How to Open a Medical Store or Pharmacy in India?

Opening a medical store requires many registrations and must follow legal procedures before selling medicines. India’s pharmacy and healthcare sectors have grown tremendously due to the increase in corporate and multi-speciality hospitals. Establishing a medical store is a good option for entrepreneurs having less capital and want to invest in the healthcare sector. This article provides how to open a medical store in India.

Types of Medical Store

The type of medical store that an individual can establish are as follows:

• Hospital medical store: It is a medical store opened inside the hospital to cater to the needs of the patients who come to the hospital.
• Standalone medical store: It is the most common form of medical store. It is small or medium-sized stores opened in residential areas that the residents visit to purchase essential medicines.
• Chain pharmacy or franchise outlets: These are medical stores in malls and shopping complexes and are part of a chain of pharmacies with branches in different areas. They are usually large-sized medical stores.
• Township medical stores: These types of medical stores are opened in a township to cater to the needs of the people residing in the town or a village.
• Stores in government premises: These medicine stores are opened under various government policies and schemes and are directly under government control. They are usually opened inside Government offices and buildings.

Hospital medical stores, chain pharmacies, and township medical stores are generally established under a larger corporate hospital or entity such as a company. The standalone and township medical stores are usually set up as shops by proprietors or partners. A person wishing to open a medical store must first decide the type of medical store they want to set up and apply for its registration and other licences.

Requirements for Opening a Medical Store

Area specification: The area of the medical store must be a minimum of 10 square metres for a retail business and 15 square metres for a wholesale business.

Storage facility: Medical stores must be equipped with an air conditioner or refrigerator since the labelling specifications require that certain drugs, like insulin injections, vaccines, sera, etc., should be stored in the refrigerator.

Technical staff: Medical stores require technical staff, which are as follows:

• For wholesale business: The sale of the medicines should be made only in the presence of a registered pharmacist with one year of experience or a person with a four-year of experience as approved by the Department of Drug Control.
• For retail: The sale of medicines should be made in the presence of a registered pharmacist during working hours.

Medical Store Registration

Hospital medical stores, chain pharmacies, and township medical stores are generally established as a company or LLP. The standalone and township medical stores are usually set up as partnership firms or sole proprietorships. The medical store owner should decide the type of business structure for the medical store and apply accordingly for its registration. Below are the types of business structures that a medical store owner can choose for opening the store:

Proprietorship Registration

In a sole proprietorship business, there will be only one person as the owner of the medical store. The sole owner runs and manages the medical store. There is no specific registration required to be obtained to establish a sole proprietorship. The sole proprietor or owner should get a PAN card and open a bank account to run the business.

Partnership Registration 

A partnership firm means the medical store is established by two or more partners who manage the business together as per the partnership deed executed by all partners. It should be registered with the Registrar of Firms.

One Person Company (OPC) Registration

A One Person Company (OPC) is a company registered by a single person as the sole member of the company. An OPC can have only one member who runs the medical store. When a medical store is registered as an OPC company, it will get all the benefits of a company, such as limited liability to the company member, perpetual succession, separate legal entity, etc. An OPC should be registered with the Registrar of Companies (ROC).

Private Limited Company Registration

A medical store can also be registered as a private limited company with the Registrar of Companies. A private limited company is started by a minimum of two members and two directors. However, the company cannot issue a prospectus inviting the public to subscribe to its shares.

Limited Liability Partnership (LLP) Registration

Recently, Limited Liability Partnerships (LLPs) have gained popularity. Medical store owners are considering it to set up their businesses as an LLP. Two or more partners establish an LLP under an LLP agreement executed by all the partners. The functioning of an LLP is similar to a partnership firm, but it has the features and advantages of a company. An LLP should be registered with the Registrar of Companies.

Documents Required for Medical Store Registration

• Pharmacy licence application.
• Drug licence deposited fee or challan invoices.
• Blueprint or key plan for the premises.
• The basis of possession of the premises.
• Identity and address proof of owners or partners.
• Ownership proof of premises.
• Appointment letters of registered and employed pharmacists or competent personnel.
• Affidavit of the full-time working registered pharmacists or competent person.
• Non-conviction affidavit of proprietor, partners or directors under the Drugs and Cosmetics Act, 1940.

Other Registrations Required for Medical Stores

Apart from the medical store registration, many other registrations and licences are required by a medical store owner to run the business. The other significant registrations which a medical store owner must obtain after registering the medical store as a sole proprietorship, partnership firm, LLP, or company are as follows:

Pharmacy Licence

A pharmacy licence is one of the major licences required to operate a medical store. The medical store owner or the appointed pharmacists should be qualified pharmacists with a degree of B. Pharm or M. Pharm to secure a pharmacy licence. 

Shop and Establishment Registration

The shop and establishment act registration is required for all medical stores to operate their business. As per the municipal rules of the respective state/area municipal corporation, all stores/shops must mandatorily obtain a registration under the respective state’s Shop and Establishment Act. 

GST Registration

Any business, including a medical store, requires a Goods and Service Tax (GST) registration if the aggregate turnover of the business exceeds the threshold limit in a financial year as prescribed under the GST Act. Under the GST Act, any business supplying goods having a turnover beyond the threshold limit of Rs.40 lakhs for normal category states and Rs.20 lakhs for special category states in a financial year must obtain GST registration.

Drug Licence

Every medical store needs to obtain a drug licence before commencing business. Since medical stores are involved in procuring and selling drugs, they will have to obtain a drug licence from the Central Drugs Standards Control Organisation (CDSCO) and State Drugs Standard Control Organisation (SDSCO). There are two types of drug licences that a medical store needs to obtain depending on the type of store:

• Retail drug licence: The retail drug licence is required to operate a general chemist shop. This licence can be done only in the individual’s name who possesses a diploma or degree in pharmacy from a recognised university or institute.
• Wholesale drug licence: The wholesale drug licence is given to medical stores dealing in the wholesale business of medicines and drugs. There are less stringent conditions to obtain this licence than a retail drug licence.

Establishing a medical store is a good option since the medical sector is growing in India. To open a medical store, an individual must obtain a partnership, proprietorship, LLP or company registration. Once the store is registered, the individual must mandatorily obtain other licences and registration to run the business smoothly, such as the drug licence, shop and establishment licence and pharmacy licence. The individual must also comply with store requirements as per the Drugs and Cosmetics Act, CDSCO and SDSCO rules and regulations to operate the business of selling medicines and drugs.

Disclaimer: The materials provided herein are solely for information purposes. No attorney-client relationship is created when you access or use the site or the materials. The information presented on this site does not constitute legal or professional advice. It should not be relied upon for such purposes or used as a substitute for legal advice from an attorney licensed in your state.
 

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