Registering a company and setting up an account at a bank in India is not enough to start pharmaceutical business operations. Depending on the business structure, a drug license, manufacturing permission, wholesalers or retailing authorization, product approvals, GST registration, Importer Exporter Code (IEC), certifications and approvals in destination countries are mandatory.
In case of foreign trade of pharmaceuticals, there are other requirements except for Indian regulations. Exporters must comply with DGFT and requirements of the country in which goods will be sold. Meanwhile, importers of pharmaceutical products to India have to register with CDSCO and have an import license.
What Is a Pharmaceutical Business in India?
An Indian drug company may encompass a variety of activities like manufacturing drugs, marketing products manufactured by a third party, wholesale distribution, retail sales, importing finished products or APIs, or exporting drug products.
Licenses depend upon the type of activity engaged in. Manufacturing is very different from wholesale distribution and exporting, where the products used are bought from an Indian manufacturer.
Popular business models are:
Pharmaceutical Business in India: Which Drug License Do You Need?
There is no universal license for all types of pharmaceutical business activities. Depending on the type of goods and activities the necessary drug license varies.
Pharmaceutical Manufacturing License
The drug license for manufacturing is needed if the company manufactures medicines and/or other goods falling under the regulatory concept of drugs. The manufacturing can take place at company premises or at a third party licensed manufacturing premises (if the company has the proper structure and permission).
A pharmaceutical manufacturing license presupposes assessment of manufacturing facilities, technical staff, manufacturing process, equipment, goods and quality requirements. The manufacturing facilities should also meet certain standards of Good Manufacturing Practices.
Wholesale Drug License
The wholesale drug license concerns those pharmaceutical companies who buy goods, store and distribute them to authorized organizations and not directly to consumers.
Wholesale establishments usually require proper storage facilities along with qualified staff and proper record keeping indicating traceability in relation to procurement and distribution of medicines. The actual type of license and conditions would depend upon the class of drugs handled.
Retail Drug License
A retail drug license would usually be required for establishments that sell medicines to patients. A pharmacy needs to comply with the prescribed premises, storage and qualified person requirements.
Some special types of drugs or drugs belonging to some categories may require some additional requirements to be fulfilled by the business establishment.
Key Authorities for Pharmaceutical Compliance
It is essential to know about the division of regulatory responsibilities in order to ensure timely completion of procedures.
The CDSCO is the primary agency for drugs regulation in India. The duties of the CDSCO include granting permission for new drugs, clinical testing, setting standards for drugs and overseeing the quality of imported drugs along with the SDCOs of respective states.
The Central Drugs Standards Control Organization is also responsible for regulating the process of imports and registration of pharmaceutical products in India.
The State Drug Control Department or its state licensing body usually deals with major issues related to the domestic production and marketing.
Documents Required for a Pharmaceutical Business in India
The exact documents required depend upon the license, product and structure of business. However, most businesses prepare the following documents:
- PAN and Identity/Address documents of promoters or authorized person
- Business registration/incorporation documents
- GST Registration documents, where applicable
- Evidence of business premises
- Ownership/License/Rent agreement documents
- Site layout and business premises information
- Constitutional documents of company/LLP/partnership or proprietorship
- Technical personnel details and qualifications
- List of products along with proposed manufacturing and sales activity
- Manufacturing equipment and machinery details
- Storage and temperature control information, where applicable
- Product specifications and technical information
- MFG/Marketing agreement, wherever applicable
- Declarations, affidavits and undertakings, wherever applicable
- Existing license/permissions
- GMP documents related to manufacturing operations
In case of an import application, the CDSCO form 10 check list includes various documents like form 8, form 9, registration documents, license details for wholesale/manufacturing activity, new drug permission if any and labels.
GMP Certification and Pharmaceutical Manufacturing Compliance
Good Manufacturing Practice is an important part of pharmaceutical quality management system. A pharmaceutical manufacturer needs to have proper systems which are capable of ensuring manufacture and control of medicines according to quality standards.
Certification under GMP guidelines could be significant, depending on the manufacturing process involved and the regulations in place. However, businesses need to understand that there are two types of certifications – the broad quality management process certification, and the actual requirements under GMP for pharmaceutical manufacture.
An effective pharmaceutical compliance system must include:
- Qualification of raw materials and vendor control
- Standard Operating Procedures
- Batch manufacturing and packaging records
- Quality Control Testing
- Equipment qualification and maintenance
- Environmental controls and hygiene controls
- Personnel training
- Documentation and data management
- Product complaints and recalls
- Change control and deviation management
Regulatory compliance does not end upon obtaining licensing of the facility. Keeping up with recordkeeping, procedural and licensing obligations is an ongoing obligation.
