Third-party pharma manufacturing is a popular business model. It involves outsourcing of pharma products to a specialist. This eliminates the need to set up your own manufacturing facility.
This way you, as a pharma business, can focus on marketing and sales of your products. In this blog, we have explained how it works, why it matters and what to look for before choosing a pharma contract manufacturer.
What is Third-Party Manufacturing?
In third-party manufacturing, you outsource the production of your pharma products to a specialist.
The manufacturer is responsible for production, quality control and compliance. This is a widely adopted business model across India and is used by many small and mid-size pharma companies. It saves them the cost of setting up a manufacturing facility. It also enables them to concentrate on what they do best – building the brand.
Why Opt for Third-Party Manufacturing in India?
Third-party manufacturing helps pharma brands enter the market and grow their business as it ensures the following benefits.
Less investment
No need to buy machinery or build a factory with a third-party manufacturing model. It saves the set-up cost of lakhs of rupees.
Time to market is faster
Your manufacturer already has the equipment and licenses required. Production can begin within weeks.
Access to expert knowledge
Your manufacturer is generally specialised in formulation, packaging and quality testing. You get the benefit of their expertise.
Scalability
With increasing demand, you can increase the size of your orders without having to invest in new equipment.
How Does It Work?
Select the pharmaceutical products you want to market
Think of what medicines or health products you want to sell.
Find a reputed and certified manufacturer
Look for a company that has a history of producing quality products and has WHO-GMP certifications.
Decide on formulation and packaging
Discuss ingredients, dosage and design with the manufacturer.
Sign an agreement
This should cover pricing, minimum order quantities and delivery timelines.
Place your first order
Your batch is manufactured and quality checked by the manufacturer.
Receive your branded products and launch them in the market. Your branded products are ready for the market.
What to look for when choosing a manufacturer
| Step | What You Do |
|---|---|
| 1. Pick your products | Think of what medicines or health products you want to sell. |
| 2. Find a reputed manufacturer | Look for a company known for quality production and WHO- GMP certification. |
| 3. Decide formulation & packaging | Discuss ingredients, dosage, and design with the manufacturer. |
| 4. Sign an agreement | This should cover pricing, minimum order quantities, and delivery timelines. |
| 5. Place your first order | Your batch is manufactured and quality checked by the manufacturer. |
| 6. Quality check | The manufacturer verifies the batch meets required standards. |
| 7. Buy and sell | Your branded products are ready for the market. |
Not all manufacturers are the same. Therefore, consider the following factors to choose the right third-party manufacturing company.
WHO-GMP Certification
Verify they are WHO-GMP certified. This indicates your manufacturer adheres to all international standards.
Check their Product Portfolio
The next thing to do is review their product range
See how they Test Quality
They should have an in-house quality control lab.
Explore Packaging options
See if they have custom packaging designs. Foil, bottles, strips and boxes should look attractive and professional as well.
Check the minimum order quantity (MOQ)
Ask about the order limit, which generally varies from manufacturer to manufacturer. Always prefer the one with flexible MOQ terms.
Compare Pricing and Margins
Request quotes from 4-5 contract manufacturers to compare pricing. But don’t pick them solely on price. See which one can ensure value.
Ask about Delivery Time
Ask about delivery times, as delays can impact your profit and reputation as well.
Products Produced by Third-Party Manufacturing Services
This model covers a wide range of pharma products. Common categories are…
● Tablets & capsules
● Syrups and suspensions
● Injections
● Creams & Ointments
● Protein powders and nutraceuticals
● Ayurvedic & Herbal Formulations
Required Documents Asked by a Contract Manufacturer
This is essential for a hassle free process as well as avoiding legal issues.
• Ensure that you get a drug license from your state to sell pharma products.
• Get registered for GST for billing and tax compliance
• Get your brand name registered.
Have these documents ready in advance so you can save time when selecting your manufacturing partner.
Common Third-Party Pharma Manufacturing Issues and How to Deal with Them
This model is not without its problems. Knowing about them helps you plan better.
• The partner determines the quality of control. You need to do regular audits and monitoring.
• Communication gaps are another concern to deal with. Clear contracts and regular updates cut down on confusion.
• There might be delays in supply. ALWAYS have a buffer stock plan for peak demand periods.
Most of these risks are minimised by selecting a reliable, transparent manufacturer.
Mistakes to Avoid While Choosing a Third Party Pharma Manufacturing Company
Not Visiting the Site in-Person:
Always visit the site if possible. This is because photos can be misleading. May be those phone conversations don’t reveal the truth.
Choosing the Lowest Quote
Don’t opt for a manufacturer with the lowest quote. May be they are cutting corners to compensate their low prices. Prefer value over pricing.
Not Checking Reviews
Feedback, positive or negative, help determine the quality of your pharma manufacturer. Check their online reviews or you can talk to their existing clients.
Final Thoughts
Third-party manufacturing is one of the smartest ways to enter the pharma business. It reduces your investment. It makes your launch faster. And it allows you to focus on growing your brand. The choice of the right manufacturing partner is the key to success. Before you sign any agreement, check out their certifications, pricing and track record.
At Systole Remedies Pvt. Ltd., we are one such WHO-GMP Certified Pharmaceutical manufacturer supplying to clients across India. We have a wide product range and we cater to the needs of all pharma businesses of all sizes, and scope.
To know more about us, call us at +91-9828506600 and +91-8955000013.
FAQs (Frequently Asked Questions)
What is this manufacturing model in the pharma industry?
It is a model where a licensed producer will manufacture medicines for a brand owner. The brand owner will do sales and marketing.
Is this business model profitable for startups?
It helps reduce set-up costs and speeds up the entry in the market, thus helping the startups to earn profits faster.
What Certifications should a maker have?
Look for WHO-GMP and ISO certifications.
What is the investment required to get started?
Many startups begin with a small capital of a few lakh rupees, depending on the product range and order size.
Can I choose my own packaging and brand name?
Of course, yes. This model lets you choose design and identity for your products.
