Types of Pharmacy Businesses You Can Start
- Independent retail pharmacy: a standalone medical store selling prescription and over-the-counter medicines directly to consumers.
- Franchise or PCD pharmacy model: operating under an established brand or taking up Propaganda Cum Distribution rights for a pharma company's products, which can lower marketing effort but usually comes with brand fees.
- Wholesale or distribution business: supplying medicines to retail pharmacies and institutions, which requires a wholesale drug license rather than a retail one.
- Online pharmacy: selling medicines through a digital platform, which still requires the underlying retail or wholesale drug license and compliance with applicable e-pharmacy rules.
Is a Pharmacy Degree Required?
Do I personally need a pharmacy qualification to open a medical store?
You do not need the qualification yourself if you hire a registered pharmacist, but the law requires that every retail pharmacy operate under the supervision of a person holding a D.Pharm, B.Pharm, or M.Pharm qualification who is registered with the State Pharmacy Council, and this person's registration is what the drug license is actually granted against.
For a manufacturing unit, the technical staff requirement is higher, typically requiring B.Pharm or M.Pharm qualified supervisors, reflecting the greater regulatory scrutiny on manufacturing compared with retail sale.
Licenses and Registrations You Need
- Business registration, whether sole proprietorship, partnership, LLP or private limited company
- GST registration is generally required before the drug licence application
- Retail or wholesale drug license under the Drugs and Cosmetics Act, 1940
- Shop and establishment registration as applicable in your state
- Pharmacist registration with the Pharmacy Council of India and the relevant State Pharmacy Council
- Udyam Registration, once operational, to access MSME benefits and funding schemes
Drug License: Form 20 vs. Form 21
Which drug license form do I need, Form 20 or Form 21?
Form 20 covers retail sale of drugs other than those specified in Schedule X, while Form 21 covers retail sale including Schedule X drugs, which are more tightly controlled substances such as certain narcotic and psychotropic medicines requiring stricter recordkeeping. Most general pharmacies apply for both to avoid restricting their product range later.
| Licence | Covers | Typical Use |
|---|---|---|
| Form 20 | Retail sale of drugs other than Schedule X | Standard medical store operations |
| Form 21 | Retail sale including Schedule X drugs | Standard medical store operations Stores also stocking tightly controlled substances |
| Form 20B / 21B | Wholesale sale of drugs | Wholesale distribution businesses |
Applications are typically filed through the State Drug Control Department, in many states via the SUGAM portal, along with the prescribed fee, premises layout plan, and the registered pharmacist's documentation.
Premises and Infrastructure Requirements
- A minimum carpet area as prescribed by the state, generally around 10 to 15 square metres for a basic retail pharmacy
- Adequate storage, including refrigeration for temperature-sensitive medicines
- Proper lighting, ventilation and cleanliness standards
- A layout plan, comprising a key plan and site plan, submitted with the application
- Display of the drug licence at the premises, as required by regulation
A drug inspector physically verifies these conditions before the licence is approved, so arranging the premises to meet these standards before applying, rather than after, avoids rejection and re-inspection delays.
Investment Required
| Cost Head | Approximate Range |
|---|---|
| Drug licence fees and registrations | A few thousand rupees to about Rs 1 lakh, depending on state and licence type |
| Shop rental deposit and interiors | Varies significantly by city and shop size |
| Initial medicine inventory | A meaningful share of total investment, since stock needs continuous replenishment |
| Refrigeration and storage equipment | Necessary for temperature sensitive medicines |
| Overall small pharmacy setup | Commonly cited in the range of Rs 3 lakh to Rs 6 lakh for a modest store |
A pharma company with manufacturing ambitions sits at a very different scale, with industry estimates for a small manufacturing unit running well into the range of Rs 1.5 crore or more, reflecting the additional Good Manufacturing Practice infrastructure required.
Step-by-Step Process
- Choose your business structure and location: Decide between a sole proprietorship, partnership, or private limited company, and pick a location with good footfall, ideally near a clinic, hospital or residential area.
- Arrange a qualified pharmacist: Either qualify yourself with a D.Pharm or B.Pharm and register with your State Pharmacy Council, or hire a registered pharmacist who will be named on the drug licence.
