What is 3rd Party Pharma Manufacturing in India?

Third party pharma manufacturing in India is a business model where pharma companies subcontract the manufacture of products to speciality manufacturers. These pharma manufacturers manufacture the medicines according to pre-agreed quality standards, while the contracting company concentrates on branding, marketing, and distribution of the manufactured products. This model assists companies in reducing manufacturing costs and increasing product range without having any manufacturing plants.

Third party pharma manufacturing in India is a partnership wherein the brand owner of a pharmaceutical company transfers the manufacturing of their products to a licenced and specialised factory, while retaining ownership of the brand name, price, and marketing. This business structure has gained popularity among the PCD franchise companies, new marketers and established companies who wish to expand their product range without setting up their own manufacturing unit. Instead of buying land, equipment and manpower, the marketer ties up with a manufacturing unit that already possesses them. The presence of generics in India, a highly skilled workforce and clustering of manufacturing units makes it feasible for a business enterprise to opt for this arrangement. This guide discusses the procedure of third party pharma manufacturing, parameters that need to be checked before entering into a binding contract and ways of selecting an efficient third party manufacturing partner.

What is Third Party Manufacturing in the Pharma Industry?

In layman's terms, Third Party Manufacturing refers to a system where a company manufactures a complete product for another company. In the pharmaceutical industry, the marketer gives the list of products to manufacture, its brand name and the design for the packaging. It is the manufacturing company that manufactures, tests, packages, and delivers the batch of product. The label usually has the brand name of the marketer and an identification of the manufacturer. It is also referred to as Pharmaceutical Contract Manufacturing. Both terms are interchangeable in India; however, contract manufacturing may also include formulation development and analytical method development.

The 3rd Party Manufacturer works on a license that is obtained from the State Drug Licensing Authority under the Drugs and Cosmetics Act, 1940. Some of the reputed units also have WHO-GMP Certification and adhere to Schedule M requirements. This implies that the Pharma Third Party Manufacturing Company is responsible for the manufacturing process, while the marketer is responsible for the trademark and promotion.

This approach needs to be differentiated from loan licensing. In loan licensing, the marketer manufactures its own product using the license and facilities of a certified manufacturer. Third party manufacture is one where the manufacturer controls the whole process via its own system. Both processes are perfectly acceptable in India but have their own responsibilities, which is why they must be defined in black and white.

How Pharmaceutical Third Party Manufacturing Works?

This procedure is fairly standard in the industry although the timelines vary with the dosage form and approval process.

The following are steps that are taken by most projects:

• Selection of the product: Selection of the formulation, concentration and form that would be produced by the marketer itself is based upon its prescription practice in its own market.
• The Contract: This covers an agreement on the number of batches, prices, quality, confidentiality, and use of its brand name and formula.
• Trademark & Artwork: The trademark is obtained first and then artwork of the label & box is submitted.
• Product permission: The manufacturer has the product permission or applies for it and organizes stability studies when necessary.
• Production and testing: The raw materials are tested, the batch is manufactured according to defined protocols, and finally, the product is tested against specifications.
• Packing and dispatch: The products are packed using the marketer’s branding, and batch information is printed. Products are dispatched with invoices and certificates of analysis.

Minimum orders tend to be very common, hence most PCD marketers start with limited product ranges and increase later when they can gauge the demand for their product range in their territory.

Why Brands Prefer Third Party Manufacturing Companies?

The 3rd Party Manufacturing Companies lies in their economic efficiency, agility and focus. The benefits include the following:

• Reduced need for capital: Compliance requires land, utilities, cleanrooms, equipment, a quality control lab and skilled personnel. The outsource option turns this upfront cost into a fee based on production volume.
• Fast market access: Collaborating with an already functioning facility that holds necessary licences, validated technology and marketing authorizations saves you time between the concept and its launch.
• Greater diversity of products: The marketer might require tablets, syrups, injectables and ointments. With 3rd Party Manufacturing Companies having multiple dosage forms, you would be able to launch all these with a single outsourcing partner.
• Sales focus: You could direct your efforts towards doctor education, distribution channels and field force rather than factory operations.
• Batch size adjustability: This option enables to adjust batch sizes according to the demand in the territory.

That’s precisely why 3rd Party Pharma Manufacturing Companies cater to different kinds of customers from PCD franchise organizations to derma or vet businesses, from nutraceutical start-ups to critical care marketing organizations. Apart from that, even established Third Party Manufacturers have the expertise when it comes to dealing with product approvals and inspections which is generally lacking for newer marketers. In fact, most of the best third party manufacturing companies in India help with artwork compliance.

Third Party Manufacturing Products You Can Outsource

Third party manufacturing product ranges cover a wide array of products. Typical product categories are tablets (coated, film coated and sustained release), hard and soft gelatin capsules, oral liquids, dry syrup, ointment, creams and gels, eye and ear drops, sachets and powders and injectables. Products in Ayurveda and Nutraceuticals are also popular in third party manufacturing.

