Introduction of Drugs or Pharmaceutical Business License
The competent authority grants a drug license under the Drugs and Cosmetic Act of 1940 to carry out a business concerning drugs/medicines or cosmetics. In other words, no person can start or carry out a business dealing with drugs or cosmetics in India without a licence from the concerned authority. All types of drugs or cosmetics business fall under the Drugs and Cosmetics Act, 1940, including allopathic, homoeopathic, ayurvedic or Unani drugs. To maintain the quality of medicines and cosmetics is the responsibility of all persons dealing with it.
For e.g. Any person consuming or using a drug or cosmetic suffers any harm due to the negligence of the manufacturer or seller. In that case, the same is an offence, which is triable as an offence of grievous hurt under IPC. Hence it is essential to comply with conditions imposed on licence.
Meaning of Drug
A drug licence is a permission granted by the government authorities to the business to deal with drugs. It is mandatory to procure a drug licence before starting a drug business. The term drug is defined under section 3(b) of The Drugs And Cosmetics Act, 1940.
It includes the followings
[tie_list type=”thumbup”]- All medicines and substances used for or in the treatment, diagnosis, prevention or mitigation of any disorder or disease in human beings or animals, including preparations applied on the human body to repel insects like mosquitoes.
- All substances used as a component of the drug. It includes empty gelatin capsules
- Medical devices [/tie_list]
Thus the drug companies the all the medicines whether Allopathic, Homeopathic Ayurvedic, Siddha, or Unani. For licencing purposes, we could divide the medicines into two category
SEE THIS: Points to Consider Before Selecting a Form of Business Organisation
Drugs Regulated By Drug Controller
Medicines Licenced by Drug Controlling Authority (Functioning Under the Ministry Of Health). Following are the examples
[tie_list type=”thumbup”]- Allopathic Drugs
- Veterinary Medicines
- Medical Devices
- Homoeopathy [/tie_list]
Drugs Regulated Under Aayush
Aayush Drug Control Cell is one of the verticals of the Central Drug Standard Control Organisation (CDSCO), regulated by the Ministry of Ayush. The following is covered under Aayush.
[tie_list type=”thumbup”]- Ayurveda,
- Unani,
- Siddha,
- Herbal Products For Medicinal Use
- Herbal Products For Cosmetic Use [/tie_list]
Regulatory Authorities For Pharmaceutical Business
The drug regulatory authorities grant and renew the licenses to sell or manufacture Drugs and Cosmetics and to operate a blood bank. It grants approval for the laboratories to carry out tests and analyses on behalf of the manufacturers. They issue Free sale certificates and Good Manufacturing Certificates and Export registration documents, etc., for export registration if required. The business may also need a No conviction certificate, Performance certificate, a Market standing certificate granted by the regulatory authorities to participate in Government tenders. There are various regulatory authorities to regulate the business of Drugs and cosmetics to ensure its safety and efficacy. Below is the list of licenses and their regulatory authority:
| No | Type of License | Regulatory Authority |
| 1. |
|
State Drug Controlling Authority |
| 2. |
|
State Drug Controlling Authority with an approval by the Central License Approving Authority |
| 3. |
|
Department of Ayush |
| 4. |
|
Central Drugs Standard Control Organization (CDSCO) |
| 5. |
|
Food Safety and Standards Authority of India (FSSAI) |
Common Types of License for Pharmaceutical Business in India
The kind of license your business needs can be determined based on your pharmaceutical business’s product or services. Here is the list of the most common licenses for the trading or manufacturing of drugs in India. Please don’t hesitate in contacting us to discuss your business so that our licensing expert can advise you appropriately.
[tie_list type=”thumbup”]- Retail Sale Drug Licence: An applicant applies for a Retail Sale drug licence for the retail sale of drugs. The term “Retail Sale” means a sale to the consumption of the end consumer. It is not meant for resale by the purchaser. Thus the purchaser is not required to possess a drug licence. Retailers of the drug could sell it to a hospital, dispensary, medical, educational or research institute, or any other person.
- Wholesale Drug Licence: A wholesaler of the Drug must possess a wholesale Drug licence. Wholesale means sale to a person to further sell it; thus, the purchaser of these drugs must have either a wholesale or retail sale drug Licence. Wholesale may opt for Third party manufacturing. Third-party manufacturing means the drugs manufactured by a licenced manufacturer per its client’s requirement, i.e. Wholesaler. Such a manufacturer will require a brand affidavit before manufacturing any medicine under the brand name of Wholesaler. The product package will bear the manufacturer( Marketed by) and the Wholesaler (Marketed by-). If a client places a requirement for which needs the approval of the Drug controlling authority, the manufacturer is to take such approval before manufacturing those drugs.
