As the pharmaceutical distribution market grows, interest is also increasing among those preparing to enter the wholesale market. However, given that pharmaceuticals are sensitive materials, the government maintains quite high standards for wholesale licenses.
From physical conditions like capital and warehouses to staffing requirements, the various criteria are intricately intertwined, making it easy to get confused during the preparation phase. In this article, I will summarize the capital standards and warehouse area regulations that you must check before applying for a wholesale business license, categorized by product type.
Capital requirements vary depending on the type of product.
To obtain a license for pharmaceutical wholesale, you must first have sufficient equity capital. However, the standards vary depending on the types of pharmaceuticals handled.
Capital of 500 million won or more required to deal exclusively with over-the-counter drugsThis is required. On the other hand, to handle imported medicines, reagents, pharmaceutical raw materials, over-the-counter medicines, and specialty medicines such as herbal medicines, 200 million won or more is sufficient. This means that even within the same wholesale business, the capital requirement differs by more than double.
If you plan to expand in the future to include over-the-counter drugs, it is wise to prepare based on 500 million won from the start. Increasing the capital later involves a cumbersome additional procedure.
Warehouse area regulations are determined by the type of medicine to be sold.
When applying for a wholesale license, the size of the sales office and warehouse is also an important criterion. The standards for this also vary significantly depending on the type of product.
| Types of medicines | Minimum warehouse area |
|---|---|
| General medicines | 165 square meters or more |
| Imported pharmaceuticals, reagents, pharmaceutical raw materials | 66 square meters or more |
| Animal medicine | 33 square meters or more |
| Traditional Korean medicine, medical high-pressure gas, radiopharmaceuticals | No criteria |
Over-the-counter medications require the most space.This is because the handling volume is high and storage environment management is strict. It means that while you can start a wholesale business for specialty pharmaceuticals with an office of the same size, you need to secure a much larger warehouse to handle general pharmaceuticals.
When looking for a place, just like finding a house, converting to square meters can be confusing, so it is a good idea to calculate the area in pyeong beforehand and then visit the actual space to verify it.
Instead of renting a warehouse directly, you can use a consignment warehouse.
If the initial investment cost is burdensome, there is the option of outsourcing warehousing. This involves renting a warehouse from another company to store your pharmaceuticals.
However, you cannot arbitrarily select a warehouse. The consignment warehouse must have a minimum net floor area of 800 square meters or more and be designated as a qualified establishment under the Korean Good Supply Practice (KGSP).It must be. This means that only specialized facilities that meet pharmaceutical storage standards are approved.
Using a consignment warehouse can significantly reduce the burden of initial building rent, interior costs, and security deposits.
Instead, you must thoroughly review the reliability and stability of your contractual relationship with the consignment supplier. This is because a sudden termination of the contract or the occurrence of problems will directly impact your business operations.
Proof of capital: Bank account balance alone is insufficient
The easiest part to make a mistake with regarding the capital requirement is the method of proof. Even if 500 million won is written on the certificate of incorporation or in the bank account, the requirement is not automatically met.
You must prove your actual capital through a corporate diagnostic report (financial management status diagnostic report) issued by a credible professional institution.. This is a procedure to verify not only that money exists, but also that the capital was secured from a sound financial state.
Because accounting issues such as provisional settlements and the calculation of the diagnostic reference date are complex, it is practically essential to prepare with a tax accountant or certified public accountant who has experience with wholesale business licensing. If you miss the criteria, your application will be rejected, and it will take time to reapply.
The wholesale business manager must be a pharmacist.
There are also standards for staffing. The wholesale business manager must be a licensed pharmacist.. This is an absolutely non-negotiable condition.
If the representative is a pharmacist, they can assume that role, but if not, they must hire a pharmacist separately. This is because someone is needed to handle the expertise and legal responsibilities regarding pharmaceutical distribution.
This means you must include pharmacist labor costs in the initial operating expenses when formulating your business plan. This is because a license will not be granted with just a warehouse and capital.
The key is to check the requirements one by one before applying for a permit.
Although entering the pharmaceutical wholesale business may seem complicated, it is fortunate that there are ultimately clear criteria. You simply need to verify and prepare for capital, warehouse space, and wholesale business manager qualifications in that order.
However, since the details of each condition (capital verification methods, finding a KGSP-designated warehouse, pharmacist employment contracts, etc.) are more complex than expected, proceeding with expert advice from the beginning can help reduce trial and error. It is much more cumbersome to make modifications after obtaining approval.