newbusiness@systoleremedies.com
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27 October 2026 | By Admin
Third party pharma manufacturing in India allows pharmaceutical businesses to outsource drug production to licensed manufacturers. This guide for 2027 covers the manufacturing process, investment requirements, product selection, quality standards, regulatory compliance and key factors for choosing a reliable manufacturing partner.
Third party pharma manufacturing in India means that an established pharmaceutical brand, PCD franchise company, or startup will have its products manufactured for it by an authorised manufacturer without setting up its own factory. The pharma marketing company would be responsible for managing the product range, branding, marketing and distribution, while the manufacturer would be responsible for making the formulations, manufacturing, controlling quality and packaging. This document provides insight into how the process works, how much it will cost, what documentation would be required, how to select the partner and what to avoid.
According to press reports quoting government officials, there are more than 10,500 pharma product manufacturing plants in India, out of which 8,500 are from the MSME sector. There is certainly a lot of choice available, but this is also exactly why choosing the right partner becomes crucial. A poorly chosen one can damage all these.
Key Takeaways
Third Party Pharma Manufacturing, also known as contract manufacturing, refers to an agreement between two companies whereby one firm contracts out the manufacture of products to another company. This is because the brand owner markets the product under its own brand name and trademark. The manufacturer produces them at its own licensed facility, following the marketer's specifications and agreed quality standards.
The concept is built around a very basic allocation of tasks. The marketer selects the products to produce, designs the packaging for the products and markets the brand to the doctors, chemists, distributors and institutions, while the manufacturer acquires the raw materials and packaging materials, manufactures the products and delivers them. An agreement is entered into between the two parties on the list of the goods, the cost, quality and delivery deadline.
As the marketer does not have to have land, plant, machinery and a large technical workforce, the barriers to entry are much reduced compared to own-plant manufacturing. That is why startups, PCD pharma franchise companies, export companies and even established brands opt for Third Party Pharma Manufacturing.
Indian drug law is worth understanding before you sign any agreement. Neither the Drugs and Cosmetics Act, 1940 nor the Drugs and Cosmetics Rules, 1945 make any provision for "Third Party Manufacturing" as a separate licensing category. There are, in fact, two ways in which it can be done legally.
In the first structure, the third party manufacturer holds the manufacturing licence and the marketer sells the product under its own brand, with both names shown on the label. In the second structure, the marketer obtains a loan licence (Form 25A or Form 28A, depending on the product category) to manufacture at another licensee's premises. Legal scholars point out that the Rules permit manufacture in a factory belonging to some other licensee via the loan licence procedure, while the Drugs Rules also explain what the term "marketer" means. Since different conditions apply to different products in different states, it is recommended that you seek professional guidance first.
The process is favoured because it changes a high fixed-cost business model to a low cost and dynamic business model. There are many benefits which are grouped into three categories: Investments, Production capabilities and Operations.
Developing an FDA-compliant plant requires land, clean rooms, utilities, water supply system, manufacturing equipment, QC laboratory facilities and labour. This service reduces the need for all these investments. Your money is invested in developing the product, branding and marketing it. The other benefit is that you will not need to wait for several years to set up the manufacturing facility.
An ideal contract manufacturer operates more than one dosage-form line with pre-existing batch sizes. This helps you to increase or reduce the production size depending on the needs of the market. For instance, Systole Remedies, a third party manufacturing company, indicates that its production facility is capable of handling both large and small-scale production processes, something that will work well for both a new brand trying out the market and an old brand with high demands.
The model is not perfect. You depend on another company's quality discipline, so a supplier failure becomes your failure in the market. You also have less direct control over scheduling. These risks are manageable through careful selection, a clear quality agreement and regular audits, which this guide covers in later sections.
The following process illustrates how a standard Third Party Pharma Manufacturing project would progress from the initial inquiry up to delivery. Timeframes depend upon the type of product as well as the readiness of the documentation.
Mention the requirements you have regarding the product name, product formula, dose strength, quantity, packing and market destination. The manufacturer verifies the feasibility of the same, confirms the products fall under the licensed categories and discusses its manufacturing capability.