- Manufacturing Licence for Drug: It is a licence for manufacturing of Drug. Manufacture in Drugs means any process or part of a process for making, altering, ornamenting, finishing, packing, labelling, breaking up, or otherwise treating or adopting any drug with a view to its sale or distribution.
- Loan Licence: It is a licence for manufacturing the drug using the facility and premises of other manufactures. The manufacturer who provides its facility for the production of the drug must have a valid drug licence and surplus production capacity.
- Import Licence: It is required to import drugs in India. The Central Drug Standard Control Organisation (CDSCO) grants import licenses for drugs. [/tie_list]
The Eligibility & Qualification of Pharmacist / Competent Person
The first requirement for a pharmaceutical business is to have a competent person or a qualified and registered pharmacist. Hence the first step is to check the basic eligibility requirements of the Competent Person / Pharmacist. The qualification or eligibility of a Competent Person for Retail and Wholesale Drug License is as under:
| For Retail Drug License | For Wholesale License |
|
|
Notes on Competent Person:-
- Pharmacists may possess the degree of any state but must be registered with the pharmacy council of the state in which the application for the drug license is filed, based on the location of the pharma business.
- The experience letter of a competent person is not enough. Drug inspector may ask to prove his experience through a bank statement showing transfer of salary amount in it. In some cases, the Drug Inspector also calls the competent person or the pharmacist for a personal interview.
- The appointed registered pharmacist or competent person must not be working anywhere else except the existing company.
- Licensees need to inform any change in the competent person/ Registered Pharmacist to the drug controlling Authority. And make arrangements for replacement of the same. [/box]
“Proprietor/Partner/Director Eligibility: Proprietor or any of Partner/Director must not be convicted under provisions of The Drugs and Cosmetics Act, 1940 and Rules framed thereunder.”
Specifications & Conditions for Premises for Drug License
The place where the drugs are stored is significant from the point of view of licensing. Most of the rejections of applications for drug licenses are done mainly due to non-conforming specifications or shortfalls in the measurement of premises. The Shop on which license application is filed must be an independent and a pucca structure, wholly in control and possession of the applicant. The requirement of the premises for wholesale or retail drug license is different. Following is the tabular presentation on the specific condition for premises.
| Eligibility criteria | For Retail Drug License | For Wholesale Drug License |
| Type of Premises | A retail pharmacy shop may be located in a Mixed Land Use Area or a Commercial Place. | A wholesale pharmacy store only at a Commercial Place. |
| Minimum Area | The carpet area of the retail store pharmacy must be a minimum of 10 square meters with a height of 2.75 meters. | The carpet area of the wholesale pharmacy must be a minimum of 10 square meters and height of 2.75 meters. |
| Approach Road | It must be facing a minimum road width prescribed by the municipality of the area for mixed land use. | The road/street on which it is located must be broad enough to facilitate loading and unloading of goods. It is suggestable to have a premises facing a minimum road width of 18 mts or more. |
| Furniture | The Retail Store requires
|
Same as retail |
| Equipments | Following equipment/appliances is required for retail sale store
|
Same as retail |
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Notes:-
Area For Retail and Wholesale (Both): If the applicant wants to apply for retail and wholesale pharmacy at the same premises, the minimum area prescribed is 15 square meters.
How to Measure Carpet Area: While measuring the Shop or premises for drug license, the carpet area is calculated after excluding the open area, pantry area, and washroom area. It includes only the area used in dealing drugs.
What is meant by Mixed land use?: Mixed use essentially means provision of nonresidential activity in residential areas. Mixed use shops can only be on ground floor upto the maximum of ground floor coverage. There should be unconditional surrender of front setback, which should not have boundaries and shall be only used for parking.Permission of mixed use would be taken from the concerned local Authority and will be subject to payment of conversion charges.No encroachments shall be permitted on the street by these shops.
What is a Commercial Place: Commercial Place is a place where only commercial activity is carried out. The applicant must ask for the conversion charge receipt and parking fee receipt from the owner of the premises to confirm whether the premises is a commercial premise or not before taking it on rent for a wholesale drug licence.
