Docs required for starting wholesale distribution of medicine business

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In India, majority of the pharmacy businesses fall under the category of standalone pharmacy operating in the unorganized sector. However, slowly the concept of chain pharmacy or township pharmacy are catching up; but is still a long way behind. Hospital pharmacy, chain pharmacy and township pharmacy are usually setup under a larger corporate entity or the hospital – mostly a private limited company constitution. The standalone pharmacies are usually setup under a proprietorship or a partnership. However, as LLP registration can now be obtained for just Rs.8000/- through IndiaFilings.com, it is advisable that standalone pharmacy businesses also be started as LLP or Private Limited Company. Setting up a standalone pharmacy business in a LLP or Private Limited Company constitution will ensure that the business is transferable, scalable and limits the promoters personal liability.

Tax Registrations
Value Added Tax (VAT) VAT registration is required in India whenever goods or products are being sold by a business. VAT fall under the purview of the state government and therefore based on the state in which the pharmacy is setup, VAT registration would have to be obtained from the State’s VAT or Sales Tax Department. Pharmacy businesses are required to obtain VAT Registration and pay VAT taxes. For more information about VAT registration or rates, refer to the following articles:

Delhi VAT
Maharashtra VAT
Tamil Nadu VAT
Gujarat VAT
Karnataka VAT
Kerala VAT
Uttar Pradesh VAT
Pharmacy License or Drug License
To start a pharmacy business, a drug license is required. The Central Drugs Standard Control Organization and State Drugs Standard Control Organization control the issue of drug license in India. Drug license for setting up a pharmacy business is usually under the purview of the State Drugs Standard Control Organization and the list of State Drugs Standard Control Organization can be downloaded below:

List of State Drugs Control Organization

Normally, the Drug Control Organization issues two types of licences for operating a pharmacy business. One is the Retail Drug License (RDL) issued to run a general chemist shop. The other is the Wholesale Drug License (WDL) issued to persons or agencies engaged in wholesale of drugs and medicines. In most states, a retail drug license is only issued to persons who possess a degree or diploma in pharmacy from a recognised institute or university after depositing the requisite fee on account of the fact that it is a specialised job and only qualified persons can handle it. But the above conditions are relaxed in case of procuring a Wholesale Drug license (WDL).

Requirement for obtaining Drug License
The following are minimum requirements for obtaining drug license or starting a pharmacy in India:

Area: The minimum area of 10 square meter is required to start a medical shop or pharmacy or wholesale outlet. In case, the pharmacy business combines retail and wholesale, a minimum of 15 square meter is required.
Storage Facility: The store must have refrigerator & air conditioner in the premises. According to the labeling specifications certain drugs like vaccines, Sera, Insulin Injections etc., are required to be stored in the refrigerator.
Technical Staff:
Wholesale – The sale of drug by wholesale shall be made either in the presence of registered pharmacist or in the presence of a competent person who shall be a graduate with 1 yr experience in dealing in drugs or a person who has passed S.S.L.C with 4y ears experience in dealing in drugs, specially approved by the department of drug control for the purpose.
Retail – The sale of drug by retail must be made in the presence of registered pharmacist approved by the department, Registered pharmacist is required throughout the working hours.
Documents required for obtaining Drug License
The documents required for starting a pharmacy business varies from state to state. However, the following is an indicative list of documents required for obtaining drug license in India.

Application form in the prescribed format
Covering Letter with the intent of the application signed with name and designation of the applicant
Challan of fee deposited for obtaining drug license
Declaration form in the format prescribed
Key plan(Blue print) for the premises
Site plan (Blue print) for the premises
Basis of possession of the premises
Proof of ownership of the premises, if rented
Proof of constitution of the business (Incorporation Certificate / MOA / AOA / Partnership Deed)
Affidavit of non conviction of proprietor / partners/ directors under Drugs and Cosmetics Act, 1940
Affidavit of registered pharmacist or competent person working full time
Appointment letter of registered pharmacist/competent person, if employed person.

Advocate Siddhant Sharma LawRato