If you’re looking for an alternative path in your professional life, starting your own pharmaceutical company might be right for you. With a pharmaceutical business background, you’ll be involved in every part of bringing a new drug or treatment method to market. From coming up with ideas and finding ingredients to filing patents and marketing products, anyone running their own business must take every precaution they can.
Starting your own business can be challenging, no matter what industry you’re in. But when it comes to pharmaceuticals and medical devices, some additional considerations come into play. These include how to set up your company as a legal entity, handling the manufacturing of your product or device, ensuring regulatory compliance, and obtaining funding to grow your business, to name a few.
This comprehensive guide covers everything you need to know before starting a pharmaceutical business.
Selecting Your Business Model
Selecting a business model is one of the first things you’ll do when starting your own pharmaceutical business. There are two primary options: retail and wholesale. Wholesale refers to distributing drugs directly to drug stores, hospitals, or other middlemen who then sell them to patients. Retail selling involves creating your outlets (pharmacies) for selling drugs directly to consumers. Both models have their pros and cons— but ultimately, it will come down to what works best for you.
Wholesale businesses are less expensive, require less equipment, and don’t require you to hire salespeople. However, they can still be quite competitive with retail companies because there is often fierce competition among wholesalers for access to drug store shelves. The ability to differentiate yourself as an effective supplier is important — and this is achieved by developing excellent relationships with your clients. Retail businesses tend to offer more profit potential because they command higher prices per sale.
Target Market Selection
You must pick your target market carefully. You need customers who will buy your product or service at full price, with no marketing incentives or special discounts even before they know everything they can know about it. Be sure to research thoroughly before narrowing down your selection. The last thing you want is to begin marketing only to realize later that you picked a group of people who aren’t interested in what you have available.
Rehabilitation centers can be a good market because they’re in desperate need of medical supplies and equipment, which are often not covered by insurance. It makes for a captive market that needs products you can provide cheaply. The best drug rehabilitation centers already have two or three companies that supply their medical supplies, so you may need to do some creativity to get your foot in the door — either with impressive price points or some product feature (e.g. faster shipping time) no one else offers. Once you have your foot in there, word-of-mouth advertising will help your business expand quickly.
Selecting Your Location
Whether you decide to sell through retail pharmacies or online, many factors go into picking your location. How close is your market? What kind of customers do you have in mind? What’s your business model going to be? Where you decide to set up shop has a big effect on where your sales will come from. A simple Google search for the pharmaceutical industry should give you some clue as to what type of population resides in any given region.
Legal Requirements
Some countries do not allow you to start your own pharmaceutical business until you get legal permission. If you are seeking permission, learn about all government policies related to starting your own business in that country. All pharmaceutical businesses should also be registered legally in their location, even if they operate remotely. For example, in the United States and many other nations, you must register with both federal and state governments before selling anything.
You must apply for a seller’s permit, or resale certificate, at each location where you will sell goods; these permits can last up to two years. It can be done through both your city/county clerk’s office and state commerce department websites.
Handling the Manufacturing of Products
Manufacturing is one area in which entrepreneurs can save plenty of money when they don’t outsource their work. Whether you start small or large, it’s good business sense to manufacture your products so that you always have them on hand as well as better quality control over your products. It also allows you more time to focus on sales while saving you time and money. There are a lot of costs involved with manufacturing pharmaceutical drugs, but if done right, it can be profitable.
The pharmaceutical industry is exciting for people who have great ideas and good business sense. Whether you’re looking to start your own pharmaceutical business or get into consulting, knowing how it works can help you develop strategies that will take your career in whichever direction you choose.
