General overview of the pharmaceutical company

According to a report, India’s pharmaceutical industry is the world’s third-largest in terms of volume. Pharma and healthcare sectors have shown tremendous growth over the past few years. The growth graph skyrocketed, especially during the pandemic due to the novel Corona Virus. Besides, technological and scientific advances are driving pharma innovations like never before. Apparently, this is the best time to start a pharmaceutical company in India.

But before proceeding directly with setting up the unit, it's advisable to understand the details involved. To start with, deciding on the correct field is quite important. The reason is that a pharmaceutical company can be involved in one or all fields, i.e., manufacturing, research, distribution, trading and marketing. That said, having basic knowledge or prior experience in the pharma industry is quite vital. Additionally, obtaining all the mandated licenses and documents becomes unavoidable. But above all, authorising a competent person to conduct all operations of a pharmaceutical company is mandatory. It must be kept in mind that the person authorised should have either one of the following:

• Minimum one-year experience at a wholesale drug licensed company after completing graduation. This must be proof acceptable by the drug licensing authority.
• S/he must be a registered pharmacist under the state pharmacy council.

The Department of Pharmaceuticals launched a production-linked incentive (PLI) scheme to promote domestic manufacturing. Under this, domestic pharmaceutical manufacturing is encouraged by establishing greenfield plants with minimum domestic value addition in four different ‘Target Segments' with a surging amount of Rs. 6,940 crores (US$ 951.27 million). This was done to reduce import dependency and obtain self-reliance.

Importance of the pharma company in India

India always outshines in the international pharmaceuticals industry, thanks to its skilled workforce, low-cost manufacturing and better infrastructure. These attributes have catapulted the nation into one of the prominent players in the generics production segment. Additionally, the country possesses a vast domestic market, which boosts its dominance worldwide in the pharmaceutical sector. This sets a vast stage for the pharmaceutical manufacturing company in India.

Indian pharmaceutical sector fulfils over 40% of generic demand in the United States,50% of global demand for various vaccines and 25% of all medicine in the United Kingdom. The domestic pharmaceutical industry includes a network of around 10,500 manufacturing units and 3,000 drug companies. Besides, India has various potential engineers and scientists to lead the industry to greater heights.

Benefits of establishing a pharmaceutical company in India

• Low cost
• Large market
• Upgraded manufacturing plants
• Intense growth and competition

Checklist of mandated licenses and documents for setting up a pharma company in India

For conducting any business in the pharmaceutical sector, one must obtain certain documents and licences, which are as follows -

Drug License

The Drug and Cosmetic Act of 1940 in India regulates the manufacture, import, distribution and sale of cosmetics and drugs. Thus, in the case of a pharmaceutical company, it becomes quite essential to obtain a drug license from the respective drug regulatory authorities. In the case of a manufacturing unit, one must obtain Drug Manufacturing License. Similarly, one requires a wholesale drug license number for marketing, trading, and distribution. Moreover, getting a Retail Drug License Number is imperative for a retail shop and pharmacy company. All of these are explained in detail below -

Wholesale Drug License

A wholesale Drug License is a licence allowing the pharma company in India to sell drugs on a wholesale level. It also includes trading and distribution.

The list of these licenses is as follows:

• Licence on Form 20-B. This is required for the wholesale of drugs other than those mentioned in Schedule C, C(1) and X. The application is submitted on Form-19.
• Licence on Form 21-B for wholesale of drugs specified in Schedule C & C(1). The application is to be submitted on Form-19.
• Licence on Form 20-G for wholesale of drugs mentioned in Schedule ‘X’.The application is made on Form-19-C.

Documents required for Drug License are as follows -

• Affidavits
• Fees along with challan as a fee deposit proof
• Blueprint or layout of premises
• Freeze purchase bill copy with complete address
• Rent agreement or proof of ownership
• Electricity bill of premises
• Affidavit of partner, proprietor, pharmacist, EP, etc.
• Firm registration receipt in case a private limited company
• Address proof
• List of directors
• AOA
• Partnership deed, if any
• Any other documents, as asked by the local drug controller etc

Drug Manufacturing License

This licence is required to manufacture Allopathic, Ayurvedic and Cosmetics products/drugs.

Documents required for Drug ManufacturingLicense are as follows -

• Authorisation letter
• Applicant’s address and identity proofs
• Covering letter
• The layout of the approved manufacturing premises
• Constitutional documents
• Specific environmental requirements
• Site and device master file

Retail Sale Drug Licence

A retail sale drug licence is required for the retail sale of drugs. The term “Retail Sale” implies a sale to the consumption of the end consumer. It is not intended for resale by the buyer. Thus, the buyer is not mandated to obtain a drug licence. Retailers of the drug could give it to a dispensary, hospital, medical, research or educational institute, or any other person.

Goods and Service Tax Identification Number

Abbreviated as ‘GST number’, Goods and Service Tax Identification Number is compulsory for the inter-state supply of goods or turnover of more than 40 lakhs.

Documents requirements for GST number for a pharma company are as follows -

• Digital Signature Certificate (DSC) (Class II)
• Partners/Proprietor/Directors address proof
• PAN card
• Aadhaar card
• Rent agreement or ownership proof
• Partnership deed or certificate of incorporation/Memorandum of Association (MOA)
• Address proof of the pharma company
• Bank details and statements

FSSAI license or registration

FSSAI license or registration is mandated in case the owner of the pharmaceutical company also deals in dietary and food supplement products in addition to pharmaceutical products.

The following documents are mandated for FSSAI License/Registration:

• List of Partners/Directors/Proprietors
• Duly completed and signed FormB
• Address proof and photo identity proof of Partner/Proprietor/Director(s)/Authorised Signatory
• List of anticipated food categories
• Authority letter with name and address of the responsible nominated person
• Proof of possession of premises
• Affidavit of proprietorship
• Partnership Deed
• Memorandumof Association
• Articles of Association (AOA)
• Food Safety Management System certificate or plan (if any)

Company or firm registration

Another essential requirement for a pharmaceutical company is company registration. However, this is obtained based on the different types of firms in India, like private limited, limited liability partnership, public limited, sole proprietorship, etc.

The following documents are required to get a company or firm registration:

• PAN card
• Passport size photograph
• Registered office proof
• Copy of the electricity bill
• No Objection Certificate (NOC)
• Residential proof

Trademark registration

Although not necessary but quite important, trademark registration helps prevent the misuse of property like brand name, logo or name of the pharma company.

Documents required for trademark registration are as follows –

• Name and logo with a description
• TM-48 form
• Details of the owner
• Assignment form

Nature of the service or product

The detailed process of setting up a pharmaceutical company in India

The process of establishing a pharma company in India involves the following steps –

1. Hiring a competent person is required as an authorised person to take a drug license.
2. Finalising a location for setting up the premises.

• Incorporating the company (Partnership/proprietorship/private limited etc.).

1. Registering the company.
2. Arrangingauthorised staff, documents and other vital requirements.
3. Buying the required analytical equipment and machinery.

• Obtaining the necessary licenses.
• Getting ready for the physical inspection conducted by the drug authority.

1. Applying for Goods and Service Tax (GST) registration.
2. Initiating the operations after completing all the formalities.

The registration process of the pharma company

Drug Export NOC

Earlier, the Central Drugs Standard Control Organisation (CDSCO) held the State Licensing Authority (SLA) to issue a NOC. This was mandated for drug export from India. But to guarantee ease of doing business and establishing the pharmaceuticals company in India, CDSCOwaived the rule of obtaining NOC by pharma firms for exporting medical devices, drugs and cosmetics across India.

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