Licenses Required for a New Pharmaceutical Start-up in India

Establishing a pharmaceutical business in India involves more than just the lofty goal of enhancing healthcare. It is more than just capitalising on a quickly expanding market. It’s also about navigating a complex regulatory landscape that ensures medicines and health products are safe, effective, and trustworthy.

Therefore, knowing the license criteria is the first important step if you are thinking about entering this market, whether by producing medications, selling them in bulk, or even operating a retail pharmacy.

The Big Picture: Why So Many Licenses?

Medicines are not like regular consumer goods. A faulty toy may break, but a faulty drug can take lives. That’s the reason the pharmaceutical industry is highly regulated. Every stage from making a tablet to selling it across the counter requires a license. These licenses guarantee that only individuals with the necessary training handle medications, that only safe medications are administered to patients, and that the government can hold businesses responsible.

Consider it a “trust contract,” whereby the government says, “We trust you to handle public health responsibly,” by issuing you a licence.

If You Want to Manufacture Drugs

If your start-up aims to manufacture medicines, whether allopathic, ayurvedic, or veterinary, the primary license you’ll need is a Drug Manufacturing License issued by the State Licensing Authority (SLA) under the Drugs and Cosmetics Act, 1940.

• Forms used: Form 29 (for experimental production for testing or R&D), Form 28 (for sterile pharmaceuticals such as injectables), and Form 25 (for allopathic drugs).
• Premises: A facility that conforms to Schedule M’s Good Manufacturing Practices (GMP) is required. This covers everything from clean rooms to air filtration.
• Qualified personnel: At least one technical individual, typically a pharmaceutical chemist, registered chemist, or someone with a degree and related expertise, must supervise the manufacturing process.

Quick Tip: Before establishing their own facility, many start-ups first outsource to an established GMP-compliant manufacturer under a “loan licence.” In this manner, you may test the market without having to create a plant right away.

If You Wish to Market and Sell Medicines (Without Producing them)

Some start-ups sell medications under their own brand names even if they don’t manufacture them. You’ll need a wholesale drug license or a loan license for this:

Loan License: This permits you to sell goods under your own brand while using another company’s manufacturing facility.

A wholesale drug license (Form 20B/21B) is required if you wish to supply pharmacies, hospitals, or other merchants with medications.

To obtain a wholesale license, you will need:

• A storage facility (for sensitive medications, air-conditioned or refrigerated).
• A licensed chemist or a recent graduate with a year’s worth of medication sales experience. If You Want to Open a Pharmacy or Sell Retail
• Running a retail pharmacy requires a Retail Drug License:
• Form 20/21: For allopathic medicines.
• Form 20F/21F: For homeopathic medicines.

Requirements include:

• A registered pharmacist must be employed full-time.
• The shop must meet minimum area requirements (usually 10–15 square meters).
• Proper storage facilities.

This is why you’ll often see a pharmacist’s name displayed in a chemist shop as it’s legally required.

For New Drugs, Biologicals, and Vaccines

The stakes are larger if your start-up intends to enter the biotech, vaccine, or innovative drug molecule industries.

The Central Drugs Standard Control Organisation (CDSCO), which is led by the Drugs Controller General of India (DCGI), must give its approval.

• New Drug Authorisation: You will have to submit safety, efficacy, and quality data (clinical study data) prior to advertisement and sale in the open market.
• Import License: If you intend to import active pharmaceutical ingredients (APIs) or formulations.

This is why pharma-biotech start-ups often collaborate with research institutions or big pharma because regulatory approval for new drugs is complex and expensive.

For Nutraceuticals and Wellness Products

Not every health product is a “drug.” Protein powders, dietary supplements, herbal juices, or fortified foods fall under nutraceuticals, regulated by the Food Safety and Standards Authority of India (FSSAI), not CDSCO.

• You’ll need an FSSAI license (state or central, depending on turnover and scale).
• Labels must follow FSSAI rules; thus, no false claims like “cures diabetes.”

This is a popular entry point for wellness start-ups because FSSAI compliance, while strict, is less daunting than drug approvals.

AYUSH Medicines

If you want to manufacture or sell Ayurveda, Siddha, Unani, or Homeopathy products, you’ll need an AYUSH manufacturing license from the State AYUSH authority.

• Facilities must meet Good Manufacturing Practices (GMP) under the Drugs & Cosmetics Rules.
• Proper labelling and approved formulations are mandatory.

With Ayurveda gaining global attention, this route is increasingly attractive to start-ups.

Devices Are Different

What if your start-up wants to sell medical devices like stents, syringes, or diagnostic kits? Until a few years ago, devices were lightly regulated, but now they are governed under the Medical Devices Rules, 2017.

• Devices are classified (A – low risk, like thermometers; B – moderate; C/D – high risk, like stents).
• For higher-risk devices, you need DCGI approval.
• Manufacturing and import licenses are issued via an online portal called SUGAM.

Compliance and Renewal

Here’s a reality check: getting a license is not the end. Most drug licenses are valid for 3–5 years, and renewal requires timely applications. Inspections by drug inspectors are routine. Stock registers, sales invoices, cold-chain maintenance logs, etc. all these records must be ready for scrutiny.

Failure to comply can lead to suspension or cancellation of the license. In some cases, even criminal prosecution.

Pro tip: As soon as possible, hire a compliance officer. Many start-ups fail owing to regulatory non-compliance as opposed to a lack of demand.

The Simple Steps:

Here’s the detailed process if you’re serious about starting a pharmaceutical start-up:

1. Select a model: Nutraceutical/wellness manufacturer, marketer, distributor, or retailer.
2. Secure premises that adhere to infrastructure, storage, and area regulations.
3. Employ competent personnel, such as chemists, technological specialists, and pharmacists.
4. Submit a license application: Depending on the activity, through CDSCO or the State Drug Control Department.
5. Schedule renewals and compliance: Keep thorough records and send out reminders.

In conclusion, a licence is a mark of trust. Starting a pharmaceutical start-up requires trust in addition to business opportunities.

Every license you obtain is not a bureaucratic hurdle but a stamp of credibility that tells doctors, patients, and investors: you are safe with us.

Yes, the process can feel overwhelming, but think of it this way: pharma is one of the few industries where regulation is your biggest moat. Once you clear the compliance path, you’ve built a protective wall around your business that keeps fly-by-night players out.

So, whether you dream of building the next great Indian pharma brand or a wellness empire, start with the licenses. They are the real foundation of your start-up.

Author Details- Apoorva Lamba (3rd Year Student, Madhav Mahavidyalya, Jiwaji University, Gwalior)