With the rising demand of affordable healthcare and medicines across the country, the generic medicine industry is seeing a boom. Starting a generic medicine distribution business can be a very rewarding venture at this point of time, both in terms of financial welfare and also when you think about contributing something good to the public.
If you are planning to enter this segment of the market, this blog can actually help you understand the steps for a beginner.
What are generic medicines?
Generic medicines are drugs that contain the same active ingredients as that of the branded medicines. However, they are sold at a lower price. They are just as effective and are approved by the authorities like the Drug Controller General of India (DCGI) and Central Drugs Standard Control Organization (CDSCO).
With the government’s push through the various schemes such as the Jan Ausadhi Yojana, there has been a rising demand and also awareness about the generic medicines. It has created a great opportunity for the aspiring entrepreneurs of best generic pharmaceutical companies to enter into the distribution business.
Step-by-step guide to start your generic medicine distribution business
Understand the market and its regulations
Before you start investing, it is very important to study the nature and the scope of the Indian pharmaceutical landscape thoroughly. There are thousands of drug manufacturing units in the country, many of which are involved with the generic medicine production. You need to understand about the licensing rules, the various distributing channels, the pricing structure and the market demand in your targeted area. It is also essential that you do the right research which products are most commonly sold, such as the pain relievers, antibiotics, diabetic medicines or cardiac medicines, etc.
Choose your business model
There are multiple business models you need and can choose from when starting a generic medicine business. You can try and become a wholesale distributor by supplying generic medicines to clinics, pharmacies, hospitals and nursing homes. Alternatively, you may also start a retail distribution setup by selling generic medicines directly through your own pharmacy or if you have a tie up with any Jan Ausudhi Kendra. There is another option where you can partner with the generic medicine company under a franchise model. This will allow you to distribute their products under their brand name. Each of these models will have different requirement in terms of investment, operation as well as manpower.
Get the required licenses
To start this business legally in India, you have to obtain the specific licenses and registration. This is a non-negotiable rule and it comes under the state drug control department, it is mandatory to have this drug license before you can handle and sell medicines. You will also need GST registration for tax compliance. Moreover, if you have planned to sell dietary supplies, supplements, or health products, you need to have an FSSAI license. It depends on the kind of product range that you are targeting to sell. For the drug license, a registered pharmacist or someone with a diploma or degree in pharmacy must be appointed as a part of your team.
Find a reliable supplier
One of the most important steps in choosing this business is to find a reliable supplier. Many entrepreneurs prefer sourcing from the pharmaceutical companies in Ahmedabad which is a known hub for high quality generic medicine manufacturing. Ahmedabad is home to many certified pharma companies that offer competitive prices, consistent product availability with a good margin in terms of business. So, before you finalize your supplier, always verify their certificates such as WHO-GMP or ISO. You should also ask for product samples, compare the pricing and get a review delivery timeline.
Set up your infrastructure
The nature of your infrastructure depends on the business model that you have chosen to work upon. If you are planning to start a wholesale business, it is important that you get a proper storage facility first, which could be like a warehouse where temperature is controlled and has the right racks for stock management, has the refrigeration for temperature-sensitive products etc. On the other hand, if you are opening a retail outlet, choosing a high footfall location is very important. So, you can choose a residential area or you can choose a place near a hospital for which you need to do some research before getting your shop. Your retail space should be clean, well organised and should have a staff(s) who are trained with proper systems for record keeping and billing.
Build a brand and promote your business
While pricing is a major factor in any form of industry, building a brand is also important. It will help you develop customer trust and have long term loyalty. Create a simple, credible brand identity and try to focus on customer education. Generic medicines and its importance needs to be made more aware to the mass. So you need to create a simple marketing strategy which speaks about the safety and effectiveness of generic medicines.You can grow your business by offering discounts to loyal customers. You can also collaborate with the local clinics or NGOs. Participating in health awareness drives is also nice. Word of mouth referrals, especially in the small towns and cities can help you get a big boost.
Manage inventory smartly
Inventory management is very vital to avoid any form of losses due to expired stock or shortage of fast moving items. You need to consider the inventory management software to monitor your stock levels of various medicines. Simultaneously, you also have to maintain a discipline in your financial keeping where you can understand the cash flow, the margin, the credit terms with your buyers and suppliers. Typically, the wholesale distributors can expect profit margins ranging from between 8% to 20%. In the initial stages, you can try to keep operational costs low and also focus on reinvesting profits.
Stay updated with regulations
Since the pharmaceutical industry is highly regulated in India, you need to be compliant. You have to keep all the business records, invoices, prescriptions and licenses up to date and they should be readily available as and when asked during inspections. You also need to keep an eye on government policies which are related to drug pricing, the packaging guidelines and the tax reforms. You have to be proactive about the compliance because it will help you avoid any form of legal trouble and also get some credibility in the market.
Starting a generic medicine distribution business in India will allow you to serve the society while also creating scalable and profitable venture for yourself. With rising awareness around affordable healthcare, this timing couldn’t be better. Whether you start big or small, consistent effort in ethical business practice will take you to success.
