Does paypal allow online pharmacies ?
I've seen many pharmacies selling using paypal and paypal virtual terminals.

Can it be done ?

I would think paypal allows any legitimate business to use their services. As long as everything is legal and the web site is not some type of scam etc.

With online pharmacies you will need to get a reular merchant account to insure proper funding times and CS.

i think you'll need to ask it from paypal customer support team .
or from any other payment processor you wish to go with

PayPal doesn't allow online pharmacies. That being said, PayPal gets used for it until they find out and shut down the account, most often freezing a ton of money. You definitely want to get your own merchant account, preferably a direct IMA you are not sharing with other merchants.