control, purified water systems, batch manufacturing records, Standard Operating Procedures (SOPs), and qualified QA/QC teams.
Conclusion
Starting a pharmaceutical business in India requires systematic planning across company registration, drug licensing, and regulatory compliance. Private Limited Company structure offers the best combination of liability protection, funding access, and regulatory credibility. Choose your business model – manufacturing, wholesale, retail, or marketing – based on capital availability and industry expertise. Ensure you have a qualified competent person and compliant premises before applying for drug licenses. With proper planning and regulatory compliance, India’s growing pharmaceutical market offers substantial opportunities for new entrants.
Frequently Asked Questions
What is the minimum qualification required to start a pharma business?
You need a competent person who is either a registered pharmacist or a graduate with minimum one year experience in drug handling. For manufacturing, B.Pharm or M.Pharm qualification is typically required.
Can I start a pharma business without manufacturing facility?
Yes, through loan license or third-party manufacturing arrangement. You can market products manufactured by another licensed facility under your brand name with significantly lower capital investment.
How long does it take to obtain a drug license?
Wholesale and retail licenses typically take 30-60 days. Manufacturing licenses may take 3-6 months depending on facility inspection and compliance verification.
Is FDI allowed in pharmaceutical sector?
Yes, 100% FDI is allowed under automatic route for greenfield pharmaceutical projects. For brownfield (existing) projects, FDI up to 74% is permitted under automatic route, and beyond that requires government approval.
What is the validity period of a drug license?
Drug licenses are typically valid for 5 years from the date of issue. Renewal application must be submitted at least 3 months before expiry to avoid disruption in operations.
Can I operate pharma business from home?
No, drug license requires commercial premises with proper storage facilities. Residential addresses are not accepted for wholesale or retail drug licenses.
What is PCD Pharma Franchise model?
Propaganda Cum Distribution (PCD) is a franchise model where you market products of an established pharma company in a specific territory. It requires minimal investment and provides ready product portfolio with marketing support.
Is WHO-GMP certification mandatory?
WHO-GMP is not mandatory for domestic sales but is required for exporting to regulated markets. Schedule M GMP compliance is mandatory for all manufacturing licenses in India.
What are the penalties for operating without drug license?
Operating without valid drug license attracts imprisonment of 1-3 years and fine of minimum ₹5,000. For spurious or adulterated drugs, penalties can extend to life imprisonment and fines up to ₹10 lakh.
Can a non-pharmacist be a director in a pharma company?
Yes, directors need not be pharmacists. However, the company must employ a qualified competent person (pharmacist or experienced graduate) who supervises all drug-related operations and whose name appears on the license.