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Planning To Start a Pharmaceutical Business
If you are planning to start a drug business, you need to know the regulatory requirements. The stepwise process for a startup in the drug could be as under
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- Check the eligibility criteria for a pharma business like premises, technical staff /competent person and equipment and machinery.
- Please select the suitable form of business and go for its constitution. You may opt for proprietary business/Partnership/Company/LLP.
- Prepare a business plan for your business.
- Once the entity gets constituted, apply for its PAN and TAN. In the case of the Company, the PAN and TAN number are allotted on its constitution.
- Execute a Rent agreement in the name of your entity.
- Arrange the documents required for the drug Licence.
- Apply for a drug licence
- Get the local registration like GST, Professional tax after the grant of Drug Licence. These applications can be filed even before applying for a Drug Licence, but it is suggestable to file it after the grant of drug licence.
- Select the brand names for drugs and file a trademark application after trademark availability search.
- Start the business in compliance with all the laws and regulations related to your business.
[/tie_list]
Document
[tie_list type=”thumbup”]- Entity Documents
- Certificate of Incorporation (COI), Memorandum of Association (MoA), Article of Association (AOA), Pan Card Copy of entity (in case of company)
- COI, LLP Agreement and PAN card copy of Entity (in case of LLP)
- Partnership deed and pan card copy of the entity (In case of Partnership)
- Any establishment proof in case of proprietorship (Not mandatory)
- Each Director/proprietor/partner Documents
- Passport size Photograph
- Pan card
- Aadhar card
- Address proof
- Affidavits for directors/proprietor/partners
- Premises Related
- Rental Agreement in the name of the entity. (Note*)
- Ownership proof of the premises ie. Latest electricity bill, property tax paid receipt and sale deed(property papers) of the premises
- Site plan and key plan of the premises with total area, dimensions, name of the firm, address mentioned on it.
- Technical person documents
- Affidavit regarding non-conviction
- All educational documents such as certificate and marksheet of graduation including 10th and 12th class documents.
- ID proof & address proof including PAN , aadhar, and photo of the premises
- Biodata and Appointment and consent letter in existing firm
- Registration certificate and PPP card from state Pharmacy council in case of Registered Pharmacist.
- Copy of experiences certificate of at least one year in case of experienced person.
- Other documents
- List or details of directors/proprietor/director.
- Board resolution or Authorization Letter
[/tie_list]
[box type=”note” align=”” class=”” width=””]Note:
- Registered rent agreement is required in case license is being applied in Maharashtra and it must be for 5 years minimum. Other states have not made it mandatory.
- Khata Certificate/extract is mandatory if the license is being applied in Karnataka.
- Conversion and parking charges receipt is required if applying for a wholesale license. It is mandatory in case the premises comes in mixed land use under Delhi MPD.
- Only conversion charges receipt is applicable if applying for a retail license. It is required in case the premises comes in mixed land/residential use under Delhi MPD.
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Validity of Drug License
A drug licence, once granted, is valid for five years unless suspended and cancelled by the Drug department. The licence imposes certain conditions on the licensee. A wholesale / Retailer of drug having a drug licence shall
[tie_list type=”thumbup”]- Maintain the record of the sale of medicines in cash or credit memos legibly.
- Comply with the conditions of licenses and other provisions prescribed under The Drugs and Cosmetics Act, 1940 and Rules framed thereunder being in force and amended from time to time.
- Not utilize the sale premises of its establishment for any other purpose except for the sale of drugs covered under the licenses.
- Ensure that the appointed Registered pharmacist or competent person must not be working anywhere else except the existing company.
- Inform the Assistant Drugs Controller and licencing authority if CP/RP has to leave the company/firm for any reason.
- Inform the Drug Controlling authority of its state for a change of name or constitution, premises, directors/partners/proprietor.[/tie_list]
Step Wise Process For Drug License
[tie_list type=”checklist”]-
Step-1: Documentation
Documentation is a crucial element in the whole licensing process. Correct documentation makes the process hassle-free and leads to a successful grant of licence. The list of documents required for the Wholesale /Retail sale drug Licence depends on the applicant’s type and business activity.
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Step-2: Generation of User ID and Password
The applicant is to register for user ID and password. Once The User ID and password once generated is sent to the registered mail ID of the applicant. The applicant can apply to the generation of user ID and password.
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Step-3: Application Filing
The applicant applies for the grant of a Drug licence to the respective Drug Controlling Authority of the state. For each type of licence, a separate application is filed via different forms prescribed for it. There is no provision for one central certificate/license covering all states. The applicant is to file separate applications for each store.
