When a pharmaceutical deal is first discussed, the opening exchange is "do you hold a licence?" That is not a courtesy. The law draws a boundary around the seller and around the buyer alike.

We previously set out the difference between a marketing authorisation and a sales licence; this article goes inside that "sales licence": what a wholesale licence permits, and who you may sell to. Ship without checking the other side's standing and the violation is the seller's.

Without a licence you may not even hold stock

The starting point is Article 24(1) of the Act. What it forbids is not only selling.

No person other than a pharmacy founder or a person who has obtained a licence for the pharmaceutical sales business shall, in the course of business, sell or give pharmaceuticals, or store or display them for the purpose of sale or giving.

The reach extends to storing or displaying for the purpose of sale or giving. Nothing has been sold yet, but the moment stock goes into a warehouse with the intention of selling it, the licence question is live. Giving something away for free is also covered. Treating sample distribution as free of the rule because no money changes hands is a dangerous reading.

The same paragraph carries a proviso: it does not apply where, among other cases, a marketing authorisation holder sells pharmaceuticals it has itself manufactured or imported to a pharmacy founder, a marketing authorisation holder, a manufacturer or a sales licensee. And the licence lapses unless renewed every 6 years (paragraph 2).

The sales licence comes in three kinds

Article 25 sets the categories. What the certificate says changes what you may do.

  • Store sales business — selling or giving guidance-required or over-the-counter pharmaceuticals at a store
  • Household distribution business — selling or giving over-the-counter pharmaceuticals by placement
  • Wholesale business — selling or giving pharmaceuticals to pharmacy founders, marketing authorisation holders, manufacturers and sales licensees; to founders of hospitals, clinics and animal clinics; and to others specified by ministerial ordinance

Side by side, the range of products differs. A store sales business reaches guidance-required and over-the-counter products. For the wholesale business the statute simply says "pharmaceuticals", prescription products included. In exchange, the permitted buyers are narrowed by an enumerated list.

Who a wholesaler may sell to

Article 34(5) is the line that does the most work in this scheme.

A person who has obtained a wholesale business licence shall not, with respect to the business premises covered by that licence, sell or give pharmaceuticals in the course of business to any person other than a pharmacy founder or the like.

A wholesale licence is therefore not a licence to sell widely but a licence with a restricted set of buyers. You may not sell to consumers. You may not sell to a business that holds no licence. And the "others specified by ministerial ordinance" at the end of that set are enumerated in 15 items in Article 138 of the Enforcement Regulation.

  • the State, a prefectural governor or a municipal mayor
  • a founder of a midwifery centre who uses sterilising and disinfecting pharmaceuticals or other pharmaceuticals there
  • a business operating emergency vehicles and the like that keeps pharmaceuticals on board
  • founders of treatment premises for massage, acupuncture, moxibustion or judo therapy, and founders of dental laboratories, who use sterilising and disinfecting or other pharmaceuticals
  • businesses controlling rats, flies, mosquitoes and fleas, and businesses managing the hygiene of septic tanks, water tanks and swimming pools
  • manufacturers of quasi-drugs, cosmetics, medical devices or regenerative medical products who use pharmaceuticals needed for manufacturing
  • heads of research facilities and educational institutions, and heads of registered testing laboratories and other inspection facilities
  • air carriers, and shipowners subject to the Mariners Act (each using pharmaceuticals required under the relevant law)

What the list reveals is that the line is drawn not by the buyer's industry but by what the pharmaceutical will be used for. Treatment premises and dental laboratories qualify because they use sterilising and disinfecting products. Quasi-drug and cosmetic manufacturers qualify to the extent that they use pharmaceuticals needed for manufacturing. Whether a deal is possible is settled by purpose and licence, not by the business card.

The licence attaches to premises, not to the company

Article 34(1) provides that a wholesale licence is granted for each set of business premises, by the governor of the prefecture where those premises are located. A licence obtained at head office does not travel to a second warehouse you start using.

What goes on the application is prescribed in detail (Enforcement Regulation Article 153, Form 86): the name and location of the premises, the floor area of the pharmaceutical storage facility, the product lines handled, the address and qualification of the premises manager, the types of any concurrent business, and contact points for enquiries and emergencies. A floor plan of the premises must be attached.

That the storage area and a floor plan are required is where practice divides. Commit to a property first and you may find it fails the structural and equipment standards, and have to start again. If the business is built on holding this licence, raise it with the prefectural pharmaceutical affairs division while the property is still being chosen.

The premises must have a manager

Article 35(1) requires a wholesaler to station a pharmacist at each set of premises and have that pharmacist manage them (unless the wholesaler is itself a pharmacist managing the premises personally). The ordinance provides exceptions where the product lines are limited, but the rule is a pharmacist.

Paragraph 4 of the same article is easy to miss. The manager must not be a person engaged, in the course of business, in pharmaceutical affairs work at any place other than those premises, and may not hold a concurrent post unless the prefectural governor permits it. Securing one person does not settle the arithmetic.

The manager carries duties too. Under Article 36(2) the manager must state necessary opinions to the wholesaler in writing concerning the business of the premises, and Article 155-2 of the Enforcement Regulation requires a copy of that document to be retained for 3 years. Having said it out loud does not meet the requirement.

The order to check in before trading

When an approach arrives, working through it in this order reduces rework.

  • What the other side holds — a pharmacy founder, or which category of sales licence. Read the category and the validity period on the certificate
  • If you are the seller, whether the buyer is a "pharmacy founder or the like"; if not, whether their intended use brings them within the enumerated list
  • Whether the products sit inside the licence — wholesale covers prescription products; store sales reaches only guidance-required and over-the-counter
  • Whether the despatching premises are licensed — the licence is per premises; a head-office licence does not cover shipping from another warehouse
  • Whether your own manager is in place and not holding a concurrent post

This check is not an act of suspicion. Because the seller bears the consequence, running the check is how you protect your own side. Done up front, it also keeps a negotiation from stalling halfway.

Primary sources

* This article outlines the system. Individual determinations rest with the competent prefectural pharmaceutical affairs division.

We import and wholesale pharmaceuticals, quasi-drugs and cosmetics. We are glad to work in a way that settles the handled categories and the buyer's standing before trading begins.