How to Start a Pharma Company in 2023 – A Beginner’s Guide

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Pharmaceutical companies are some of the largest businesses in the world. They produce medicines that treat diseases such as cancer, diabetes, heart disease, and mental health disorders. Some of these drugs are even life-saving. This industry has become one of the fastest-growing industries worldwide. According to experts in the health industry, global spending on healthcare is expected to reach $8 trillion by 2030. In addition, the number of new drugs approved each year is also increasing steadily.

It is indeed a profitable business to start a pharma company today. In this article, you will get to know how to start a pharma company, what are the pros and cons, the cost of starting a pharma company, and some other important factors related to your startup. Read this article to know in detail. 🙂

how to start a pharma company

What is a Pharma Company

A pharmaceutical company produces or sells prescription medications, over-the-counter products, medical devices, vaccines, biological therapies, and nutritional supplements. These companies have been around for more than 100 years. Since then, many new drugs have come up with innovative ways to cure various illnesses. The most common types of pharmaceutical companies include:

  1. Generic Drug Companies
  2. Biotechnology Companies
  3. Contract Research Organizations
  4. Specialty Pharmacies
  5. Medical Device Manufacturers
  6. Vaccine Manufacturers
  7. Nutritional Suppliers
  8. Hospitals
  9. Insurance Companies
  10. Healthcare Providers
  11. Retailers
  12. Distributors
  13. Consulting Firms
  14. Others

Why Do We Need a Pharma Company

Pharmaceutical companies are an integral part of our lives. They make sure that we stay healthy. There are so many different kinds of drugs available today. From antibiotics to anti-depressants, they help us live longer, healthier lives. The pharmaceutical industry is growing at a fast pace. It is approximately said that it has grown from $1.7 trillion in 2015 to $2.2 trillion by 2020.

In fact, there are about 2,000 active drug development projects underway right now. And according to reports, the number of new drug approvals per year is expected to increase from 1,500 in 2014 to 2,100 by 2025. There are many reasons why people want to start their own pharmaceutical companies. Here are some of them:

To Make Money

Starting a pharma company can be very lucrative. You can earn a lot of money if your product becomes successful. For example, a few companies earned $20 billion in revenue last year. That’s not all. They made another $15 billion in profit. If you think you can do better than that, you should definitely consider starting your own pharmaceutical company.

To Help People

Many people suffer from chronic conditions like arthritis, asthma, high blood pressure, depression, and others. If you find a way to solve those problems, you could change millions of lives. You can use your knowledge and skills to develop a medication that helps people who need it.

To Change Lives

Some people don’t have access to proper treatment because of financial constraints. Or maybe they just don’t know where to go for help. Starting a pharma company can give them the opportunity to take control of their lives again.

To Be Your Own Boss

Starting a pharma firm gives you the freedom to work when you want to and where you want to. You can choose your own hours, set your own goals, and even decide how much you want to earn. It’s also a great way to build a career. Many top executives started out as pharmacists.

How to Start a Pharma Company

Pharmaceutical companies are some of the largest and most profitable businesses in the world. They make billions of dollars every year selling drugs to patients around the globe. But starting a pharmaceutical company can be challenging, especially when you’re just getting started. Here’s a list of things to think about before you jump into the industry.

Step 1: Understand the Industry

Before you launch a startup for your pharma business, you’ll need to understand the industry you plan to enter. Start by reading articles written by experts in the field, watching videos produced by reputable organizations, and talking to people who’ve been involved in the industry for years. Make sure you have all the resources before you walk into the field.

Step 2: Research Potential Markets

Once you understand the industry, it’s time to research potential markets. Where does the demand exist for your product? What are the barriers preventing customers from buying your product? How much money are consumers willing to spend on your products? These questions will help you decide where to focus your efforts. The Pharma industry is a huge industry and has a lot of competitors. It won’t be easy to make your place in the market. Hence, you must be aware of the market trends, demand trends, and price ranges for the products you’re going to sell.

Step 3: Develop a Business Plan

Next, write out a detailed business plan that outlines all aspects of your idea. Include information like projected revenue, costs, and profit margins. Also, describe how you intend to reach your target audience and how you’ll scale your business over time. You must also decide what type of business structure you want for your pharma company. It is easy to have a Limited Liability Company than a corporation or a partnership business.

Step 4: Get Your Company Registered Legally

Once you have your business plan, you must register your business legally. If you are going to set up an LLC, then read our guide on how to start an LLC before you proceed. On the other hand, if you are going to set up any other type of business structure, then you must know about the pros and cons of the structure. In StartrMyLLC, you will find a number of “how-to guides” for your assistance.