The therapeutic sectors covered are antibiotics, analgesics, gastrointestinal medicine, cardiology and diabetes, dermatology, gynaecology, paediatrics, veterinary and critical care medicines. Certain product categories like sterile injectables, beta lactams and oncology products may require segregated manufacturing facilities; hence, it is important to check if the unit is capable of handling the category.

When selecting 3rd Party Manufacturing Pharmaceuticals, ensure you request a list of approved products together with the approval requirement, meaning whether approval is already there or needs to be obtained and the batch record and certificate of analysis.

Regulatory and Quality Standards for Third Party Manufacturing Pharma Companies

Third party pharma manufacturing depends on the robustness of the quality systems behind it, and compliance will distinguish a reliable Third Party Manufacturing Pharma Company from all others. The critical points of focus are:

• Manufacturing license: It comes from the State Drug Licensing Authority and is unique to each facility and product type.
• Compliance with GMPs: It refers to the new Schedule M system which defines the requirements related to premises, facilities, documentation, quality systems and manpower. WHO-GMP certification is optional.
• Certificate of Pharmaceutical Product (CoPP): Important when you are thinking of exporting as most importers would demand it.
• Quality Check: It includes internal QC tests, stability tests, validated processes, and full batch manufacturing record.
• Compliance with pricing rules: Ceiling prices fixed under Drugs (Prices Control) Order must be honored while fixing PTR, PTS and MRP for scheduled formulations.

It is the collective responsibility of all parties. If any batch fails the quality test in the market, regulatory agencies can penalize both the manufacturer and the marketer whose name is put on the label.

How to Choose the Best Third Party Pharma Manufacturers in India?

However, when searching for Top Third Party Pharma Manufacturers in India, the directory lists will come long; however, the directory listings are no assurance of quality. You would be better off using criteria that you could easily validate yourself.

• Licenses & Certifications: Check the license number with the concerned authority and obtain the recent GMP and WHO-GMP certification. Facilities: Conduct an inspection of the facilities by first checking the manufacturing facility, water, materials handling and storage facility, and the quality control laboratory.
• Expertise on Product: Collaborate with companies having expertise in your product type and therapeutic area.
• Openness: A good vendor will readily conduct an audit for you and also give you sample documents and answers to all your technical queries.
• Commercial Terms: The commercial terms of price, minimum order quantity, payment, and delivery schedule must be known.
• Locations: Pharmaceutical parks at Baddi, Haridwar-Roorkee, Ahmedabad-Vadodara, Hyderabad, Daman, and Sikkim could be chosen based on your distribution channel.

They will not be hesitant in telling about the processes, any deviations and corrective actions taken. There are certain qualities that the Best Third Party Manufacturing Companies in India have in common and these include consistency in quality of the batch, process documentation, timely delivery and honesty in case there are any issues. The Best 3rd Party Pharma Manufacturing Companies are also careful about their client’s confidential information and ensure that it does not go out to their competitors. In case you are considering the Best Third Party Pharma Manufacturers in India, make sure you visit a few facilities personally.

Risks in 3rd Party Manufacturing and How to Reduce Them

Third Party Manufacturing can be extremely low-risk when done properly, but there are certain things that tend to come up repeatedly. Improper contracts lead to disputes in terms of formulation and brand, these should be specified clearly. A single supplier without alternatives is the source of the possibility of supply interruption; hence, one always needs a contingency plan in case of fast-turn products. Lack of proper records is going to pose a problem during inspection by the authorities, and one needs to ensure that there is batch traceability. The pharmaceutical contract manufacturing quality agreement is just as important as the business agreement, since it specifies accountability for changes, complaints, and recalls. One needs references from third party manufacturing companies, and any credible pharmaceutical third party manufacturing company will offer those references willingly. Last but not least, about 3rd Party Manufacturing Pharmaceuticals, one always has to start with sample batches first.

Frequently Asked Questions

Q1. Is third party manufacturing legal in India?

Yes. This is allowed according to the Drugs and Cosmetics Act of 1940, provided that the manufacturing company has obtained a licence issued by the State Drug Licensing Authority, and the product labelling mentions the name of the marketer and manufacturing facility.

Q2. What is the difference between loan licensing and third party manufacturing?

In loan licensing, the marketer uses a license and plant of the approved manufacturer to produce its own product. On the other hand, in third party manufacturing, the manufacturer conducts the complete manufacturing process.

Q3. How can I select the right third party manufacturer in India?

You can check the manufacturer's licence, WHO and GMP certificate, inspection status, product list, and then visit the plant to review the batch sample and seek customer references.

Conclusion

Third Party Pharma Manufacturing India will help you grow your brand of medicines by allowing the marketer to do away with the process of having his own manufacturing facility. In lieu of finding the Best Third Party Pharma Manufacturers in India and Top Third Party Pharma Manufacturers in India, create a small list following audits and references. Selecting one from Best 3rd Party Pharma Manufacturing Companies is not a question of choosing the cheapest option but of trusting and being consistent. In order to get the most out of third party manufacturing, it is ideal that your selected manufacturer is licensed and GMP-certified, open and experienced in your product range. You should take time to verify qualifications, do an audit and start with a specific range of products. With the help of the right Third Party Manufacturers, you will be able to focus on developing your business.

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