The next step involves selecting the products. For already developed generics, the manufacturer uses its own formulations. For custom products, the technical team discusses the formulation, including composition, strength, excipients and stability. In case of any novel drug or fixed-dose combinations that require regulatory clearance, this is the stage where you need to ensure its approval status.
The supplier quotes prices for each product, minimum order quantity, packaging and payment terms. On accepting the same, both parties enter into a manufacturing agreement. A good agreement involves confidentiality, quality responsibility, batch release procedure, complaints and handling, recall procedure, labelling responsibility, and termination clauses.
Submission of documents on business, trademarks and licenses for your structure as well as label artwork, is made. The regulatory team at the manufacturer ensures that the artwork is validated according to the labelling laws like manufacturer’s name and address, license number, batch number, manufacture and expiry dates and marketer.
Upon validation of artwork and placing of order, procurement of active pharmaceutical ingredients, excipients and packaging material from approved suppliers is made.
The batch is manufactured according to good manufacturing practices. In-process inspection of quality parameters is done through blending, tablet weight and hardness, fill volumes and sterility of the injectable preparations.
The QC laboratory performs tests on the finished product to meet the specifications of identification, assay, disintegration/dissolution, if any and microbial limits. Batches that pass the tests only are released and there is usually an accompanying certificate of analysis upon release.
Released batches are packed in your own brand packs and shippers and shipped out to your own warehouse or distributors. Good 3rd Party Manufacturer always provide batch information, test report and invoice with each shipment. Retained samples are kept at the manufacturer's premises for the lifetime of the product as per the quality system requirements.
There are various factors affecting the timeline such as dosage form, availability of raw materials and the completeness of documentation provided. Generally, simpler oral solid dosage forms take less time than injectable dosage forms due to sterility testing and validation. You should request a written timeline at the quotation stage.
The document requirements will be based on your form of business, product types, and the state where you are operating. The following is a list of documents that most customers should have ready.
Evidence of the organization’s constitution: partnership deed, LLP agreement, or Certificate of Incorporation along with Memorandum and Articles of Association
According to the Drugs & Cosmetics Rules, 1945, a company intending to market its own brand has to take a legal route. The most common routes taken are:
The majority of generic preparations can be produced under the manufacturing company's license that shows the list of authorized products. At the same time, in order to manufacture and sell a new product or fixed-dose combination, approval according to New Drugs and Clinical Trials Rules, 2019 should be obtained. Inquire about your manufacturing company's list of product approvals and make sure all items intended for marketing are included in the list. A product approval list can be found on Systole Remedies website.
Some products have their ceiling prices fixed by the Drugs (Price Control) Order, 2013 for the schedule medicines. According to legal commentaries, marketers are considered a part of the "manufacturer" in the context of price control, thus you are jointly responsible for complying with the pricing. Nutraceuticals and food supplements might be regulated according to FSSAI guidelines rather than the drug guidelines depending upon the nature of the product.
Important: This section contains general information only. Procedures related to License, fees, etc. vary and there is a different procedure for every state licensing authority. Verify the present procedure at CDSCO website or State Drugs Control Department before the application.
Minimum Order Quantity is the minimum quantity of a product a manufacturer will accept. There is Minimum Order Quantity because every batch has a fixed cost of setting up. Some of the costs associated with every batch of production are machine cleaning, set-up cost, quality assurance, documentation, etc.
MOQ can be stated as per product, per batch or per order, but varies from manufacturer to manufacturer. As there is no universal number, be careful about any claims made on standard MOQ. Instead, ask for a list of MOQ for all of the items from the selected Third Party Pharma Manufacturers , along with the low MOQ for trial orders.
The cost for Third Party Manufacturing is different for each product type. Since one unit cost does not apply to all tablets, syrups, and injections, smart consumers compare quotations based on the same specification and not the lower number. Here are the primary cost factors:
A good quotation contains information on product, strength, packaging quantity, rate, minimum order quantity, validity period and payment terms. Confirm if packaging costs, artwork fees, testing fees, and GST have been included in the cost per unit. In addition, too low prices might conceal the lack of inclusion of the aforementioned fees and poor quality of raw materials used as well as the quality assurance process.