Drug Approval and Product Registration
Manufacture or importation of all pharmaceutical products is not just about having the business license.
Drug approval and product registration could be significant, depending on the type of drug involved.
For imported drugs, pharmaceutical product registration may have to be done prior to importation. According to CDSCO, the drugs falling under the concerned framework require product registration and even the manufacturing facility requires to be registered.
It would therefore be appropriate to determine the classification of the product prior to investing in stocks. The composition, dosage forms, purpose and status of the drug can determine the concerned route of approval.
Pharmaceutical Import Requirements in India
Pharmaceutical importation to India is not only business but also regulatory in nature.
According to CDSCO, pharmaceuticals fall under the scope of the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945. The Import & Registration Division of CDSCO provides registration certificates and import license for relevant bulk drugs and formulations.
Depending on the drug being imported, the following may be required:
- Importer Exporter Code
- CDSCO registration
- Import license for drugs
- Approval for the product
- Details of the manufacturing site being registered
- Authorization from the foreign manufacturer
- Label and packing information
- Certificate of Commercial Invoice
- Packing List
- Bill of Entry
- Air Way Bill/Bill of Lading
- Relevant customs documentation
- Reports/Certificates, as required
Form 41 is used for obtaining the concerned Registration Certificate and Forms 10/10A are used for import licenses.
The drug import permit is distinct from a normal customs document. Regulatory approval and customs clearance are two different elements of compliance.
Pharmaceutical Export Regulations from India
Exporting medicines from India has multiple levels of compliance.
The first one is related to the requirement of IEC. According to the current Foreign Trade Policy by DGFT, IEC is essential for import/export except in case of exemptions. The policy mentions transport document, commercial invoice-cum-packing list and shipping bill/bill of export as the common export documents while there could be additional documents required based on specific regulation for certain products.
The second step is checking the pharmaceutical export regulations and export policy of specific products.
The third step is checking the drug regulations in the destination country as the destination country’s regulator may require manufacturing site registration, product registration, marketing authorisation, pharmaceutical product certification or other relevant document.
International Pharmaceutical Regulations and Destination Approval
An approval by Indian regulator does not guarantee export of medicine abroad.
Under international pharmaceutical regulations, each destination country has freedom to set its own approval, labelling, adverse reaction reporting, manufacturing and distribution requirements.
Before exporting medicines, one needs to check:
Documents for International Medicine Shipping
Documentation requirements in international medicine shipments should comply with both the customs and pharmaceutical laws.
Typical documents could include:
- Commercial invoice
- Packing list
- Shipping bill
- Airway Bill/Bill of Lading
- IEC
- Purchase order
- Certificate of Analysis
- Certificate of Origin, wherever required
- Product registration/marketing authorization documents
- Manufacturing license
- GMP documentation
- Import permit of the destination country, wherever required
- Health/Pharmaceutical certificate, wherever required
- Insurance documents
- Documentation of temperature control, wherever applicable
Pharmaceutical Business in India: A Practical Compliance Roadmap
Common Mistakes to Avoid
The most costly errors are usually made by companies who consider pharmaceutical licensing to be only a registration issue.
Don’t start selling your products commercially until you get the relevant license. Don’t think that just because you have a wholesale license, you’re allowed to manufacture. An IEC doesn’t substitute for a drug license and product authorization either.
Also, businesses should not ship their products internationally simply because the product is legally manufactured in India. The regulator in the country where the product is imported might require its own pharmaceutical product registration, an import permit and product labeling.
FAQs
All businesses don’t require the same type of license. However, some operations like manufacturing, retailing, wholesaling and distribution of regulated drugs require licensing.
The CDSCO supervises particular categories and central activities, whereas domestic manufacturing, sale, and distribution are the responsibility of the States. Some categories of products may need a license/approval at the central level.
Yes. As per DGFT, IEC is essential for carrying out import/export operations, except in cases where an exemption exists.
Registration along with an import license is mandatory for importing medicines under India’s import registration regime. CDSCO specifies that the drug and manufacturing unit should be registered.
Conclusion
It is necessary for a pharmaceutical business in India to align the business model with the right type of drug license, approval of the product, premises, and quality systems. Manufacturers, wholesalers, retailers, and importers do not adhere to the same set of compliance rules.
In case of international transactions, the compliance matrix is larger: the IEC and Indian export compliance rules need to be supplemented by the destination country’s approval, registration of the pharmaceutical product, and shipping controls.
