How to start a Pharmaceutical Business

  Pharmaceuticals Overview

Pharmaceuticals are generally classified by chemical group, by the way they work in the body (pharmacological effect), and by therapeutic use. Alkaloids were the first pure pharmaceuticals derived from natural substances (plants); they include quinine, nicotine, cocaine, atropine, and morphine. Drugs of animal origin include glandular extracts containing hormones, such as insulin for use in treating diabetes.

Antibiotics, vaccines, human blood-plasma fractions, and steroid hormones are other important pharmaceuticals manufactured from natural substances. Vitamins, which were formerly obtained from natural sources, are now often made in the laboratory.

In the preparation of dosages, many pharmaceuticals are ground to varying degrees of fineness. Many medicinal substances are added to water, alcohol, or another solvent so that they can be used in solution form. These may include spirits, elixirs, and tinctures. Ointments are one of many semisolid preparations, which also include creams, pastes, and jellies. Solid pharmaceuticals include pills, tablets, lozenges, and suppositories. In this form the compounds are more stable, with less risk of chemical reaction, and the dosage is easier to determine. Storage and packaging also is made simpler, and solid forms are more efficient to produce.

Setting up pharmaceutical manufacturing unit is lit bit difficult work as compare to setting up manufacturing units in other sectors. Drug and medicines are regulated through Drug and cosmetic Act & Rules in India. Pharmaceutical Manufacturing unit has to compile with many rules and regulations i.e. Drug and cosmetic Act & Rules plus factory act regulations. First part is to set-up of medicine factory plant and basic requirements for manufacturing premises. A medicine factory should compile with two regulations:

    • Factory Act regulations
    • Drug Manufacturing license and Good Manufacturing Requirements ( i.e. WHO: GMP, Schedule M or applicable in concern country).

  Pharmaceuticals Market Outlook 

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry growing at a CAGR of 9.43% since the past nine years.

Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. India has the most number of pharmaceutical manufacturing facilities that are in compliance with the US Food and Drug Administration (USFDA) and has 500 API producers that make for around 8% of the worldwide API market.

Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. The domestic pharmaceutical industry includes a network of 3,000 drug companies and ~10,500 manufacturing units. India enjoys an important position in the global pharmaceuticals sector.

The country also has a large pool of scientists and engineers with a potential to steer the industry ahead to greater heights. Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms. India is rightfully known as the “pharmacy of the world” due to the low cost and high quality of its medicines.

India is the 12th largest exporter of medical goods in the world. Indian drugs are exported to more than 200 countries in the world, with US being the key market. Generic drugs account for 20% of the global export in terms of volume, making the country the largest provider of generic medicines globally. Indian drug & pharmaceutical exports stood at US$ 24.60 billion in FY22 and US$ 24.44 billion in FY21. Indian drug & pharmaceutical exports stood at US$ 2,119.08 million in June 2022.

If you have considered starting a business in pharmaceuticals, there’s no time like now to begin. The Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value, as per a report by Equity Master. India is the largest provider of generic drugs globally, with the Indian generics accounting for 20 per cent of global exports in terms of volume. Now that’s a huge number. Not to mention, Indian homegrown pharmaceutical firms have established dominance and distinction in a once prominently multinational niche.

A business model for a pharmaceutical company is usually quite diverse in scope. From establishing competent production lines to affiliating with an accomplished league of medical practitioners to associating with a selection of chemists and stockist, the logistics spread is wide and uneven. Starting any business is a challenge and you need to have the right resources, the right documents and the right people assisting you.

Before starting pharmaceutical manufacturing unit, one should have basic knowledge about in pharmaceutical sector about manufacturing, marketing, administration and others aspects, and/or he/she should employee/partner with persons who have good knowledge of manufacturing and analytical procedures. Without having basic knowledge of pharmaceutical industry, it is difficult to compete or survive even after investing huge amount.

Searching for premises is also crucial step in manufacturing unit set-up. Location and building should compile with Good Manufacturing Practice (GMP) standards. GMP standards and plant specifications may slightly very depend upon country policy and requirements.

    Steps to start a Pharmaceutical Business

     1.  Research your playing ground

Before you start any business, let alone a pharmaceutical one, you need to study the current market and what it holds. Know your competitors well because they are the ones you will be competing against on a day-to-day basis. Find out what it is that you can contribute to the market that isn’t in existence yet. Which location would be ideal to establish your factory? If the time comes to franchise, jot down the different places that would serve your business better. Study the big players and what it is that they are doing right.

