How to Start Third Party Manufacturing Companies
How to Start Third Party Manufacturing Companies: A Comprehensive Step-by-Step Guide
The pharmaceutical industry in India is currently witnessing a monumental shift. Known as the "Pharmacy of the World," India is the largest provider of generic drugs globally. For many entrepreneurs, the dream of entering this sector often feels hindered by the massive capital required to set up a manufacturing plant. However, there is a smarter, more scalable way to enter the market: by starting third party manufacturing companies.
This business model allows you to launch your own brand of medicines without owning a factory. By partnering with established entities like Zemax Pharma, you can focus on marketing and distribution while the manufacturing experts handle the production, quality control, and regulatory compliance.
In this guide, we will walk you through the exact process of how to start third party manufacturing companies in India, covering legalities, documentation, and growth strategies.
What Are Third Party Manufacturing Companies?
Third party manufacturing, often referred to as contract manufacturing, is a business arrangement where a company (the brand owner) hires another firm (the manufacturer) to produce its products. In the pharma sector, this means you provide the brand name, packaging design, and formulation requirements to a manufacturer, who then produces the final medicine under your label.
For startups and small businesses, starting third party manufacturing companies is the most viable growth path. It eliminates the need for multi-crore investments in land, machinery, and specialized labor. Instead, you leverage the infrastructure of a trusted partner like Zemax Pharma to bring high-quality medicines to the market quickly and efficiently.
Why Third Party Manufacturing Is a Profitable Pharma Business Model
The profitability of third party manufacturing companies stems from capital efficiency. Here is why it is the preferred choice for modern pharma entrepreneurs:
Low Initial Investment: You don’t need to spend on manufacturing units or expensive laboratory equipment.
Focus on Core Competencies: By outsourcing production to Zemax Pharma, you can dedicate 100% of your time to brand building, doctor detailing, and sales.
Operational Agility: You can easily scale your product list up or down based on market demand without worrying about factory idle time.
Access to Expertise: Established manufacturers have years of experience in formulation R&D, ensuring your products meet international standards.
Cost Savings: Large-scale manufacturers purchase raw materials (APIs) in bulk, passing on the cost benefits to you, which increases your overall profit margins.
Legal & Regulatory Requirements in India
Before you dive into the operational side of starting third party manufacturing companies, you must understand the legal framework. The pharmaceutical sector is strictly regulated by the Central Drugs Standard Control Organization (CDSCO) and state-level drug control departments.
To operate legally, your company must be a registered entity. You can choose to register as a Sole Proprietorship, Partnership, LLP, or a Private Limited Company. Once registered, the most critical requirement is obtaining a Wholesale Drug License. Even though you are not manufacturing the products yourself, you need this license to store and distribute the medicines manufactured by your partner, such as Zemax Pharma.
Additionally, Goods and Services Tax (GST) registration is mandatory for all pharma businesses in India to ensure tax compliance and smooth inter-state movement of goods.
Step-by-Step Guide to Start Third Party Manufacturing Companies
Starting third party manufacturing companies requires a structured approach to ensure long-term success. Follow these steps:
Step 1: Market Research and Niche Selection
Identify the therapeutic segments that have high demand but low competition in your target area. Whether it’s Derma, Cardiac, Diabetic, or General Medicines, choosing a niche helps in focused marketing.
Step 2: Finalize Your Product List
Prepare a list of products you want to launch. Consult with a reliable partner like Zemax Pharma to understand which formulations are currently trending and have the best stability profiles.
Step 3: Brand Name and Trademark Registration
Your brand identity is your biggest asset. Ensure your brand names are unique and do not resemble existing famous brands. It is highly recommended to apply for trademark registration to protect your intellectual property.
Step 4: Choose a Reliable Manufacturing Partner
This is the most crucial step. Look for manufacturers that are WHO-GMP and ISO certified. Zemax Pharma, for instance, is known for its stringent quality protocols and state-of-the-art facilities, making it a preferred choice for entrepreneurs looking for consistency.
Step 5: Finalize Product Compositions and Design
Work with your manufacturer to finalize the exact chemical composition. Simultaneously, hire a graphic designer for your packaging (cartons, foils, and labels). The packaging must comply with the Drugs and Cosmetics Act regarding font sizes and statutory warnings.
Step 6: Documentation and Order Placement
Submit the required documents (listed below) and place your first purchase order. Most third party manufacturing companies have a minimum order quantity (MOQ) per product.
Documents Required
To initiate a partnership with a manufacturer like Zemax Pharma, you will need the following paperwork:
Company Profile: A brief overview of your business and directors.
Director’s Documents: Self-attested copies of Aadhar Card and PAN Card.
Drug License: Copy of your Wholesale Drug License.
GST Registration: Copy of your GST certificate.
Trademark Copy: If the brand is registered or under application.
Non-Resemblance Certificate: An affidavit stating your brand names don’t mimic others.
Manufacturing Agreement: A signed contract outlining terms, pricing, and timelines.
Manufacturing & Quality Control Standards
In the pharmaceutical world, quality is non-negotiable. When you are building third party manufacturing companies, you are essentially selling trust. Therefore, you must ensure your manufacturing partner adheres to:
WHO-GMP Certification: Ensures the factory follows World Health Organization standards for Good Manufacturing Practices.
