India’s pharma industry is one of the world’s highest growth industries, renowned for its quality production and cost-effectiveness. Growth is largely driven by the growth of Third Party Manufacturing companies. Third Party Pharma Manufacturing has been a popular business model for pharma companies looking to outsource operations without huge investments in manufacturing facilities over the past decade.
This blog post elaborates on the main reasons behind the massive growth of Third Party Manufacturing Companies in India and why this model continues to thrive in the current shifting pharmacy scenario.
What is Third Party Pharma Manufacturing?
Third Party Pharma Manufacturing is a method by which a pharmaceutical company outsources the manufacturing of its products to another business, often referred to as a 3rd Party Manufacturer or Third Party Medicine Manufacturer. The production partner manufactures following the quality and regulatory specifications, and the outsourcing company takes care of branding, marketing, and distribution.
This is also referred to as 3rd Party Pharmaceutics Manufacturing and is widely used by pharmaceutical brands, distributors as well as Indian businessmen.
1. Cost-Effectiveness and Savings on Capital
Cost-effectiveness is one of the largest arguments and drivers of the expansion of Third Party Manufacturing. Establishment of a pharmaceutical manufacturing unit involves heavy investment in infrastructure, equipment, manpower and adherence. For small to medium-sized companies, this can prove costly.
By making use of Third Party Manufacturers, pharma companies save on:
- Capital expenditure on setting up factories
- Regulatory and licensing expenses
- Upgrades on equipment and technology
- Technical hiring and training
This cost benefit induces more pharma companies to go for 3rd Party Manufacturing Pharmaceuticals instead of setting up in-house production.
2. Concentration on Core Competencies
Pharma business has several layers production, marketing, distribution, compliance and R&D. By outsourcing production to Third Party Manufacturing Companies, pharma companies can concentrate on their core competencies such as:
- Market research
- Branding and promotion
- Product portfolio expansion
- Building stronger distribution channels
By delegating the production responsibility to a Third Party Pharma Manufacturer, companies can manage their work more efficiently and grow their business at a faster rate.
3. Access to Advanced Technology and Infrastructure
There are hundreds of Third Party Manufacturers in India with world-class infrastructure, latest machinery and highly qualified professionals. They are often WHO-GMP compliant, ISO, and other international standards, delivering impeccable quality in every batch.
Pharma companies lacking technical know-how or infrastructure find it extremely advantageous to partner with a Third Party Medicine Manufacturer. The outcome is high-quality products produced under close supervision without having a facility.
4. Scalability and Business Growth
The Third Party Manufacturing model has great scalability. After a brand picks up pace in the market, production volume can be easily increased with the assistance of an established 3rd Party Manufacturer.
Rather than constructing new facilities or purchasing extra equipment, businesses merely need to boost their order levels to accommodate increased demand. Scalability is a huge motivator for 3rd Party Pharma Manufacturing in India.
5. Regulatory Compliance and Quality Assurance
The pharmaceutical sector in India is strictly regulated by bodies such as the CDSCO, DCGI, and state FDA departments. Compliance with regulatory requirements is of paramount importance and usually necessitates a specialized compliance department.
Third Party Manufacturing companies that are experienced in production are already compliant with the required certifications and SOPs. When company outsource to them, they gain automatically:
- Regulatory-ready facilities
- Uniform documentation and quality checks
- Audit readiness
- Batch-wise compliance reports
This facilitates easier maintenance of product quality and compliance for non-manufacturing pharma companies without having to invest in their own QA departments.
6. Time to Market Reduced
Time is important in the pharmaceutical industry, particularly when introducing new products or reacting to marketplace trends. 3rd Party Manufacturing Pharmaceuticals allows for quicker turnaround because the manufacturing partner is already set up to start production with little delay in setting up.
The quicker time-to-market permits companies to capture opportunities, keep ahead of competitors, and retain customer satisfaction with timely deliveries.
7. Rising Demand for Generic Drugs
India is the world’s largest supplier of generic medicines. With healthcare becoming increasingly affordable, the need for generics keeps increasing within the country as well as worldwide. Third Party Pharma Manufacturing is at the forefront in fulfilling this requirement.
Pharma marketing firms, particularly those that are venturing into the generic drug industry, tend to partner with Third Party Manufacturers to provide good quality products at affordable prices. Such a business model facilitates mass production without diluting quality or profitability.
8. Low Risk and High Flexibility
To new players in the pharma industry, Third Party Manufacturing presents a high-reward, low-risk option. Without having to invest in facilities, the risk is lowered. On the other hand, the ability to try out new products and brand names is what makes it a viable business model.
Most startups start with small batch orders and scale up over time, experimenting with various therapeutic areas and marketing strategies in the process. Such adaptability would be impossible with conventional in-house production.
9. Government Policies and Support
The Indian government has been actively encouraging pharmaceutical production with efforts such as:
- Make in India
- Production Linked Incentive (PLI) Scheme
- Streamlined drug approval processes
These policies have created a positive environment for Third Party Manufacturing Companies, further encouraging businesses to follow the model.
10. Contribution to Export Market
India is one of the major exporters of pharma products to more than 200 nations. Several Third Party Medicine Manufacturers hold exporter authorizations and have well-established global networks. Pharma marketing businesses frequently collaborate with such manufacturers for exports under their brand name.
This partnership increases India’s pharma export quantities and generates new income streams for both the manufacturing firm and marketing partner.
11. Growing Number of Pharma Startups and Entrepreneurs
The convenience of penetrating the pharmaceutical market through 3rd Party Pharma Manufacturing has attracted a wave of start-ups and entrepreneurs. These start-ups do not possess the capability for large-scale production, but they have fresh ideas on branding and marketing.
Through their association with Third Party Pharma Manufacturers, they can launch products in a quick and timely manner, test markets, and establish their brand without huge capital investment. This has been a major driver of growth in the Third Party Manufacturing ecosystem in India.
Conclusion:
The emergence of Third Party Manufacturing Companies in India is no accident, it’s a product of definite economic and strategic benefits. From cost savings and accelerated product launches to regulatory compliance and business freedom, this approach is revolutionizing the manufacture and marketing of pharmaceuticals.
Whether you are a successful pharma company looking to expand or a budding entrepreneur seeking to find a foothold in the market, collaboration with a trustworthy 3rd Party Manufacturer can be a good start towards growth and long-term prosperity.
As the healthcare sector continues its growth and transformation, Third Party Pharma Manufacturing will continue to be a pillar of India’s pharma success story, enabling companies, generating employment and bringing quality healthcare solutions to the world.
Must Read: Unlock Success with Cost Effective Third Party Contract Manufacturing