    2.  Make a hard-hitting business plan

A business plan will not only help others get a clear idea of your business but also give you a clear roadmap. Make a step-by-step plan, chalking out how you intend to take the company ahead. Start with what your company is all about, what you are going to deal with, what will you manufacture or sell, where you are going to be located, who your competitors are, what makes you different from the rest, what will you look to achieve, your mission and vision, your company’s goals etc.

    3.  Licenses Required for Pharmaceutical Manufacturing Company (Business) in India:

A manufacturing unit may require different types of licenses and registrations depend at location and country. Most important license for setting up pharmaceutical manufacturing unit is Manufacturing License. List of generally required licenses are:

    • Company Registration (If required)
    • Drug Manufacturing License
    • Drug Distribution License (For Distributing finished goods)
    • Testing Laboratory License
    • Good and Service Tax (GST) or any Tax registration required in concern country
    • NOC from other departments if required.

Company Registration:
Company registration may be required or not depend at type and size of organization. For proprietorship and partnership, company registration could be skipped.

Manufacturing License Procedure and Documents Required:
Manufacturing license of pharmaceutical products and medicines are come under Drug Control Authority in concern country e.g. USFDA (USA), DCGI (India), DCC (South Africa) etc. You should know about where to apply for drug manufacturing license in your country.

In India, Drug manufacturing License is issued by state drug controller generally located at capital region of concern state of Indian Territory. State Drug Controller is appointed by state government and work under guidelines of Drug Controller General of India (DCGI). You have to apply for grant of pharmaceutical manufacturing unit to state drug controller.

Complete all requirements and acquire all documents related to justifying requirements. Apply for medicine manufacturing license at concerning authority. After receiving the application (Online or Offline mode), drug authorities inspect the plant by visiting at plant and check for requirements and manufacturing/quality procedure as per laws and regulation, and good manufacturing practice.

If requirements are found to be satisfactory, manufacturing license has to be issued and you can start manufacturing of medicines.

List of general documents we are listed below (Documents requirements may be changed according to concern country laws and regulations and/or any amendments:

    • Introductory Covering Letter mentioning Name and address of plant and administration office
    • Application at prescribed Form and format
    • Prescribed Fee Receipt
    • Details of constitution of firm, partnership or Company
    • Documents related to Ownership of premises or Rent or Lease documents
    • Identification Proof of all Authorized persons, proprietor, partners and/or directors
    • Details of Technical Staff e.g. Manufacturing Chemist and Analytical Chemist with education documents and approval certificates which is applicable
    • List of machineries and laboratory equipment
    • Site Mater File
    • Blue print of Plant and layout of premises specifying installation of machinery and equipment
    • Design and Layout of HVAC system
    • List of medicines to be manufactured in manufacturing unit
    • Water analysis report
    • NOC if required from other departments like health department, pollution department or MC etc.
    • Factory Act Registration if applicable.

Goods and Service Tax (GST) Registration:
Every country has own tax structure and way to collect tax. Name of taxes may also vary according to country. Almost every country has own tax laws and tax structure. Register your firm/company under Tax laws is also an essential part of any business. Confirm about taxes and laws applicable for selling and purchasing at medicines in your country and register accordingly.

In India, All businesses and services fall under Goods and Service Tax. At present medicines attract 5% and 12% tax under GST and for above 20 lakh annual turnover, firm/companies are required to take GST identification number.

   4.   Area Required for Pharmaceutical Manufacturing Company:

The manufacturing plant should have adequate space for:-

    • Receiving and storing raw material
    • Manufacturing process areas
    • Quality control section
    • Finished goods store
    • Office
    • Rejected goods/drugs store

Different sections required different criteria for space and requirements. Here we will discuss about minimum area required for each section set-up for pharmaceutical manufacturing unit.

For External Preparation section like cream, ointments etc., Minimum of 30 square meters is required for basic installation and 10 square meters for ancillary area. Formulation of external preparations and internal preparations should be separate to avoid contamination.

For Liquid Dosage Form Section like syrup, suspensions etc, Minimum of 30 square meters is required for basic installation of machineries and 10 square meters for ancillary area.

For Solid Dosage Form Section like Tablets, capsules and powder requires more area for machinery installation and ancillary.