Manufacturing your goods at a cheap cost, which results in a failed production lot, complaints from consumers in the market or even a recall, is a lot more expensive than paying reasonable prices for good quality. Treat your manufacturer as a partner and compare other factors along with the cost.
A good manufacturer will provide various forms of products across different therapy segments. The following table shows some of these product categories.
|
Dosage Form |
Common Examples |
What to Check |
|
Tablets |
Antibiotics, analgesics, antacids, antidiabetics, cardiac medicines |
Beta-lactam and non-beta-lactam segregation, coating and blister options |
|
Capsules |
Antibiotics, multivitamins, digestive enzymes, probiotics |
Hard gelatin versus softgel capability, cross-contamination controls |
|
Syrups and Suspensions |
Cough syrups, tonics, paediatric suspensions, antacid liquids |
Liquid section capacity, bottle types, preservative systems |
|
Dry Syrups |
Paediatric antibiotics and other reconstitution powders |
Separate beta-lactam and non-beta-lactam facilities, reconstitution stability |
|
Injections |
Liquid and dry injectables, antibiotics, analgesics |
Sterile area standards, sterility testing, ampoule and vial lines |
|
Ointments and Creams |
Antifungals, antibacterials, anti-inflammatory topicals |
Tube filling, homogeniser capability, content uniformity |
|
Eye and Ear Drops |
Antibiotic, lubricant and anti-allergy drops |
Ophthalmic-grade controls, sterility and particulate limits |
Oral solids form the core of most portfolios. There are tablets that include plain, film-coated, and sugar-coated forms. There are also capsules such as hard gelatin capsules containing powders and pellets. You need to determine whether there are dedicated facilities by the Third Party Pharma Company for the production of beta-lactams like penicillin and cephalosporins.
Liquids can be used for children and older patients. Dry syrups are powder formulations reconstituted with water upon use. The dry form is preferred in the case of antibiotics due to stability reasons. You should inquire about the type of packaging bottles used, closure system, and the stability of the reconstituted dry syrup formulation.
Liquid and dry powder injections fall under the category of injectables. They require clean rooms, sterility assurance systems and extensive testing. As failure to adhere to this process results in risks to patient safety, special attention should be paid to the sterilization facility's compliance and inspection records.
These products have their requirements for filling lines and, for eye and ear drops, sterile/low bioburden control. The mentioned segments may typically belong to dermatology, ENT and ophthalmology franchises.
Quite a lot of companies categorize their products according to therapy areas, not forms. Typical therapeutic ranges include cardiac, diabetic, hormones, gynaecology, paediatrics, orthopaedics, dermatology, ophthalmology, critical care, neurology, nephrology and urology. Systole Remedies offers contract manufacturing of tablets, capsules, syrups, dry syrups, injections, ointments, ear drops, eye drops and cardiac, hormones and diabetic ranges; and their website features a range of PCD segments including gynae, pediatric, oncology, ortho, derma, critical care, neurology, nephrology and urology.
It is always better to be aware of some of the standards that you are likely to encounter during your conversations with manufacturers since quality is the basic requirement of all good manufacturing relationships.
GMPs pertain to the guidelines that ensure the production of medicines according to the necessary consistency and requirements. In India, GMPs are prescribed under schedule M of the Drugs and Cosmetics Rules. It has been notified by the Ministry of Health and Family Welfare on the revision of Schedule M in December 2023, which ensures that Indian practices are aligned with the standards of WHO. Larger manufacturing firms have been granted a short transition period, while smaller or medium manufacturing firms having turnover below Rs 250 crore have been granted an extension up to 31 December 2025. As of 1 January 2026, the new rules will apply to manufacturing firms in India.