Step 5: Hire Experts

You may find yourself overwhelmed by the amount of information required to run a successful business. To avoid making costly mistakes, hire professionals who have experience running similar operations. For instance, if you plan to manufacture medical devices, consider hiring a manufacturing expert. Besides, you can consider a chemist and other experts in the field.

Step 6: Raise Capital

Now that you have a clear understanding of the industry and your business model, it’s time to raise capital. There are several options for funding, including angel investors, venture capitalists, private equity firms, banks, crowdfunding sites, and government grants.

Step 7: Launch!

Finally, launch your business! Don’t wait until everything is perfect to go public. Instead, test your product with a small group of early adopters first. Once you receive feedback, you can adjust your plans accordingly.

After Starting Your Pharma Company

There are some points you need to consider when you start a pharma company. Once you have the business plan, enough capital, and all other resources, you need to work on the following points, 

Get Legal Help

When you start a new business, you should always seek legal advice. This includes obtaining patents, trademarking your brand name, and drafting contracts between partners. Also, once you launch your business, you must know about the taxes to be paid. For example, if you have an LLC in Texas or a California LLC for your pharma business, you must file the Franchise Tax Report every year.

Get Patents

Patenting your invention gives you ownership rights to it. It also establishes proof of innovation and protects you against competitors. In order to patent an invention, you must file a provisional or non-provisional application with the United States Patent and Trademark Office (USPTO).

Register a Brand Name

A brand name is the identity of your company. You cannot sell your product under another company’s name without permission. If you want to protect your brand, register it with the USPTO.

Get a Registered Agent

Your registered agent is responsible for receiving legal documents on behalf of your company. It is mandatory to appoint a registered agent, no matter what type of business structure you have.

Get Insurance

Insurance helps cover any financial losses that might occur during the operation of your business. When starting a pharmaceutical company, you should obtain insurance for intellectual property, inventory, employees, and more.

Cost to Start a Pharma Company

The cost to start a pharmaceutical company varies depending on where you live. In the US, it ranges from $1 million to $10 million. It will depend on whether you want to develop a drug yourself or license one from another company. This is an estimated cost and can be changed anytime.

Startup Costs

If you’re planning to start a pharmaceutical company, you’ll need to invest money into research, development, and production. Depending on the type of product you’re developing, this could be anywhere from $500,000 to $20 million. On the other hand, a few costs like state filing fees, registered agent costs, insurance costs, and such are some of the costs included in the list.

Type of Pharma Companies and Costs

In the pharmaceutical industry, there are two main types of companies: contract manufacturers and branded products. Depending on the type, the cost varies.

  • Contract Manufacturers: These companies produce drugs for other companies. They do not own their own manufacturing facilities; instead, they outsource the process to third parties. The cost to start such a company is less than the other type of company.
  • Branded Products: Companies that manufacture their own drugs include large pharmaceutical companies like Pfizer and Johnson & Johnson. These companies use their own factories to make their products. It is obvious that the cost of setting up a pharma company is more than the contract-basis company.

Cost to Maintain a Pharma Company

To maintain a pharma company, you must carry some costs. Depending on the structure of your business, you may have different taxes. For example, if you have a Montana LLC or Wyoming LLC, then you don’t have to pay sales or franchise tax, On the other hand, if you have an LLC in Florida, you must pay a sales tax, but there is no Franchise tax.

Other than taxes, annual report submission, wages of employees, depreciation of machinery (if you are manufacturing medicines), and some other maintenance costs are required to be paid to maintain your pharma company.

How Much Money Pharma Companies Make

According to the National Association of Drug Diversified Businesses, the average annual revenue for a pharmaceutical company is around $2 billion. However, the median income for a pharmacist is only about $40,000 per year.

What Is the Future of Pharmaceutical Manufacturing?

As technology continues to advance, so does the field of pharmaceutical manufacturing. For example, 3D printing has made it easier to create custom medications.

  • 3D Printing: This technique allows people to print customized medications using biodegradable materials. It can even be used to create implants that match the shape of a patient’s body.
  • Manufacturing Drugs at Home: With the rise of 3D printers, home manufacturing may become commonplace. As people realize how easy it is to create their own medication, many will choose to do so. However, some experts believe that this trend will lead to an increase in counterfeit drugs. This means that patients who buy medicines online may end up taking ineffective versions of their prescribed medications.


What is an active pharmaceutical ingredient (API)?

An API is a chemical compound used in the manufacture of drugs. APIs are usually derived from natural sources such as plants, animals, minerals, or microorganisms. The FDA regulates the manufacturing process for APIs, which must be performed under Good Manufacturing Practices (GMP).

What is the difference between a drug and a medicine?

