Drugs are different from other commodities due to which the government has laid down stringent law. The drug license is provided to the pharmacy business to regulate and govern the manufacturing and selling of drugs. Drug license is basically a permission granted by the competent authority under Drugs and Cosmetic Act, 1940 to carry out a business concerning drugs/medicines or cosmetics. The regulation is necessary from the stage of the raw material stage to the stage of manufacture, sale, and distribution of retail drug license to owners. It is further passed on to a patient or consumer by a Pharmacist in retail Pharmacy, Hospital, or a Dispensary.
In other words, no one can start or continue a business dealing with drugs or cosmetics in India, unless an appropriate license is aquire for the conduct of such activity. Under the purview of provisions of Drugs and Cosmetics Act, 1940, all types of drugs or cosmetics businesses are covered, including allopathic, homeopathic, ayurvedic, or Unani drugs. In the year 1964, the Act was amended to include Ayurvedic & Unani drugs. However, it is the responsibility of all persons to maintain the quality of drugs and cosmetics with which they are dealing. If any person consuming or using drugs that suffer any harm due to the negligence on the part of the manufacturer or seller, the same is an offense, and the person would be punishable under the eyes of the law.
Why Drug License is important for Retail Medical Business?
Health is the most important part of personal life. The evergreen business that is unaffected by the economic cycles is the business in medicine or the medical sector. Healthcare and pharmacy business today in India is facing tremendous growth and also gaining popularity in corporate hospitals and multi-specialty hospitals. Having a medical store is a good option for those entrepreneurs who want to invest in the healthcare segment, having less space and low capital.
Despite having the remarkable importance, every medical store also has a big responsibility. A little mistake on their part may become fatal for the customers. Therefore, this is the reason that medical stores are often required to follow many legal procedures before they start selling medicines to the customers.
Advantages of Drug License
- With the rise of medical issues in recent times, it is necessary for the government to take control over those dealing in this sector. There are many entities that, after obtaining retail drug license, can do their business without any fear of being caught.
- Entity working in the pharmacy sector can easily expand their retail business as retailers will not hesitate in dealing with customers after obtaining a valid license with the concerned authority.
Deciding upon the type of medical store:
Before proceeding for the registration process, an individual has to decide the type of medical store that he wants to own. The following are the options available:
- Hospital medical store: It is store inside the hospitals developed to cater to meet the demands of the patients treated inside the hospitals.
- Standalone medical store: Mostly open for 24 hours as it is the most common form of store that is present in any residential area for its customers.
- Chain Pharmacy/ Franchise outlets: Medical stores that are present in the malls, and these are part of the chain of pharmacies.
- Township medical stores: It is a build-up for the people living in a township area to cater to their needs.
- Stores in Government Premises: These stores helpful for the employees working in government offices or providing services to a country like army camps have their own medical stores.
Before applying for registration of business, an individual must fulfill the following necessary requirements:
- Pharmacy Licence: In order to have a Pharmacy License, a person requires being qualified as a pharmacist having a degree of B. Pharm or M. Pharm.
- Land Registration: Every business has to be decided upon the investment that it would require. Depending upon the budget, one has to choose whether to have a rented shop or to own a shop. There is a requirement of either of the Rent deed or the sales agreement. A person may seek legal assistance for this purpose.
- Registration of Medical Store Business: The Indian Pharmacy Act, 1948, governs the registration of medical stores in India. This Act states that the medical stores and pharmacies have to get registered with all the particulars given by the state government. Thereafter Post submission of a registration application, the tribunal will decide on the matters pertaining to it.
The constitution for the business of the medical store is important. While in other cases, the hospitals, chain pharmacies, and township medical stores prefer to set up a private limited company. The standalone medical store is preferably set up as a proprietorship or maybe as a partnership firm. Recently, since Limited Liability Partnerships (LLPs) are gaining popularity, medical stores are also considering it as a preferred form of business. The change is mainly attributed to the promotion of the rights of the partners, which is mentioned in the LLP form of constitution.
- Company Registration: It important to register the business as a proprietorship or partnership or full-fledged company since day one for the retail stores. Depending on which mode one wants to operate the business. The following can be probable options for the medical stores:
- Shop and Establishment Registration/ Gumasta Registration: According to the municipal rules of the respective municipal corporation, one needs to get the shop and establishment registration done in order to run a business without any hassle made by the authorities. Also, this particular certificate is required as a supporting document from drug licensing and registrations.
