If you want to build a business in pharmaceutical distribution, you will hear three models again and again: the PCD franchise, the distributorship (sometimes called a stockist or wholesaler arrangement) and the C&F agency (carrying and forwarding agent). They can look similar from the outside, since all three involve licensed premises, stock and dispatch, but the work, the money and the risk are quite different.
This guide compares them side by side so you can decide which one fits the capital, skills and time you have.
The three models in one line each
- PCD franchise: you buy a company’s products and promote them yourself to doctors and chemists in your area. You earn the margin between what you pay and what you sell at.
- Distributorship: you buy products, often from many companies, and supply them to chemists, hospitals and smaller wholesalers. The companies or their representatives do most of the promotion; you earn a trade margin on volume.
- C&F agency: you store and dispatch a company’s stock on its behalf to its distributors in a region. You usually do not own the stock or promote it; you are paid a commission or fee for the service.
Side-by-side comparison
| PCD franchise | Distributorship | C&F agency | |
|---|---|---|---|
| Who owns the stock | You | You | Usually the company |
| Who promotes to doctors | You (and your representatives) | Mainly the companies | The company |
| How you earn | Margin on your own sales | Trade margin on volume | Commission or fee on what you handle |
| Main skill needed | Building prescriptions | Supply, credit and service to retailers | Storage, records and dispatch |
| Starting capital | Moderate: licences, premises, first stock | Higher: stock across many products, credit to customers | Higher: large storage, staff, often a security deposit |
| Risk | Unsold stock, slow prescriptions | Credit and slow payments | Stock-handling errors, dependence on one or few companies |
| Who you deal with | Doctors, chemists, nursing homes | Chemists, hospitals, sub-stockists | The company and its distributors |
These are the usual patterns. The exact terms in any arrangement are set by the agreement with the company, so read it carefully.
PCD franchise: build your own prescriptions
In a PCD (Propaganda Cum Distribution) franchise you get the right to market a company’s products in an area. You buy the products, keep them in your licensed premises, and visit doctors and chemists to build demand. The more prescriptions you create, the more you sell.
Suits you if you know the doctors and chemists in your area, you are comfortable with field work (many PCD partners are former medical representatives), and you want a business you can start at a moderate scale and grow.
Watch out for territory terms (whether any rights are exclusive), the price list, the expiry and breakage policy, and what promotional material is supplied. Our post on what a PCD pharma franchise costs lists every cost to plan for, and what is a PCD pharma franchise explains the model from the start.
Distributorship: supply and service
A distributor buys from several companies (or from their C&F agents) and supplies chemists, hospitals and smaller wholesalers. The value you add is availability: having the right products in stock, delivering quickly, and giving the credit your customers expect.
Suits you if you have strong relationships with retailers in a market, can fund a wide range of stock and customer credit, and are good at managing collections.
Watch out for working capital. Customers often pay weeks after delivery while you pay the companies sooner, so money is tied up in stock and unpaid bills. Margins per product are usually thinner than in a PCD franchise, so the business depends on volume.
C&F agency: logistics for a company
A carrying and forwarding agent is a service provider. The company sends its stock to your warehouse; you store it properly, keep records, and dispatch it to the company’s distributors in your region against their orders. You are typically paid a commission on the value handled or a fixed fee, and the stock usually remains the company’s.
Suits you if you can run a large, well-organised warehouse with good record-keeping, and you prefer a service business to selling.
Watch out for the scale it needs: enough storage (including cold storage for some products), trained staff, accurate stock records, and in many cases a security deposit. C&F appointments are usually made by established companies with large regional sales, and your income depends on their volumes.
What all three need
Whichever model you choose, you are storing and supplying medicines, so you need:
- a wholesale drug licence from your state’s drug licensing authority (for most allopathic medicines, the wholesale licences in Forms 20B and 21B under the Drugs Rules, 1945), issued for your premises, with a qualified competent person in charge;
- GST registration;
- suitable storage: clean, dry premises, and refrigeration for products that need it.
Requirements differ from state to state, so confirm them with your state authority. Our post on the documents required for a PCD pharma franchise lists what the licence application usually asks for.
Which one should you choose?
Ask yourself three questions:
- Do you want to sell, supply or store? Field work and doctor relationships point to a PCD franchise; retailer relationships and credit management point to a distributorship; warehousing and logistics point to a C&F agency.
- How much capital can you commit, and for how long? A PCD franchise can start smaller; a distributorship needs more working capital; a C&F agency needs space, staff and usually a deposit.
- How much control do you want? In a PCD franchise you decide which products to push and where. As a distributor you respond to market demand. As a C&F agent you follow the company’s systems.
Many people start with a PCD franchise in a territory they know, and add distribution later as their network grows. Our guide on how to start a PCD pharma franchise walks through the first steps, and 10 questions to ask before choosing a PCD company helps you compare companies on facts.
Working with Ancare Life Sciences
Ancare Life Sciences, Panchkula, works with PCD franchise partners and distributors. Territory, the price list and terms depend on your area and the products you choose, and anything agreed is confirmed in writing. Read how our PCD pharma franchise works, browse the product list with compositions, or contact us to discuss your area.