A drug is any substance used for medicinal purposes, while the medicine is a preparation containing such substances. Drugs are often prescribed by doctors, while medicines are taken by patients. The term “drug” is also used to refer to illegal drugs, which may be called “narcotics.”

What are some common mistakes people make when starting a pharmaceutical company?

The first mistake people make when starting a new business is they think about how much money they need to start up. This is a bad idea because you should focus on building a product that solves a problem for customers instead of trying to build a business around a specific amount of revenue. The second mistake people make is they try to do everything themselves. If you want to be successful at running

What is a typical timeline for starting a new drug company from scratch?

The average time to start a new drug company depends on many things, there are licenses, manufacturing time, testing of medicines, the legality of the sale, and such. It takes 2 to 10 years (average) to start a drug company.

Who should be involved in starting a new drug company?

The best person to start a new drug company is someone who has experience running a successful business and knows how to build a team. Also, starting a drug company needs experts in chemistry and mathematics. A great place to find such individuals is at a university where they teach entrepreneurship courses along with mainstream courses.

Why Start Pharma Company is So Important

Why Start Pharma Company is So Important

The pharmaceutical industry plays a crucial role in the well-being of communities worldwide, and the importance of starting a pharmaceutical company cannot be overstated. Such a venture is not only beneficial for the entrepreneurs behind it but also for society as a whole. Although data and statistics may provide further support to this argument, it is important to present a generic perspective that emphasizes the broad societal impact of starting a pharma company.

First and foremost, the remarkable progress in the medical field would not be possible without the constant influx of innovative drugs and medicines. Pharmaceutical companies are at the forefront of this revolution, continually investing in research and development to create breakthrough medications. New drugs have the potential to treat diseases that were previously deemed incurable or to significantly improve the quality of life for those suffering from chronic conditions. By starting a pharma company, individuals have the opportunity to contribute to this ongoing progress and create a better future where medical ailments are no longer crippling.

Furthermore, the establishment of a pharmaceutical company is vital for job creation and economic growth. From research scientists to manufacturing workers, a multitude of professions thrive thanks to this industry. The presence of such companies fosters innovation-driven economies as they attract talented researchers, who further amplify scientific progress. These companies also contribute to the development of related industries, such as logistics and distribution, creating a ripple effect that benefits the community at large. The increase in employment opportunities not only improves individual livelihoods but also enhances the overall prosperity of local economies.

Starting a pharma company is also important because it promotes competition within the industry. Competition drives innovation and ensures that corporations continually strive to improve their products, while keeping prices reasonable. This dynamic landscape inspires scientific breakthroughs and negates the possibility of monopolistic practices that can be detrimental to patients and healthcare systems alike. A robust pharmaceutical market ensures that consumers have access to a diverse range of medications, facilitating informed choices for both healthcare providers and patients.

In addition, the expansion of pharmaceutical companies helps bridge the gap in healthcare provision, especially in underprivileged areas. Developing countries, in particular, struggle with limited access to affordable medicines and suffer from a range of health challenges. By establishing a presence in these regions, pharma companies can tailor their products to cater to specific local needs and market conditions. Such localization efforts ensure that individuals facing economic constraints are not excluded from the advancements made in medical science. The benefits of starting pharma companies extend far beyond economic profits; they have the potential to improve public health on a global scale.

In conclusion, starting a pharmaceutical company holds immense importance for several reasons. Beyond the obvious financial gains for entrepreneurs, these ventures have far-reaching societal impacts. They contribute to the development of groundbreaking medications that can transform lives, stimulate job creation and economic growth, foster competition, and address healthcare disparities around the world. The pharmaceutical industry is at the forefront of medical progress, and the establishment of new companies ensures its continuous growth and innovation. With each new pharmaceutical company that emerges, the world moves one step closer to conquering some of humanity’s most challenging medical problems.


Starting a pharmaceutical company is challenging, but it doesn’t have to be impossible. With the right guidance, you can succeed. I hope this article helps you to set up your own pharma company. Please share your feedback with us by commenting below.

About Author & Editorial Staff

Steve Goldstein, founder of LLCBuddy, is a specialist in corporate formations, dedicated to guiding entrepreneurs and small business owners through the LLC process. LLCBuddy provides a wealth of streamlined resources such as guides, articles, and FAQs, making LLC establishment seamless. The diligent editorial staff makes sure content is accurate, up-to-date information on topics like state-specific requirements, registered agents, and compliance. Steve's enthusiasm for entrepreneurship makes LLCBuddy an essential and trustworthy resource for launching and running an LLC.

1 thought on “How to Start a Pharma Company in 2023 – A Beginner’s Guide”

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