Third party manufacturing in the pharmaceutical industry refers to the process where a company outsources the manufacturing of its products to another specialized pharmaceutical manufacturer. This model is also known as contract manufacturing and is widely adopted by both startups and established pharmaceutical companies due to its cost-effectiveness, scalability, and operational efficiency.
In third party manufacturing, the pharma company (the brand owner) provides the formulation and product specifications, while the manufacturing company is responsible for producing the medicines as per the agreed quality standards. The final product is manufactured under the brand name of the pharma company and delivered with proper packaging and labeling.
How Does It Work?
The process typically involves several key steps:
Product Selection – The pharma company decides which products it wants to manufacture.
Quotation Request – The company contacts a third party manufacturer and requests a price quote.
Order Finalization – After negotiating terms, both parties agree on the quantity, pricing, and timelines.
Documentation – Essential documents like Drug License, GST, and company profile are shared.
Manufacturing – The third party manufacturer produces the medicines according to the specifications and complies with regulatory standards.
Delivery – Once the production is complete, the goods are delivered to the brand owner, ready for distribution.
Benefits of Third Party Manufacturing
Cost Efficiency: No need to invest in manufacturing infrastructure, machinery, or labor.
Time-Saving: Allows companies to focus on marketing, branding, and expansion while the production is handled by experts.
Scalability: Easy to scale up operations based on market demand without worrying about production capacity.
Quality Assurance: Reputed third party manufacturers follow strict quality control protocols and comply with GMP-WHO standards.
Who Should Opt for This Model?
This model is ideal for:
New pharma startups looking to enter the market without heavy investments.
Existing pharmaceutical companies wanting to expand their product range.
Businesses aiming to focus more on sales and marketing while leaving production to experienced manufacturers.
Conclusion
Third party manufacturing has emerged as a key pillar in the Indian pharmaceutical ecosystem. With increasing demand for affordable and quality healthcare products, this model offers a smart, efficient, and profitable way for pharma companies to grow. Whether you're an entrepreneur or an established player, embracing third party manufacturing can be a game-changer for your business.
