PCD Pharma Franchise is a business model in the pharmaceutical industry where a pharmaceutical company allows an individual or a group of individuals to use its products, and brand name, as well as offers marketing support to promote and sell the products within a geographical area.
PCD is an abbreviation for Propaganda Cum Distribution. It means the franchisee has the responsibility of promoting and distributing the products of the franchisor to healthcare professionals and hospitals, and pharmacies in the designated territory. The franchisee earns a commission or a profit margin on the business made.
Is the Pharma Franchise Profitable?
As far as profitability is concerned, it can be high if one handles the business correctly. Since the Indian pharmaceutical market is one of the fastest-growing markets globally, the potential is good. Moreover, it is expected that the market will continue growing in the coming years. Therefore, one can plan a systematic growth plan. The demand for medicines is also increasing because of increasing awareness among people.
The profit margin varies depending on the product category and the pricing strategy. Still, the key to making higher profits in this business is efficient management of the distribution network. When it is aided by effective marketing strategies, the results are phenomenal. A PCD company should have a well-established network of channel partners (retailers and wholesalers), and it should be able to provide timely and efficient delivery of products. These two are the essential elements of profitability.
PCD pharma franchise can be more profitable in India if one manages the business well. Efficiency and a properly defined clear business strategy are important aspects. It requires an investment of time and resources.
How much Investment is required to Start a PCD Pharma Company?
You need to spend money on acquiring a Drug License Number. Then, you will need to get GST Network Registration. Also, you will have to register the company as a private limited company. As per norms, one has to appoint people in the roles of Accountant, Auditor, Doctor, Physician, Representative, etc. It will also require money.
When you want to start a PCD franchise business of your own, it is essential to get connected with a good Pharma manufacturing company. You should be prepared with a list of drug formulations that you want to offer to your customers.
In general, in order to get the pharma franchise from the company, one has to invest 50K to 100K. Read more.
What is the difference between franchise and brand pharma?
A franchise is a collection of related medicinal products or a therapeutic area that a company that has established a strong presence and has become known. A franchise is built over time through research and development, marketing, and other efforts to establish the presence of a company in a particular area of healthcare.
A brand is a specific product developed by a pharma company. It is protected by a patent. A brand is developed to typically treat specific conditions and disease states. It can be a prescription drug or OTC (Over the Counter) product. A brand is protected by a patent that gives the company a unique name. Brands are typically developed to treat specific conditions and they sell drugs for a certain period of time. Once the patent protections expire, other companies can develop and market generic versions of drugs. These products can be sold at lower prices than brand-name products.
While both franchise and brand pharma are related to the pharma industry, a franchise is a broader concept that refers to the presence of a company in a particular therapeutic area. On the other hand, a brand is a specific product developed by a pharma company, which has a unique name and it is protected by a patent.
How do I start a pharma franchise?
You need to do thorough research on the pharmaceutical business model. After settling on launching a PCD pharma franchise company, you should now write a business plan.
- Check who are your competitors: When setting up a PCD pharma franchise, researching your potential competition is important. By studying their business model, you have an idea of what you can improve on their operations and have an edge over them.
- Set your expenses: It is also essential to know the initial total investment that you need. It includes knowing about activities like trials, pharmaceutical distribution, or manufacturing that will be conducted in-house. Some expense heads are salaries, cost of lab equipment, machinery, product facilities, and so on.
- Find out roles and responsibilities: You will have to hire a team to manage the work. You have to ensure that the staff is qualified and works as per your vision and mission.
- You should perform a SWOT-Analysis: It scrutinizes the business plan and finds out the strengths, weaknesses, opportunities as well as threats. Moreover, it would be best if you do a SWOT analysis of your main competitors to get an excellent overview ad comparison of the market. It tells where and how you will fit in.
- Check the license requirements: You will need licenses from your state and city. They usually differ depending on the business you are engaging in, but in most cases, most pharmaceutical startups are classified as limited liability corporations. Read more.
What are the documents required for a pharma franchise?
These documents are required if you are planning to start a PCD Pharma Franchise Company.
- Pharmaceutical License- This is like a green card to launch a Pharma business. You are not allowed to do business without a Pharmaceutical License. The cost of a Pharmaceutical license varies from state to state.
- ITR (Income Tax Registration)- Income Tax Registration is a mandatory requirement for a company. It will help with the deduction in taxes according to your firm. This is important for the company to file ITR and should not skip this.
- GST (Goods and Service Tax)- Goods and service tax is based on eliminating Tax on tax. It will replace all other taxes related to the company. One company must have a valid GST number.
- Partnership Deed (if it is a partnership firm)- If a partnership exists in the company, then, the document of partnership must be there. This will cost differently in different states.
- Pharmaceutical Trademark- A company must buy a trademark for all the products. The cost of a trademark depends from state to state.
- Qualification and Experience – The qualifications and experience are mandatory part if you want to start your own Business. If you have a backdrop of the Pharma industry, then it is good. You will easily understand all the details, and the Business will be easy for you.
What is the profit margin of a pharma franchise business?
In offline pharmacies, the profit margin typically ranges between 15 to 26% for top-brand medicines and it may go up to 40 to 50% for generic medicines. Moreover, companies offer discounts to attract consumers. These discounts may vary from 10% to 80%. Here are the steps that will help you calculate the profit margins of your pharma franchise company:
Collect The Information On Market Conditions
You will have to do an appropriate study of how the market conditions vary in terms of net rates and profit margins. The variations in the economic condition of a country largely affect your business operations. Therefore, if you want to handle the prices according to your competitors in the market, then a thorough analysis is required.
You should learn how your consumers affect the fixation rates and set them conveniently. It will help you earn a stable future in the evolving pharma market.
You should Calculate The Net Rates
If you want to find profit margins, then you must know how net rates are calculated. It is a simple process done by pharma franchise companies. Here are the steps:
Find the Total Cost first. Total Cost = Manufacturing expenses + Selling Expenses + Taxes + Other Costs Total Fixed Cost + Other expenses
Now, you need to calculate the net price and the percentage of margins. They may vary from the company’s policies.
Total Cost * percentage of margin
Now, Calculate The Profit Margin
To measure profitability here is the formula that determines the Profit Margin:
Profit Margin = Net Profit / Revenue Or Selling Price *(Net Profit = Revenue – Cost)
The required calculation will be your pharma franchise business profit margin.
Actual Realization Amount
Typically, the profit margins vary by industry sector. So, you have to be careful when comparing the figures for pharma franchise businesses. And if you want a real amount of earnings, certain amounts need to be added and deducted. Firstly, you have to reduce the share of agents, stock managers, and commissions of various pharma professionals. All should be done under the price to retailers including the discounts, rebates, transportation, labor cost, etc. Read more.
How does a PCD pharma company work in India?
In the PCD Franchise type of business, PCD Pharma companies appoint their distributors and provide them with monopoly rights. Distributors appoint Medical Representatives to contact doctors in their area. The medicines are prescribed by the doctors, and it generates business for the PCD Franchise.