- Register your business entity: Complete business registration, obtain PAN, and register under Shop and establishment rules as applicable in your state.
- Complete GST registration: Register for GST, since a valid GSTIN is typically required before a drug licence application can be processed.
- Apply for the drug licence: Submit Form 20 and Form 21 applications, often through the SUGAM portal or the State Drug Control Department, along with premises layout plans, pharmacist registration proof, and other required documents.
- Pass the premises inspection: A drug inspector will inspect your premises, storage arrangements, refrigeration where needed, and overall compliance before approving the licence.
- Set up inventory, billing and compliance systems: Source medicines from licensed distributors, set up a billing and prescription record system, and display your drug licence prominently as required.
Funding Options
- Personal savings and family funding for the initial setup
- MSME business loans and working capital loans from banks and NBFCs once the pharmacy is registered
- Government-backed schemes such as Mudra loans for smaller requirements or CGTMSE guaranteed credit for larger, collateral-free term loans
- Equipment or inventory financing offered by some lenders specifically for retail setups
Common Mistakes to Avoid
- Signing a shop lease before confirming the premises will meet drug licence space and storage requirements
- Hiring a pharmacist informally without completing their registration formalities, which can delay or invalidate the license
- Underestimating working capital needed for continuous stock replenishment
- Ignoring prescription record keeping and Schedule X compliance once Form 21 items are stocked
- Delaying GST and Udyam Registration, which can slow down access to funding and supplier credit later
Key Takeaways
- A retail pharmacy in India needs a drug licence under the Drugs and Cosmetics Act, 1940, granted against a registered pharmacist's qualification.
- Form 20 covers general retail drug sale and Form 21 adds Schedule X drugs, with most pharmacies applying for both.
- A basic pharmacy can be set up for roughly Rs 3 lakh to Rs 6 lakh, while a small manufacturing unit requires a far larger investment, often above Rs 1.5 crore.
- Premises must meet minimum area, storage and cleanliness standards verified by a drug inspector before licence approval.
- Once registered as an MSME, pharmacy owners can access business loans, Mudra loans and CGTMSE backed credit to fund setup and working capital.
FAQs
How much does it cost to start a pharmacy business in India?
A small retail pharmacy can typically be started with an investment of around Rs 3 lakh to Rs 6 lakh, covering shop setup, initial inventory, drug licence fees and registration, though the actual figure varies widely with city, shop size, product range and whether the premises are rented or owned.
Do I need a pharmacy degree to open a medical store?
You do not necessarily need the degree yourself, but a registered pharmacist holding a D.Pharm, B.Pharm or M.Pharm qualification and registered with the State Pharmacy Council must be employed on the premises, since the drug licence is granted on the basis of that qualified person's registration.
What is the difference between Form 20 and Form 21?
Form 20 is the retail drug licence application for selling drugs other than those specified in Schedule X, while Form 21 is used for retail sale of drugs including Schedule X substances such as certain narcotic and psychotropic medicines, which carry additional recordkeeping requirements.
How long does it take to get a drug licence?
Timelines vary by state, but after submitting a complete application with the required documents, a drug inspector typically visits to verify the premises, storage facilities and the registered pharmacist's presence before the licence is approved, a process that commonly takes a few weeks, depending on the state's processing load.
Can I start a pharmacy as a side business without being present full time? No. Drug licensing rules require a registered pharmacist to be present and responsible for the pharmacy during operating hours, so if you are not the qualified pharmacist yourself, you must employ one who takes on this legal responsibility, and absentee ownership without proper pharmacist coverage can put your licence at risk.
What funding options are available to start a pharmacy?
Beyond personal savings, pharmacy owners commonly use MSME business loans, working capital loans and, where eligible, government backed schemes such as Mudra loans or CGTMSE guaranteed credit, since a pharmacy, once registered as an MSME, can access the same funding instruments available to other small retail businesses.
Conclusion
If you are planning to open a pharmacy and want help with business registration, Udyam Registration, or identifying the right funding scheme for your setup and working capital needs, Growthora Advisory can guide the process. Book a free consultation with our funding team today.
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