Tablet section requires minimum of sixty square meters area for basic installation and twenty square meters area for ancillary for uncoated tablets. If coating section is required then it should be separate from other section having minimum of thirty square meters area for basic installation and ten square meters for ancillary area.

Capsule section requires minimum of twenty five square meters area for basic installation and ten square meters for ancillary.

Powder section requires minimum of thirty square meters area for basic installation and ten square meters for ancillary.

Ophthalmic Preparation Section is sensitive section like parenteral section. Section should be in separate building or separately placed from other sections mentioned above. Fully air locked, sterile and non contaminated area is required for ophthalmic preparations. Minimum area require for ophthalmic section is twenty five square meters and ancillary area is ten square meters.

Parenteral section like ampoules and vials for injections etc. are of two types. One is Dry Parenteral preparations like dry powder for injection and second is liquid injections. It is most sensitive section in pharmaceutical manufacturing unit. It should be in separate building and dry powder should also be separate from liquid section. Area requirement also change according to large volume parenterals and small volume parenterals types.

Minimum area require for parenteral section is One Hundred and fifty square meters for basic installation and one hundred square meters for ancillary activities.

     5.  Machineries and Analytical Equipment’s:

Different sections required different type of machinery and analytical testing required. Essential Machinery list is as follow:

Liquid /Syrup/Suspension Section:

  • High speed mixer for 1000 liter tank
  • S. tank- 1000 liter capacity with wheel and cover lid
  • S. tank- 200 liter capacity with wheel and cover lid
  • Colloidal Mill
  • Liquid filling machine
  • P. cap sealing machine
  • Liquid filtration unit
  • Tables

Capsule/ Tablet/Powder Section:

  • Air compressor
  • Air conditioner
  • Blister packing machine
  • Alu-Alu Packing Machine
  • Capsule filling machine
  • Capsule Loader
  • Dehumidifier
  • Tablet Punching Machine
  • Coating Pan
  • Sifter
  • Mass mixer- 100 kg
  • Multi mill
  • FBD- 30 kg// tray drier(24 treys)
  • Double cone blender 100 kg
  • Powder Filling and Sealing Machine.


  • Batch printing machine
  • RO plant
  • Lab equipment’s
  • Balances
  • AHU (Air Handling Unit) and Air Lock System
  • HVAC

   6.  Investment Required:

A pharmaceutical Manufacturing unit required two type of investment i.e. fixed assets and Liquid assets. Fixed assets means investment at building, land, infrastructure and finishing-furnishing etc. Liquid assets means investment at men power, raw material, rent, promotional and marketing expenses etc.

It’s not possible to calculate exact investment theoretically because it depends many factors like area, location, country, land cost, rent, machinery and equipment cost at that area, salary of employees and workers etc. We need actual data to calculate investment.

   7.  Marketing and Distribution:

If you need to distribute your product to the end consumer, you need to partner with chemists and pharmacies. For this, it is necessary to factor in effectiveness, need and other competitors in the same space. Make sure pharmacists are cued in on your product and make it memorable so it stays on the top of their mind when the order comes in. Produce ample products that you can use as a promotional tool when approaching pharmaceutical reps and practitioners alike in order to acquire visibility amidst close competitors. While the consumer market is vast and robust, entering it involves groundwork that demands significant expenses and expertise.

To conclude, the steps to start a pharmaceutical manufacturing unit can be highlighted as follows:

    • Prepare a Business Plan
    • Choose Company Name
    • Finalize location for premises for manufacturing unit (must compile with norms)
    • Incorporation of Company (Proprietorship/partnership/private limited etc)
    • Company Registration
    • Arrangement of Documents, authorized staff and requirements.
    • Furnishing and Finishing of premises as per WHO:GMP regulations or as per concern country rules and regulations. (In India as per Drug and Cosmetic Act Schedule M)
    • Purchase of required machinery and analytical equipment for smooth running of plant
    • Prepare a file with all necessary documents
    • NOC for any other department like pollution department, CLU etc what it asked for
    • Submit file for manufacturing licensing Authority
    • After acceptance of file, Drug authority will conduct physical inspection before granting manufacturing license
    • Apply for Wholesale and Drug Distribution License
    • Apply for Goods and Service Tax (GST) Registration
    • After getting manufacturing license, start of manufacturing of medicines can started.

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