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Step-4: Inspection of the premises
Before the grant of a drug license, the drug inspector having jurisdiction of the area visits the premises where the drug license is required and verifies the particulars furnished with the application and takes a measurement of the premises. He also checks the area of the premises, whether it is on mixed land use or in a commercial.
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Step-5: Scrutinization of Application
The concerned Drug Inspector verifies the details and the documents uploaded in the online application with his observations on his visit. He may raise a clarification in the application. The applicant must reply to the clarification within 3days of it. Non-furnishing a satisfactory reply may lead to the cancellation of the application.
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Step-6: Issue of License
After satisfactory verification of the documents and the details, the Drug Control department issues the Drug License. The issued licence is valid for five years and is valid after that, subject to its renewal.[/tie_list]
Frequently Asked Questions
Q. Is a drug Licence compulsory to do a pharmacy business?
A. No one can deal with drugs without a licence in any manner. So, a drug licence is compulsory to do pharmacy business.
Q. Who provides a drug Licence?
A. Drug controlling authority specified under Drugs and Cosmetic Act,1940 and rules made thereunder provides the drug Licence.
Q. What is the Drug and Cosmetic Act?
A. Drug and Cosmetic Act is an Act to regulate the pharma sector, be it sale, distribution, transport, storage, import, export, manufacturer of drugs in India. This act was passed in 1940 with the primary objective to ensure the provision of safe, effective and quality drugs to the people of India
Q. Is it a requirement to display the original license?
A. Yes, the licensee should display the original license s in a prominent place in a medical store. The medical store should display the Registration Certificate of the registered pharmacist and the licence
Q. Whether a license is required for the sale of cosmetics?
A. No, A cosmetic trader does not require any licence from the drug controlling authority. Cosmetic manufacturers require a licence from the drug department, but if they are manufacturing ayurvedic/herbal cosmetic products, they need an Ayurvedic cosmetic manufacturing licence from AYUSH.
Q. Whether a separate license is required for the sale of drugs through a motor vehicle?
A. Yes, a separate licence is required for the sale of drugs through motor vehicles. At the time of applying, applicants need to opt for it.
Q. How to Run a 24X7 medical store? Is there a provision of a separate licence to run 24X& medical Store?
A. Pharmacy stores running 24X 7 do not require any special licence. They need to get the retail sale licence, but they have to appoint three pharmacists to operate three shifts continuously. Each pharmacist will do a shift of 8 hours.
Q. What is the minimum area required to open a wholesale or Rtailsale medical store?
A. The minimum area required to sell drugs are as under:-
- Retail sale Pharmacy Store- 10 sq.m
- Wholesale Pharmacy store- 10 sq.m.
- Retail & Wholesale Pharmacy Store at a single premise- 15 sq. m
Q. Do a wholesaler or retailer of drugs mandatorily require a refrigerator?
A. The wholesaler or retailer of drugs compulsorily requires a refrigerator at his medical Store.
Q. Can the fridge be switched off after the working hours of the medical shop/store?
A. No, as we all know, some medicine must be stored between 2ºC and 8ºCparticularly vaccines, insulins, sera, eye drops, etc. Thus the pharmacy store cannot switch off the fridge at any point in time. It should be on & in working conditions even after working hours at a medical shop/store.
Q. Do you require a special licence for veterinary drugs?
A. No, Drug dealers do not have a separate license for veterinary drugs. Still, he needs to make a separate provision for storage in the medical Store marked as VETERINARY DRUGS, NOT FOR HUMAN.
Q. Can the licenced premises store drugs and general items Eg: cosmetics, chocolates, mineral water etc.?
A. Yes, A medical store can store and sell general items like cosmetics, chocolate, mineral water etc.
Q. What happens to the drug licence if there is a change in premises?
A. The applicant has to surrender the drug licence granted for the old premises and apply for a new licence if there is any change in the firm’s premises..
Q. Do we require to inform if there is any change in the competent person/registered pharmacist?
A. Licensee needs to report any change in the competent person / registered pharmacist and submit relevant documents of the newly appointed competent person / registered pharmacist to the concerned licensing authority. The licencing authority does the necessary endorsement on the license after verification of the document to its satisfaction
Q. Do importers of drugs need a wholesale license?
A. Yes, the importer of a drug must possess both an import License and a wholesale licence to sell imported drugs within the country.
