Third Manufacturing/Contract Manufacturing

Pharma Third party manufacturing/contract manufacturing is provide easy solution for manufacturing of own brands.

Third party or contract manufacturing is referred to out sourcing of products or to get manufactured one’s brand names from others manufacturing unit out. In current time it is very popular concept among marketing companies. Even companies having their own manufacturing units are gotten manufactured their products from outside. Multinational companies are also gotten manufactured their products at loan license or third party basis.

THIRD MANUFACTURING/CONTRACT MANUFACTURING

When a firm/company (marketing/manufacturing firm/company), called party ‘A’ enters into an agreement with the manufacturing firm/company, called party ‘B’ and Party ’B’ agrees to manufactured generic/patent-proprietary product of party ‘A’ in the manufacturing facility belonging to Party ‘B’ on bases of party ‘A’ wholesale drug license. Majority of Pharma marketing companies are engaged in third party manufacturing.

WHY IS THIS CONCEPT SO POPULAR?

One of the best reasons of popularity of this concept is simplicity and easy availability. You don’t have to do much work and investment. It gives opportunities to even those persons who don’t have own manufacturing units to start their own Pharma company. Starting and running a manufacturing pharmaceutical company is difficult and tensed work, and require high investment but starting and running Pharma marketing company is easy thanks to third party manufacturing. 

PROCEDURE TO START OWN MARKETING COMPANY AND GET PRODUCT MANUFACTURED AT THIRD PARTY BASIS?

• Choose Company Name
• Apply for Company Registration
• Apply For Wholesale Drug License
• Apply for GSTIN
• Select Molecules and Combination for manufacturing and chose Brand Name.
• Send quotation for minimum batch size and minimum possible rates at third party basis. We recommend you to send query to many third party manufacturers to get best deal. 
• Choose pharmaceutical manufacturer to which you want to get manufactured your product.
• Manufacturer will ask you to send affidavit with respect to brand name or trade mark. This is generally for the purpose to specify that this brand name of product belongs to you and you will be totally responsible for brand name or trade mark conflict and manufacturer will not responsible for any brand name conflict in future. 
• Manufacturer will also ask for scan copy of your drug license number and GST number. These documents will provide authenticity and proof of your address and firm name. 
• Send Marketed By address which you want to put at products.
• Finalize design of packing material.Printing and procurement of packing material depends upon you. You can procure packing material yourself or you can let manufacturer to procure and print packing material for yourself. 
• Deposit initial advance in manufacturer account and your third party Pharma manufacturing process has been started. Generally, manufacturers take 25% advance and remaining 75% against Performa invoice after completion of manufacturing of your products.
• Manufacturer will book you product through transport or other mean (as you prefer) to your premises or location. Now process has been completed. .

REQUIREMENTS FOR PHARMA THIRD PARTY MANUFACTURING?

For getting third party manufacturing, you don’t need to have much requirement. You should have

• Company Profile
• Address Proof
• Drug license number (Not applicable at Ayurvedic Products) 
• GST Identification number
• Brand Name non resemblance affidavit
• Agreement for manufacturing
• Packing material printer (in case you will procure printing material) 

ELIGIBLE TO GET PHARMA PRODUCT MANUFACTURED AT OWN BRAND NAME?

Firm or person having its own wholesale drug license number is eligible to get product manufactured at his own brand name.

MINIMUM BATCH SIZE FOR PHARMA THIRD PARTY MANUFACTURING?

Batch size depends upon manufacturer and molecule you want to get manufactured. Big giants don’t take small batches whereas small manufacturers can even manufacture small quantity for you. Batch size also depends upon cost of product you want to get manufactured. Costly products can be manufactured in small batches whereas cheap products usually require good number of quantity. Some manufacturers can even manufacture small batch size as 100 boxes for tablet/cap and 500 pc for liquid/syrup, 1000 pc for injections.

DAYS IT TAKES IN MANUFACTURING PROCESS

Time depends at availability of materials like packing material, raw material, excipients etc. Usually manufacturing process will take 30-45 days for new product and 15-25 days in case of repetition. Most important, process duration also vary manufacturer to manufacturer. Few manufacturers take less time and few takes more time to manufacture product. But above mentioned duration considered to be standard. Process includes:

• Product Approval – 5-7 days
• Packing Material – 10-20 days
• Manufacturing Process: 12-15 days
• Transport: 2-8 days

COSTING

Costing for third party manufacturing is calculated as per following mentioned product/process’s cost and price.

• Raw material cost: Involves Active ingredient/s cost and Excipients cost
• Packing Material Cost i.e. Box, foil, label, lami tube etc. Secondary Packing material like tape, shipper, PVC etc. 
• Manufacturing Process cost 
• Quality assurance and Quality control cost 
• Transportation
• Labour Charges 
• Tax
• Profit Margin

PAYMENT TERM AND CONDITIONS

Payment term also vary party to party. For older parties payment term as per mutual agreed term i.e. generally 45 days. For Newer Parties manufacturing is usually done at 25-30% advance and remaining payment against performa invoice at time of dispatch of finished product.

TRANSPORTATION AND INSURANCE

Transportation charges mostly bear by marketing company or as per mutual agreement. All transported material should be secured under insurance which is generally 0.5% of total bill value.

CHECK LIST FOR NEW PARTIES

• Approval Letter For Product Approval From The Party On Party’s Letter Head. 
• Third Party Agreement.
• Affadavit Performa For Address Proof. 
• Contact Information Details Of The Party
• Account Numbers Of Pharma Franchise Help For Depositing Product Approval Charges. 
• Packing Investment Details To Be Given To Party.