The WHO-GMP Certification means that the facility complies with GMP standards consistent with the World Health Organization. It is the preferred or required certification for many export markets and institutional customers. According to various press reports, only a small percentage of Indian MSME facilities are WHO-GMP certified; therefore, the WHO-GMP certification is an important differentiator. One should always ensure to view the certification, its expiration date and its scope, which may be only for some products or dosage forms.
The ISO certifications include ISO 9001. Good Laboratory Practice (GLP) is a set of procedures for conducting, documenting, and planning laboratory research and testing. This practice is not intended as an alternative to a valid manufacturing license or GMP, but may be considered an additional safety measure. The certification year and the version of the standards must be up-to-date.
Brand owners often confuse these three models, so it helps to compare them side by side.
|
Factor |
Third Party Manufacturing |
Own Manufacturing |
PCD Pharma Franchise |
|
Investment |
Low to moderate |
High (land, plant, machinery) |
Low |
|
Brand ownership |
Your own brand |
Your own brand |
Usually, the parent company's brand |
|
Control over production |
Shared, through agreements |
Full |
Limited |
|
Time to launch |
Months |
Often years |
Fast |
|
Best suited for |
Brand builders and growing companies |
Large, established companies |
Distributors and entrepreneurs entering pharma sales |
In a PCD franchise, you market the parent company's products in an assigned territory. In Third Party Pharma Manufacturing, you build and own the brand while the manufacturer makes the product. Some businesses start with a PCD franchise to learn the market and then move to their own brands through contract manufacturing.
Manufacturer selection is the most crucial step in this business. Follow the checklist given below for evaluating potential manufacturers based on facts and not claims.
Request the manufacturing license and the product approval list. See whether the license is valid for you and your products. A buyer would prefer WHO-GMP certification, ISO certification and, even better, compliance with the Revised Schedule M. According to Systole Remedies, they are ISO- and WHO-GMP-certified.
A reliable manufacturer has a documented quality management system. It should include a quality assurance team that is independent of production, standard operating procedures, change control, deviation and complaint handling, batch release procedures and recall procedures. Ask who releases batches and how out-of-specification results are investigated.
Make sure that the producer can manufacture the dosage forms that you want. It is also important to ensure that the manufacturer has enough manufacturing capacity, batch size, beta-lactam and sterile areas, and test laboratories. The producer with production facilities and test laboratories under its control can control quality better than the other producer.
Request sample batch records, certificates of analysis and artwork approval procedures. A transparent partner shares these readily and explains its documentation system. Hesitation here is a warning sign.
If possible, inspect the manufacturing plant. Look at its cleanliness, material handling, storage areas, laboratories, and staff training. If not, request an inspection report or arrange an independent audit.
Inquire into the sources of APIs and other raw materials, vendor qualification process, and testing of the incoming materials. A sound source is critical to assure quality and availability.
Ask for lead times and means of communicating any delays and who to contact at the manufacturing company. Try to contact the existing clients wherever possible.
Comparison of quotations must be done by keeping the specifications the same. Pricing terms, MOQ, pricing changes, confidentiality, and termination clauses must be considered.
Manufacturing in a cluster with good road and rail connectivity reduces logistics time. Systole Remedies is located in Village Ogli, Kala Amb, District Sirmaur, Himachal Pradesh, which is an established manufacturing area in India, and claims to provide its services to clients all over India.
Most errors made in contract manufacturing are predictable and avoidable. They are the errors that buyers generally make along with the questions needed to prevent them.
Sometimes the most economical quotation may be an indication of low-quality ingredients, reduced quality tests or other costs that have been hidden. Think about this: what do you really get for your money?
It's assumed that any manufacturer can manufacture any item. Consider: Are all products I need manufactured and approved in accordance with your licence?
Using a different company’s licence to promote the products and lacking a label or a separate licence can lead to you being held liable under drug regulations. Consider: Which legal structure do I need for my brand? How should it be marked?
A certificate of compliance is not about how compliant your company is with the existing requirements. For example, is your production facility compliant with the revised Schedule M? When did you have the last regulatory audit?
