A start-up pharmaceutical business, anywhere in India, can be a profitable idea for an aspiring business owner. But it should be taken seriously in view of specific regulations, manufacturing requirements and reliable distribution channels available.
You need to decide between setting up a manufacturing facility or a brand-selling business, but what are your options?
We have prepared a brief guide on how to establish a pharmaceutical company in India for those who have clear vision on their product and the market. Here is our step-by-step instruction on opening a pharmaceutical company, from choosing a business model to finding a reliable partner.
1. Define the Business Model
The first thing to do is define the business model. There are at least three main options on starting a pharma business in India:
- start a manufacturing business, which requires having your own facility
- use a ‘pharma manufacturer for hire’ business model, i.e. an outsourcing company to make drugs with your brand
- start a marketing and distributing business, which implies buying goods and delivering them to appropriate sellers
Depending on what you are aiming for and your financial capabilities, discuss and choose what type of organization will be more beneficial to you in the future.
2. Do a Market Study
Do some research on the current situation in the pharmaceutical market, including medicines’ price, potential customers, and competition. Identify what medications are in demand; consider common spheres like cardiology, diabetology, respiratory system diseases, gastroenterology, nephrology, etc.
Find what you can offer on the market in view of your competitors, what you are going to manufacture or distribute, and what your approximate expenses will be in relation to other similar businesses.
3. Get Incorporated as a Formal Business
Next, pick a business structure – private limited, LLP, partnership or sole proprietorship. It also defines the necessary documents: you might need PAN, a business bank account, GST registration if required, etc.. Get guidance from professionals on what is best for future development.
4. Get to Know Requirements for Licenses
Depending on the chosen business model, define the list of required licenses and regulations to follow. A manufacturing company requires a drug license to operate, which may also depend on the type of medicine produced. If you are a marketer, your suppliers may oblige you to have specific documents.
For example, every single party involved in import/export of medicines or any other pharmaceutical activity should have relevant authorization. Visit the Central Drugs Standard Control Organisation website and State Drug Control Department websites to get acquainted with the list of required documents.
In either case, when using a third-party pharma manufacturer, discuss with them the necessary paperwork, legal claims, etc. and understand your responsibilities there.
5. Budget Estimation
Estimate your budget according to the selected business model and list of documents: costs on registration, labelling, manufacturing or purchase, storage or transportation of goods, marketing, staff, working capital, etc.
Depending on the manufacturing method and the products selected, costs of a pharma start-up business in India will vary. Make a provisional business plan before making any commitments.
6. Find a CMO (Contract Manufacturing Organization) Pharma Manufacturer
Another important step, when you decide to use a third-party manufacturing organisation, is choosing the right CMO partner. The decision should be based on the range of products they offer in the agreements, the presence of necessary authorizations and certifications, capabilities in processing (tablets, capsules, liquids, etc.), required quantity, packing options and deadlines. In addition, arrange commercial conditions: who will be responsible for technical specifications of medicines, document formatting, financial and other agreements, quality deviations, and other specifics.
To take a closer look at this question, read our blog post on how to select a pharmaceutical contract manufacturing partner in India.
7. Develop a Brand and Establish Distribution Network
Find a memorable name, check patents, and create a trademark; discuss product packing and labelling options according to regulations. Then, find the right distribution partners: stockists, pharmacies, hospitals, or any other business entities capable of providing your goods/services. A strategy on price, stock levels, delivery method, etc., determines further business relations. Keep in mind that a good brand image and product availability is a key to success.
8. Focus on Quality & Compliances
Do not underestimate the role of quality in the functioning of your pharmaceutical business. Ensure that you are compliant with all quality requirements; keep proper records and documents, discuss details with manufacturers, develop procedures for quality-related complaints and product recalls, analyze batch quality, and track performance of goods as proof of your quality assurance (QA). Remember your liabilities in either case of a CMO manufacturer.
A reliable quality-managing system not only corresponds with all regulations and laws but also helps to maintain trustful relationships with clients and suppliers.
For more details on QA see our blog post on GMP compliance checklist for pharmaceutical manufacturers.
Summing Up
Setting up a pharmaceutical business in India involves the selection of a favorable business model in terms of location and product range on the market. Then, study the chosen concept’s characteristics, required documentation, compliance, and legal requirements.
A great understanding of your responsibilities, regular checks, and high quality of products/services ensure that your business will become an integral part of local or international market. Choose a reliable outsourcing partner and follow all the instructions defined above, as well as professional advice in your particular case.
Common Questions
- Can I start a pharmaceutical company without manufacturing unit?
Yes, you can. There is an option of a ‘pharma manufacturer for hire’, which has all the necessary manufacturing equipment. However, you will need to clarify legal and regulatory aspects of cooperating with such a company.
- How much does it cost to start pharma business in India?
It can vary depending on a number of products you are going to sell or manufacture using outsourcing companies, a list of mandatory documents, and other expenses.
- Do I need a drug license for starting a pharmaceutical business?
In accordance with regulations, every manufacturing and trading company should have the corresponding permits. Learn more about required documents here .
- How do I select a third-party pharmaceutical manufacturer partner?
Make a priority list of a future pharma contract manufacturer partner: the basis for cooperation should be the presence and type of necessary documents and authorizations, the scope of their services, technical specifications and agreements on product quality, the terms of packing and delivery, and financial statements. You may want to take a closer look at the document list and some other aspects defined in this blog post .
