Understanding the Process of Third Party Manufacturing to Yield High-Quality Goods
The manufacturing plants often deal with the necessity to lower the cost of the manufacturing process and make sure that their potential customers receive the best available products. Therefore, many manufacturing plants are considering the viable option of registering in a third-party business. The third party manufacturing pharma companies have their own specific manufacturing certified vendors. They manufacture high- quality products that are not only advantageous to the companies but also contribute to the health of humans.
Concept of Third Party Manufacturing:
Here, a manufacturer becomes a service provider, and he utilises his resources (for example, man and machine) to manufacture the brands trademarked in the name of a marketing company. On the brand, it is printed as a manufacturer by the manufacturer name and address and advertised by marketing company name and address.
In other words, Third Party Manufacturing pharma involves the products manufactured with your own brand name from others who are manufacturing it. This is becoming a widespread stratergy to start pharma products without having your own plant, and in this way, one can thoroughly emphasise on the sale of the products. It serves to be an excellent business opportunity to both the parties. Third party manufacturing is also sometimes referred to as contract manufacturing. But, a proper understanding of the similarities and dissimilarities of these marketing terms makes all the difference.
Third party manufacturing, Contract manufacturing and Loan-License:
Practically, there is no significant difference in Third party manufacturing and Contract manufacturing and could be used interchangeably. But, there is a theoretical difference in both terminologies.
Third Party Manufacturing term is used when a company get manufactured product with its own brand name at a certain quantity timely from a manufacturing company, e.g. 5000 box order as a one-time requirement.
In the case of Contract Manufacturing, a company get manufactured product at customised term and conditions, i.e. provide everything connected to the manufacturing of that product, for example, raw material, excipients, packaging material, die, etc. The manufacturer only needs to manufacture it. It has a delivery time obligation.
As for Loan Licensing, one can start own manufacturing in an already permitted licensed manufacturing unit. A particular space in a licensed manufacturing unit is rented for manufacturing your own brand name products. Here, the displayed marketed by and manufactured by name will be your own company with manufacturing address detail of the rented manufacturing unit.
By definition, a Loan license is defined as “For the purpose of this rule a loan license stands for authorization which a licensing authority may issue to an applicant who does not have his own provisions for manufacture but who anticipates to avail himself of the manufacturing facilities possessed by a licensee in form 25 or in form 28 as the case may be.” under the Drugs and Cosmetics Rules.
Hence, it is similar to third party manufacturing; however, with limited differences. In loan licensing, you can use marketed by address and manufactured by the name of your company.
Process of Third Party Manufacturing
CONFIRMING QUANTITY AND COMPOSITION OF THE ORDER:
Before beginning the process of third party contract manufacturing, the order quantity and composition of the product needs to be confirmed. While concluding the order quantity, the minimum order quantities for the composition needs to be revised. For tablets and capsules, MOQ is usually between 500 – 1000 Boxes, i.e., 50000 – 100000 tablets. While confirming, check if the manufacturer has an approval for that composition.
The next step after finalising composition and order quantities is to raise a quotation which will comprise of all the costs that you will incur. This is also known as the purchase order (PO). It includes the cost of the product, packaging material, securities if any (in case of smaller batches). Any other charges concerning the manufacturing process are also included.
FINALIZE THE ARTWORK:
Complete all the registration formalities as requested by the Manufacturer and finalise the design artwork shortly after.
Main Points to note while finalising the Artwork:
– Check Brand Name on the carton and foil
– Check Packing details, Composition, Manufacturing information
– Check Design and Color combination
– Check Marketed By company name, logo and address on the carton and foil
Along with The Drug license and GST number as the essential requirement, the registration document of the firm or company may also be needed. DL is allotted by the local Food and Drug authorities. DL is of 2 types, i.e. one for retail and other for wholesale. GST number is assigned by the Government of India and is essential for Third party manufacturing. Rarely, some other documents like Non-resemblance certificate are required.
PRODUCT MANUFACTURING AND DELIVERY:
GMP or Good Manufacturing Practices. GMP is a system that guarantees the product is continually produced and controlled as per the quality standards. The GMP needs to be followed while manufacturing, which covers all the aspects of production from starting material to the hygienic staff. At each step, the correct procedure must be followed every time products are made.
Also, the quality standards set by the WHO (World Health Organization) are crucial to ensure that products are produced and controlled under the set guidelines.
After goods are manufactured, you will obtain a quotation mentioning the particulars of product manufacture. Goods will then be forwarded through via the desired transporter after submission of documents & clearance of accounts.
Third party manufacturing in the pharmaceutical industry can offer numerous advantages. One of the key benefits of third party manufacturing is that you can start manufacturing your product even if you do not have adequate finance necessary to initiate this process.
Several other unique benefits have been elucidated below like:
Helpful for both, owner and the service provider: Many companies involved in third party manufacturing typically work on a contract basis. It enables them to manufacture similar products for different brands, or a brand can manufacture the same products from various third party manufacturers. Hence, third party manufacturing is becoming more popular in the pharma industry.
Opportunity for business expansion at low investment: One can expand their business without investing heaps money in it. If you have picked a good company, then you can provide the finest products to your wholesalers, retailers and ultimate users. It helps in reducing investment in the large scale business model. It assists to build a reputation of your products as well as your company amongst its customers.
Cost-effective manufacturing: The product owners need not worry about starting capital and upkeep of the manufacturing unit, which is otherwise tiring and expensive otherwise. Third party manufacturing can also save the cost of production and management of labour. Arranging the labour and equipment for manufacturing your products is no longer of concern
Improved products: You can manufacture better products than your potential if you choose an experienced and reliable service provider third party manufacturing company. It ensures the constant supply of world-class medicines.
Timely delivery: Especially for companies dealing with an inflow of orders and are finding it challenging to complete them in time, the third-party manufacturing company offers to timely complete the orders and that too efficaciously. It will remove all the stress linked with completing the orders.
Professional expertise: After outsourcing the production process to a third-party manufacturer, the pharma company gets a continuous supply of quality drugs. The professionalism and expertise of both partners add up to raise the bar to a high level. The highly professional experience of both adds up in getting more business increasing the sales and hence profits.
To sum up, more and more pharma manufacturing companies in India are inclining towards outsourcing to focus on marketing their products, to save the time and headaches involved in manufacturing. Knowing about the benefits of third party manufacturing in the pharmaceutical industry can be useful in a careful assessment of a reputable and experienced third party manufacturing service to avail its benefits.