How To Start Pharma Online Business?

E-commerce has opened the doors for a huge number of products to sell online. If you are looking to start your own online pharmacy business, there is no better time than now. The pharmacy business is an evergreen business, without being affected by the recession. With the threat of the pandemic looming over us and the increased health awareness among the people, this small business is booming. The growth in internet usage and the rise of eCommerce have also contributed to its growth.

Pharmaceutical companies make both branded and generic drugs. Generic medicines are copies of drugs whose patents have expired. They can reach the masses and uplift the healthcare capability of the country.

Online pharmacy-a huge business opportunity

As per a report by Equity Master, the Indian pharma market is the third-largest in the world in terms of volume. Indian generic drugs also have a 20 per cent market share of the global export market in terms of volume. The profitability of online pharmacies in India is expected to rise due to an increasingly ageing population.

An online pharma company sells prescribed medicines over the internet. Starting an online pharmacy is not only a profitable business idea, but it can also fulfil your entrepreneurial dream. You get the pleasure of helping people lead a better and healthier life and also save their time. People now don’t have to stand in queues to buy medicines.

Business Model of Online Pharmacy Store

The online pharmacy business model can be divided into two categories, based on how they operate and make money. In the first one, the online pharmacy stocks medicines and directly delivers them to the customer. This is just like a local pharmacy that stocks a huge number of medicinal products.

The customer has to provide a valid prescription of the medicines that he wishes to purchase. In the second one, you don’t have to stock the medicines yourselves. Instead, you can partner with local retail companies.

You can follow a pharmacy aggregator online business model by sourcing generic drugs directly from manufacturers and selling them to pharmacies. In this way, you can eliminate the 16 to 20 per cent wholesaler margin. You can partner with retailers from major cities like Bangalore, Mumbai or Pune, and follow a profit-sharing model.

To start your online pharmacy, you have to first launch a website. This will allow customers to learn more about your company, and the products you offer. You can also launch an app with facilities to upload prescriptions and place orders. This will help to deliver drugs faster to consumers. It will complement the website, and customers will find an app a lot easier to buy from.

How to start an online pharmacy business in India?

In this article, we provide you with a step-by-step guide on how to start your business online.

1. Plan and research your business

A clear plan is essential to succeed in any business, and it will help you to map out the specifics. A few important points that you have to consider are:

1. Do an in-depth market analysis.
2. Find out the start-up and ongoing costs.
3. Identify the target market and devise an effective marketing strategy.
4. How long it will take you to break even?
5. What will you name your business?

A clear business plan will outline the way that your business will take, and is essential for approaching venture capitalists.

Before setting up an online pharmacy, you have to first set up a traditional physical pharmacy. Remember that your target market will most likely be people in the 30 to 50 age group since this age group is the most comfortable in ordering from their smartphones or laptops.

2. Select a name

You can select your particular niches like wellness, fitness, or skincare medicines.

Choosing the right name for your online pharmacy is both challenging and important. While registering a business name you should first check the social media platforms and web domain availability. Register a nice and catchy domain name before someone else does.

After registering a domain name, you can create a professional email account like ‘your name’@your company.com

3. Identify Opportunities

You can take the franchise route; the advantage is that you would get the support of large corporations, and your setting-up cost will be less. You will have to spend less on advertising, promotions, and acquiring new customers.

4. Ensure legal compliance of your business

There are a lot of legal guidelines to follow while opening an online pharmacy. To open a pharmacy, you need to obtain a retail drug license from the Central Drugs Standard Control OrganiSation (CDSCO) authorities of your area. You also have to register it with the State Drugs Standard Control authorities, under Form 19. The Drugs and Cosmetics Act, 1940 (amended in 1945), states the guidelines for import, manufacture, and distribution of drugs in India, and it classifies drugs under different schedules.

You have to form a legal entity for your company. It can be a sole proprietorship or a private limited company.

5. Goods and Services Tax (GST) Registration

You must also get the GST registration done for any payment transaction. Though GST is usually applicable to firms having a turnover of Rs 40 lakhs or above, in the case of online transactions it is compulsory.

The medicines must be sent from a chemist store with a retail license. Any person starting this business should have a degree or diploma in pharmacy from a recogniSed institution or university with one year of experience in dealing with drugs. If you don’t have a chemistry background, you can hire a chemist full-time for dealing and processing prescriptions.

6. Funding

You can find an investment firm willing to take a stake in your company, and thus raise funds for your business. Otherwise, you can approach any local bank and apply for a small business loan.

7. Expenses

As an online pharmacy owner, your major expenses will be on buying prescription drugs at wholesale rates. Other expenses will be on advertising, employee salaries, and administrative costs (e.g., maintenance of website).

8. Pricing

Some of the prices of generic drugs are controlled and regulated by the Government. For others, try to purchase them at wholesale rates, so that you can earn a good margin for yourself.

9. Build your supply chain

Secure relationships with reputable pharmaceutical companies. Try to become the preferred distributor for some popular brands.

10. Build your brand on social media

Having a social media presence to draw more customers has become an important part of the pharmacy business. As more and more patients take to social media to discuss their ailments and medications, it has opened a range of possibilities for pharmacists. You can use social media as a platform to divulge information about your products.

11. Go the extra mile and increase your profitability

As your business grows, you may include some premium subscription services, like providing free consultation with doctors, to customers who opt for a certain plan. There is also an opportunity to make money from featured products. You can also start a pharma e-marketplace, and help businesses trade surplus inventory. Another scope is to trade in allied materials like Active Pharmaceutical Ingredients (API)s, bulk drugs, and chemicals.

Points to remember while opening an E-pharmacy

• You must have authentic and valid prescriptions signed by a doctor, for accepting orders.
• You should hire a qualified pharmacist to sign on the bills.
• You must have a minimum area of 100 square feet.
• You should possess the Rent Agreement or the ownership proof of the premises.
• Choose the area of your operations smartly.

Hurdles to online medical stores in India

India has a stringent policy regarding the sale of medicines. Some medicines are only available with a prescription. Secondly, many brick-and-mortar companies, popularly known as ‘chemist shops’, are opposing the online pharmacies, tooth and nail. They fear that these online retailers will eat into their market share.

Online medical stores in India are the latest entrants to the eCommerce ecosystem. Starting an online pharma company is a sound business idea to profit from the ever-present and rising demand for medicines. We hope that this article will make the process a lot easier for you.

Also read:

1) What Are the Business Ideas I Can Look at If I Am an MBA Graduate?
2) 20 Business Ideas for Stay-At-Home Parents
3) 21 Successful Small Business Ideas for New Entrepreneurs in India
4) What are Some of the Best Online Businesses?
5) OkCredit: All you need to know about OkCredit & how it works.

FAQs

Q. Where do I need to go to get a pharmacy license?

Ans. You need to go to your State Pharmacy Board to apply for a license.

Q. What can you do to familiarise doctors and patients with your brand?

Ans. You can hire a marketing communications team to send promotional literature about your brands to these target customers.

Q. What is the gestation period for an online pharmacy business?

Ans. As per industry experts, an offline pharmacy store might take anywhere between 6 months to a year to break even. However, when it comes to an online store, it can be faster than that depending on your inventory management and customer acquisition skills through digital marketing.