- GST Registration: As other business entities, including a medical store, to start a retail business, one must get GST registration. The GST number is required if the aggregate turnover in a financial year exceeds the given threshold limit. The limit prescribed by the GST Council is Rs 20 lakhs for all states other than the North-Easter Hilly states where the limit is Rs 10 lakhs.
Registering for Drug License
Before the operations begin, every medical store, whether it’s big or small, requires a drug license from the Central Drugs Standards Control Organization and from the State Drugs Standard Control Organization.
These both organizations are responsible for issuing two major drug licenses:
- Retail Drug License: Retail drug license is needed to start a medical store/ chemist shop. A prescribed fee has to be deposited. The registration can only be done in the name of an individual who possesses a degree or a diploma in pharmacy from a recognized university or institute.
- Wholesale Drug License: wholesale drug license is issued for those medical stores, dealing in the wholesale business regarding drugs and medicines. Unlike Retail Drug License, there are no more stringent conditions that one has to meet in order to get this license.
Read our article:Punishment for Selling of Medicines Without a Drug License
Minimum requirements for obtaining Drug License
- Area specification:
The minimum area requirement is 10 square meters in order to start a medical shop or pharmacy outlet. In case, the pharmacy business combines both the retail and wholesale, a minimum of 15 square meters is required.
- Storage Facility:
The medical store must be equipped with the refrigerator and also an air conditioner. According to the labeling specifications, certain drugs like vaccines, Sera, Insulin Injections, etc., are required to be stored in the refrigerator.
- Inspection by Drug Inspector:
Before the permit of a drug license, the drug inspector having jurisdiction of the area visits the place where retail drug license is required and verify the particulars furnished with the application. If required, take measurement of the premises and also interview the competent person.
- Technical Staff:
All types of medical stores require technical staff that must have the qualification in the medical field.
- Wholesale business:
The sale of drugs must be made in the presence of registered pharmacist or in the presence of a competent person who must be a graduate with 1 yr experience in dealing with the drugs. Either a person who has passed SSLC with the experience of 4 years dealing in drugs, specially approved by the department of drug control for this purpose.
- Retail business:
The sale of the drug by retail must be made in the presence of a registered pharmacist approved by the department. The registered pharmacist has to be present at the time of sale of medicines during all the working hours.
Documents needed to obtain a Retail Drug License
Here is a list of documents needed for procuring drug license in India which may vary across different states:
- Application form in the prescribed format in the Act
- A cover letter with the application duly signed with all details of name and also designation of an applicant
- Challan of fees deposited for registration
- Blueprint of the premises
- Declaration form in the prescribed format in the Act
- Proof of ownership of the premises
- Proof of business constitution and its registration certificate
- Affidavit regarding non-conviction of the proprietor or the partners or the directors under the Drug and Cosmetics Act, 1940
- Affidavit of the registered pharmacist or a person equally competent who works the whole time
- Appointment letter from the registered pharmacist or any competent person, in case, if employed
Legal Procedures regarding Online Medical Stores
The people are shifting towards online things, and online medical stores have also developed the most common medium of buying medicines. Consumers can get the rarest of rare drugs with utmost ease and privacy.
Here are a few practices which are legal for an online medical store:
- All drugs, other than over-the-counter drugs, require the prescription.
- Contact details of online medical stores must be stated in the form in which the drug license has been procured.
- Verify and certify of delivery of drugs.
- There are provisions in the Indian law regarding the shipping of medicines from one state to another and in the provision of taking money prior to the delivery of medicines.
Licensing is mandatory to deal with Drugs & Cosmetics in India. The provisions for this have been made in the Drugs & Cosmetics Act, 1940, which is applicable to the whole of India. It is an Act that consolidates all the laws relating to drugs & cosmetics, and it established the Drugs Control Department. If drugs are sold or stocked for sale at more than one place, the application shall be made, and license shall be issued, in respect of each such place except migrant vendors.
Once the license is granted to the business, all such license must ensure that all the conditions in the drug license complied at all the time during the course of the business. All the records /registers /Forms must be maintained in the manner specified by the licensing authorities, and authorities shall be kept informed for all the changes or modifications in the business activities.
Read our article:A Complete Overview on Drug License Rules in India