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The Complex Factors that Influence Drug Prices

Pharmaceutical companies typically use a variety of factors to determine the price of their drugs, including: Development and production costs: Pharmaceutical companies invest significant amounts of money into the research, development, and production of new drugs. The cost of these activities, including clinical trials and obtaining regulatory approval, is factored into the price of the drug. Marketing and Distribution Cost: Marketing and distribution costs may also be considered by pharmaceutical companies when determining drug prices. These costs include expenses related to advertising, sales representatives, and distribution networks. Drug Uniqueness: If a drug is the first of its kind or represents a significant improvement over existing treatments, the pharmaceutical company may set a higher price for it. If a drug has many competitors or is like existing treatments, the company may have to set a lower price to remain competitive. Market demand: Companies also consider the dem

What is Pharmaceutical Franchise?

Franchise is an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities, for example acting as an agent for a company's products.

That’s same for all sectors with some modifications. When it applies in pharmaceutical sector, it requires some alterations because pharmaceutical sector is different from other sectors.

Pharmaceutical franchise is a form of franchise business that is used when a pharmaceutical company gives franchise to a distributor/person/firm. Pharmaceutical franchise is different in many aspects from other sectors franchise because pharmaceutical sector is regulated sector and marketing is different as compare to other sectors. PCD (Propaganda cum Distribution) is also a sort of franchise business in pharmaceutical sector.

Medicine’s sale depends at doctor’s prescription in pharmaceutical sector that creates difference from other sectors where consumer is actual customer. But in pharmaceutical sector prescriber/consultant i.e. registered medical practitioner is actual customer, not the consumer and sale of medicines is directly proportional to his/her recommendation/prescription.


When a pharmaceutical company grants authorization at monopoly basis to an individual or group enabling them to conduct specific commercial activities i.e. using company name, logo, doing marketing, distribution, selling of products, collecting payment, appointing stockist, distributors etc known as Pharmaceutical Franchise Business and pharmaceutical companies who provides franchise known as pharmaceutical franchise companies.

What is Pharmaceutical Franchise?

In Pharmaceutical Franchise, there is requirement of two entities: one is pharmaceutical company having medicine brands and second is individual or group want to market and distribute these medicine brands.

To under start pharmaceutical franchise business, first we will need to understand distribution channel in pharmaceutical sector. Pharmaceutical distribution channel includes following basic structure:

This is the general distribution chain type. But in pharma franchise distribution chain, distribution chain is somewhat modified. A franchisee could be either from distribution chain or outside and we will place it as Franchisee in distribution chain. It could be CnF, stockist, distributor and wholesaler, any from sales team, retailer or even doctor also.

By the way there is no criteria to become a franchisee of pharmaceutical company, generally sales experience and capability to sell medicines is first thing a pharmaceutical franchisee must have. Some companies set own standards to appoint franchisee but sale are most preferable standard for them also.

Medical representatives are key factors for pharmaceutical companies to generate sale at ground level. Upper level sales team i.e. area sales manager, zonal sales manager and higher level members also directly connected to doctors and medical professionals. That makes them most reliable persons to be a franchisee of a pharmaceutical company and/or ayush medicine company.

Some distributors/stockists also have good relationship with medical professionals and capable for generating sale through prescription and other means, and fulfil the criteria to become franchisee. A pharmaceutical franchisee could be any person/distributor/stockist/CnF/agency/company or any other entity that are capable of providing business to pharmaceutical company.

Pharmaceutical franchise is a mutual business concept where a pharmaceutical company has invested huge money for setting up manufacturing unit or marketing company, has build a long list of medicine’s brand and searching for marketing and promotional partners, on other hand a individual/group i.e. any person from sales team, distributor, chemist, stockist etc having sales experience and want to start own pharmaceutical business with very less investment. These persons generally don’t have knowledge or money for setting up pharmaceutical company but want to market and promote medicine’s brand at monopoly basis for earning handsome income for living or expansion.

For pharmaceutical franchise company, distribution channel will be as like:

In case, any from sales team, a person is franchisee, then distribution chain will be:

In case, any of distributor/stockist/ wholesaler is franchisee, then distribution chain will be:
  • Pharmaceutical Manufacturing Company or Pharmaceutical Marketing Company
  • Franchisee
  • Medical Representative/sales team (Optional)
  • Doctor
  • Retailer
  • Patient

In case, a CnF is franchisee, then distribution chain will be:
  • Pharmaceutical Manufacturing Company or Pharmaceutical Marketing Company
  • Franchisee
  • Sub Franchisee
  • Distributors (If required by Sub Franchisee)
  • Medical Representative/sales team (optional)
  • Doctor
  • Retailer
  • Patient

In case, a Doctor is Franchisee, then distribution chain will be:
  • Pharmaceutical Manufacturing Company or Pharmaceutical Marketing Company
  • Doctor (Franchisee)
  • Distributor
  • Retailer
  • Patient

In case, a chemist/pharmacy is a franchisee, then distribution chain will be:
  • Pharmaceutical Manufacturing Company or Pharmaceutical Marketing Company
  • Retailer (Franchisee)
  • Distributor (Optional)
  • Doctor
  • Patient
Most of cases, if retailer is franchisee, retailer also have wholesale license along with retail drug license.

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Hope above information is helpful to you...
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  1. Hi, A Retailer can take a pcd franchise?? Which licence need?

    1. A pharma retailer also can take pcd franchise. Generally wholesale drug license is required but pharma companies would also bill at retail drug license...

  2. I am a individual person want to have a franchise can it be possible and how....?


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