How to open a medicine shop in India


Are you an ambitious individual who is looking to start a medical store but don't know how to move ahead further? Then you are at the appropriate page to know about the detailed information regarding the procedure to open a medical shop in India and many other essential requirements that need to be fulfilled for starting a pharmacy business.

Introduction

The medical store business has deep roots in the Indian economy. It is very lucrative in nature as the medical store business profit margin is somewhat higher and also it doesn't easily get affected by the ups and downs in economic cycles. But, the pharmacy business may not flourish as expected if proper analysis is not done in advance. The most important thing to check out before opening a medical shop is the location. If a proper location is not chosen, it will be very difficult for the activity to sustain. If the location is already got saturated with such kind of business activities, it is better to avoid such type of locations. Though it is not ethically right, an informal tie-up with a doctor or with a clinic will always enhance your chances of succeeding in the venture. Purchasing a franchise is another way of succeeding in such kind of businesses as the franchise provider will look after many difficult things for making you profitable. The healthcare industry is rising exponentially over the years and will continue to rise so in future also. So, if you take proper steps at right time, your drug store business can last through generations.

Infrastructure and investment required to start a medical shop

  • You require 10 sq. meters of minimum area for starting a retail or wholesale drug store. If you combine both retail and wholesale businesses under a single roof, the minimum area required will be 15 sq. meters.

  • If you are not a pharmacist by yourself, you have to employ a registered pharmacist for a retail drug store and for a wholesale drug store, you have to employ a competent person, who should meet the requirements as prescribed by the Drug Control Department. It is not strictly mandatory for any individual to be a pharmacist or a competent person for starting a medical store.

  • For storing vaccines, Insulin injections, some liquid antibiotics and other medicines at lower temperatures, a refrigerator is a must required equipment to be present always and there should also be sufficient number of cupboards to store different kinds of drugs and pharmaceutical preparations.

  • The minimum investment required for opening a retail drug store in small towns and semi-urban areas is around Rs. 3-4 lakhs and for a wholesale store it will be around Rs. 7-8 lakhs. The investment will be more for large towns and metropolitan cities. Similarly, the investment will be more if more inventory is kept at the medical store.

What is the criteria to get licence for medical shop

Before opening a medical shop, you need to decide the type of firm you want. That means whether it should be a sole proprietorship firm, a partnership firm or a private limited company. For a sole proprietorship firm, there is no requirement of any business registration that need to be done but a partnership firm may be registered with the Registrar of Firms by using a Partnership Deed written among different partners. But it is not mandatory for the partnership firm to be registered. It should be registered only when you foresee some legal disputes among partners in future. A private limited company will always be registered with the Registrar of Companies if it wants to do any business in India.

In order to open a medical shop you need to get a drug license from the State Drug Control Department. The medical store license procedure is almost same across all the states in India. The registered pharmacist that you hire must work full time in the retail pharmacy store and he must be an approved pharmacist by the state pharmacy council. In case of wholesale pharmacy shop, there is no need of a registered pharmacist to be employed. But in place of the pharmacist, a competent person, who must be a graduate with at least one year of experience in dealing with medicines or a person, who has passed matriculation and having 4 years of experience in dealing with medicines is to be recruited. Sale of drugs should only be done in presence of the registered pharmacist or the competent person. The name of the pharmacist/competent person will enter into the drug licence. Once a pharmacist/competent person is employed in one medical shop, he should not do any other job outside. Similarly, the registration certificate can only be used for a single medical shop. If all the requirements are met properly, you will need to submit the duly filled-in application form along with other mandatory documents to the drugs control department. In some of the states, application for drug license is submitted through online. Once submission of application is done, the drug control department will allot the license after doing thorough investigation. While running your business, if the qualified staff resigns, you will need to submit the duly filled-in application form again along with the original drug licence and other necessary documents so that the licensing authority can change the name in the drug licence.

Documents required for medical shop licence

The document list for opening a medical store is almost same for most of the states, though some states may ask for some extra documents. Here is the comprehensive list of important documents that need to be submitted to the Drug Control Department of the state.

  1. A covering letter clearly specifying the purpose of application with duly signed in by the applicant.

  2. Duly filled-in application form.

  3. Fee challan.

  4. Design layout of the medical store in which you are going to commence your business and the site plan of the location specifying different identification spots clearly.

  5. If the premises is a rented location, you need to submit the lease deed or rental agreement or rent receipt, building tax receipt and a declaration letter by the building owner.

  6. Experience and qualification certificates of the competent person in case of wholesale drug store or Registration certificate of the pharmacist in case of retail drug store.

  7. Affidavit by the competent person or the registered pharmacist, who will be completely working full time.

  8. Relieving letter of the pharmacist/competent person from previous employer.

  9. Appointment letter of the competent person or the registered pharmacist if he is not the owner of the pharmacy business.

  10. Document concerning to the constitution of the business, most probably a Partnership Deed or an Incorporation Certificate or a Sole Proprietorship declaration document.

  11. Applicant's Affidavit on constitution, location of premises, tenancy, biomedical waste disposal, etc.

  12. Purchase records of the refrigerator.

  13. Residential address proof of the pharmacist or the competent person along with that of the applicant.

  14. Passport size photographs of the pharmacist or the competent person and that of the applicant.

  15. Additional information documents if mandatory.

  16. In the case of renewal of the licence, original licence need to be submitted in addition to the application form and extra documents if necessary.

VAT registration for medical shop


If the taxable turnover exceeds the limit specified by the state, you have to go for Value Added Tax (VAT) registration with the Sales Tax department of the state in which your business unit exists. Different states have different turnover limits for VAT registration. Check the turnover limit of your state and go registering VAT for medical store if your business turnover exceeds the limit. A Tax Payer Identification Number (TIN) will be allotted for your business if you register for VAT. If you are undertaking interstate trading, you also have to register for Central Sales Tax (CST). You have to file VAT returns regularly by using the TIN number that is allotted to you. Once you know how to open a medicine shop in India, it is utmost important to know about the tax consequences of your business sale and you should be thorough in filing your taxes.

If Goods and Services Tax (GST) is implemented in India, the VAT and CST registrations will be replaced by GST registration. The GST registration process will be somewhat simple as all the indirect taxes registrations will come under single GST registration and the process will be uniform across India. There won't be any separate turnover limits for different states and the tax levied across different states in India, will also be uniform.

Update - As Goods and Services Tax came into force from 1st July, 2017, you need to do GST registration for your medical shop. So. there won't be any VAT or CST registration from 1st July, 2017.


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Comments

Author: neeru bhatt04 Aug 2017 Member Level: Silver   Points : 4

A comprehensive guide lines for opening a drug store. Nice article.
Nowadays many drugstores are keeping items of general interest in their drug stores like chocolates, biscuits, health related foods, special creams for various beauty enhancements and many other items like that. This will be a good idea to keep these items also as people coming for drugs may see them and purchase these items.
It will also help the shopkeeper to increase his revenue specially when margins on drugs are going down with time.



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