All is well until something goes wrong, but there are no terms of cooperation. Would you cooperate on issues such as Responsibility, Batch Rejection, Recall Costs, Confidentiality, and Termination of Cooperation?
An ambiguous MOQ will bring overstocking and an ambiguous delivery timeline will result in understocking. For instance, what MOQ does a specific product have and what is the guarantee of the delivery timeline?
Labelling mistakes lead to delays, the need for redo and non-compliance. Who would check my artwork based on your labelling requirements?
It is impossible for me to understand the manufacturing capacity by means of only reading a brochure. Will I have the possibility of seeing your manufacturing plant, examining your paperwork, and speaking with your quality control staff?
Over-ordering will be hard to handle and might expire eventually. Question to ask: Is it possible to place smaller quantities initially?
Questions of effectiveness in the market and stability of the product will become apparent. Question to ask: What about complaint handling and how long would I have to wait for help?
Systole Remedies Pvt. Ltd. is a pharmaceutical manufacturer based in Kala Amb, Himachal Pradesh. Based on information published on its website, the company offers the following to marketers and brand owners.
Read more about the company’s capacities on their special web page: Third Party Pharma Manufacturing Company in India. As is the case with any supplier, it is important that one confirms the credentials, licensing and product approval with the supplier prior to conducting the transaction.
Q1. What is Third Party Pharma Manufacturing?
Third Party Pharma Manufacturing is the process through which a licensed manufacturer produces the drugs for another company that will sell them under its own name.
Is it necessary for me to have a manufacturing facility for setting up a pharma business with the help of third party manufacturing?
Not necessarily. It's not required to have your own facility because the manufacturer will provide all such facilities, machinery and skilled personnel. You will require only the business registration, legal licensing structure, product permits and wholesaler's license.
Q2. What licenses are necessary for Third Party Pharma Manufacturing in India?
The manufacturing company should possess a valid manufacturing license in Form 25 or Form 28. In case you manufacture using loan license, then Form 25A or Form 28A will be required. You will also require the wholesale drug license and GST registration.
Q3. What is MOQ in third party pharma manufacturing?
MOQ is an acronym for Minimum Order Quantity, which indicates the smallest order quantity of orders taken by the manufacturer for the concerned product. MOQ is dependent on the dosage form, machinery, number of raw materials in the packing, packaging, and the formulation itself. It is always advisable to request a written quotation for the MOQ of each product.
Q4. What is the cost involved in third party pharma manufacturing?
This will depend upon the type of formulation, the API cost, dosage form, batch size, packaging, testing and logistics. Injectable products will have a higher cost compared to basic tablets. Always compare written quotations for the same specifications and see what all is covered like artwork and GST.
Q5. What dosage forms can be manufactured under third party pharma manufacturing agreements?
Some common dosage forms include tablets, capsules, syrups, dry syrups, injections, ointments, and eye and ear drops. This will depend on the type of licence and facilities available with the manufacturer.
Q6. What is the method of confirming the reliability of the pharma manufacturer?
Request a copy of the manufacturing license, list of approved products, GMP and ISO certification, certificate samples, and the quality agreement. The company’s adherence to the revised Schedule M is essential. If possible, do an audit of the premises and talk to their customers.
Q7. What is the time required for launching products through third party manufacturing?
It varies depending on documentation, artwork clearance, availability of raw materials and dosage form. Oral solids tend to be launched faster than injectable dosage forms. Get from your manufacturing company a written product-specific timeline while requesting a quotation.
Third Party Pharma Manufacturing provides a practical approach for getting to the market for pharma brands without large initial investments, on the condition that they select the right partner and establish the right legal structure. Licenses and product approvals, a documented quality system, product-by-product quotation comparison, everything agreed in writing, an audit, and a narrow portfolio are key to success.
Looking for a Third Party Pharma Manufacturing Partner? Explore Systole Remedies' manufacturing services and contact the team to discuss your requirements.
Phone No: +91-9828506600
Email ID: newbusiness@systoleremedies.com
Address: Village Ogli, Kala Amb, District Sirmaur, Himachal Pradesh 173030