ISO 9001:2015: Focuses on the efficiency of the Quality Management System (QMS).
In-House Testing: The manufacturer should have advanced labs for Raw Material (RM) testing, In-Process checks, and Finished Product (FP) analysis.
Stability Studies: Ensuring the medicine remains effective throughout its shelf life under various climatic conditions.
By choosing Zemax Pharma, you gain the peace of mind that every batch undergoes rigorous multi-level testing before being dispatched to your warehouse.
Marketing & Client Acquisition Strategies
Once your products are ready, the real work begins. Successful third party manufacturing companies rely on a robust marketing engine:
Doctor Detailing: Hire experienced Medical Representatives (MRs) to meet doctors and explain the benefits of your formulations.
PCD Franchise Model: You can appoint distributors on a PCD (Propaganda Cum Distribution) basis in different districts to expand your reach.
Digital Presence: Create a professional website and use SEO strategies to attract B2B inquiries.
Visual Aids and LBLs: Provide high-quality promotional materials like visual aids, catch covers, and Leave Behind Leaflets (LBLs) to your sales team.
Common Challenges and How to Overcome Them
Running third party manufacturing companies is not without its hurdles. Here is how to handle them:
Supply Chain Delays: Sometimes, raw material shortages can delay production. Solution: Maintain a buffer stock of your best-selling products and work with a reliable partner like Zemax Pharma, known for timely deliveries.
Quality Variations: Batch-to-batch inconsistency can ruin your reputation. Solution: Always choose a WHO-GMP certified manufacturer and ask for a Certificate of Analysis (COA) for every batch.
Changing Regulations: The Indian government frequently updates drug laws. Solution: Stay updated through industry news and ensure your manufacturer is compliant with the latest "Schedule M" requirements.
How Zemax Pharma Supports Third Party Manufacturing
Zemax Pharma has established itself as a cornerstone for entrepreneurs entering the pharma world. As a leading name in third party manufacturing companies, we offer more than just production; we offer a partnership geared toward your growth.
Our facilities in Ambala are equipped with the latest technology to produce Tablets, Capsules, Syrups, Injections, and Ointments. When you partner with Zemax Pharma, you get:
Premium Packaging: High-quality, waterproof, and aesthetically pleasing designs.
Timely Dispatch: A robust logistics network ensuring your orders reach you on time.
Regulatory Assistance: Our experts help you navigate the complex world of licensing and product approvals.
Affordable Pricing: We provide cost-effective solutions without compromising on the purity of the medicine.
Frequently Asked Questions (FAQ's)
1. What is the minimum investment required to start a third-party pharma company?
The investment depends on your product list and MOQs. Generally, you can start with ₹2 lakhs to ₹5 lakhs. This covers drug license costs, trademark registration, and the initial stock of 5–10 products. Partnering with Zemax Pharma allows you to start with manageable volumes.
2. How much time does the first batch take to be manufactured?
The first order usually takes 30–45 days. This time includes brand name approval, packaging design, procurement of raw materials, and the actual manufacturing process. Subsequent orders for the same product typically take 20–25 days.
3. Do I need a pharmacist to start this business?
Yes, to obtain a Wholesale Drug License in India, you generally need a registered pharmacist or an "experienced person" as per the guidelines of your state’s drug control authority.
4. Is trademark registration mandatory?
While not strictly mandatory to start, it is highly recommended. Without a trademark, another company could copy your brand name, leading to legal disputes and loss of business. It protects your brand identity in the long run.
5. Can I sell these products all over India?
Yes, once you have your Wholesale Drug License and GST registration, you can appoint distributors and sell your products across all states and union territories in India.
6. What are the profit margins in third party manufacturing?
Margins vary by product category. In the generic segment, margins are lower, but volumes are high. In specialty segments like Derma or Neuro, margins can range from 20% to 50% or more, depending on your marketing efficiency.
7. Who is responsible for product quality—me or the manufacturer?
Legally, both are responsible. However, the manufacturer (like Zemax Pharma) is responsible for ensuring the product is made as per GMP standards and matches the approved composition. As the brand owner, you must ensure proper storage and transport.
8. Can I start with just one or two products?
Yes, many entrepreneurs start with a small "niche" list of 2–3 products to test the market. Once those products gain traction, they reinvest the profits to expand their portfolio with Zemax Pharma.
9. What happens if a batch fails a quality test?
Reputable manufacturers like Zemax Pharma have strict internal QC. If a batch doesn't meet standards, it is not released. If an issue is found later, the manufacturer usually assists with a recall and provides a replacement as per the agreement.
10. Why should I choose Zemax Pharma for my third-party manufacturing?
Zemax Pharma is an ISO 9001:2015 and WHO-GMP-compliant company. We offer a wide product portfolio, premium packaging, and end-to-end support, making us a trusted partner for hundreds of successful pharma brands across India.
Conclusion
Starting third party manufacturing companies is a rewarding journey for those who are willing to focus on quality and brand building. By leveraging the expertise and infrastructure of a reputed manufacturer like Zemax Pharma, you can bypass the technical complexities of production and focus on what truly matters—bringing life-saving medications to the people who need them.
With the right niche, a solid marketing plan, and a reliable manufacturing partner, your pharma startup can grow into a household name.