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How to Establish a Pharmaceutical Manufacturing Company in India?

Setting up a pharmaceutical manufacturing unit is more difficult than setting up a manufacturing unit in another industry. In India, drugs and medicines are governed by the Drug and Cosmetic Act and Rules. Pharmaceutical manufacturing units must comply with numerous rules and regulations, including the Drug and Cosmetic Act and Rules, as well as factory act regulations. The first step is to set up the medicine factory plant and the basic requirements for manufacturing facilities. A pharmaceutical factory should follow two rules:
  1. Factory Act Regulations
  2. Drug Manufacturing License Requirements, and Good Manufacturing Practices ( i.e. WHO: GMP, Schedule M or applicable in concern country)


Topic Covered in This Article:
  1. Pharmaceutical Manufacturing
  2. What to do first
  3. Area Required
  4. Requirements
  5. Licenses
  6. Company Registration
  7. Manufacturing License Procedure and Documents Required
  8. Drug Wholesale/Distribution License Procedure
  9. Goods and Service Tax Identification Number (GST Number)
  10. Machinery and Analytical Equipment Required
  11. Technical Staff
  12. Steps to Start
  13. General Manufacturing Sections
  14. Scope of Pharmaceutical Manufacturing Unit
  15. Marketing and Sales Ways
  16. Investment Required

What is the definition of manufacturing in the pharmaceutical industry?
Pharmaceutical manufacturing refers to a set of operations that includes purchasing raw materials, processing, manufacturing, packaging, releasing, storing, and shipping medicines and pharmaceutical products in accordance with GMP compliances.

What should I do first?
Before starting a pharmaceutical manufacturing unit, one should have a basic understanding of the pharmaceutical industry in terms of manufacturing, marketing, administration, and other aspects, and/or he/she should work with or partner with people who are knowledgeable about manufacturing and analytical procedures. Even after investing heavily, it is difficult to compete or survive without a basic understanding of the pharmaceutical industry.


Searching for premises is also a crucial step in manufacturing unit set-up. Location and building should compile with Good Manufacturing Practice (GMP) standards. GMP standards and plant specifications may slightly vary depend upon country policy and requirements.

Area Required for Pharmaceutical Manufacturing Company:
The manufacturing plant should have adequate space for:-
  • Receiving and storing raw material
  • Manufacturing process areas
  • Quality control section
  • Finished goods store
  • Office
  • Rejected goods/drugs store


Different sections required different spaces and requirement criteria. We will discuss the minimum area required for each section set-up for a pharmaceutical manufacturing unit in this section.

External Preparation section such as cream, ointments, etc. requires a minimum of 30 square meters for basic installation and 10 square meters for the ancillary area. To avoid contamination, external and internal preparations should be prepared separately.

Liquid Dosage Form Section such as syrup, suspensions, and so on, A minimum of 30 square meters is required for the basic installation of machinery,  and 10 square meters is required for the ancillary area.

The Solid Dosage Form Section, which includes tablets, capsules, and powder, necessitates more space for machinery installation and ancillary.

Tablet section requires a minimum of sixty square meters area for basic installation and twenty square meters area for ancillary for uncoated tablets. If the coating section is required then it should be separate from other sections having a minimum of thirty square meters area for basic installation and ten square meters for the ancillary area.

Capsule section requires minimum of twenty five square meters of area for basic installation and ten square meters for ancillary. 

Powder section requiresA minimum of thirty square meters is required for basic installation and ten square meters for ancillary.

A section on Ophthalmic Preparation is a sensitive section, such as a parenteral section Section should be in a separate building or location from the other sections mentioned above. Ophthalmic preparations require a completely airtight, sterile, and non-contaminated environment. The minimum area required for an ophthalmic section is 25 square meters, and the ancillary area is ten square meters.

There are two kinds of parenteral sections, such as ampoules and injection vials. The first is dry parenteral preparations, such as injection powder, and the second is liquid injections. It is the most delicate section of the pharmaceutical manufacturing unit. It should be housed in a separate structure, and dry powder should be kept separate from the liquid section. The area required varies depending on whether the parenterals are large volume or small volume.

The minimum area required for the parenteral section is 150 square meters for basic installation and 100 square meters for ancillary activities.

General Requirements:
  1. Premises, Building and plant as per GMP standards
  2. Constitution of Firm and/or Company
  3. Section wise partition in plant
  4. Technical Persons (Manufacturing chemist and Analytical Chemist)
  5. Machinery and laboratory Equipment’s
  6. HVAC Unit
  7. Workers and Supervisors
  8. List of medicines to be manufactured
  9. NOC from required departments whichever applicable like pollution board, MC etc.
  10. Manufacturing License and Distribution License
  11. Registration of Factory under Factory Act
  12. Raw Material Suppliers
  13. Packaging Material Suppliers
  14. Distributors and/or marketing companies for output consumption

Licenses required for pharmaceutical manufacturing companies in India:
A manufacturing unit may require different types of licenses and registrations depending on at location and country. The most important license for setting up a pharmaceutical manufacturing unit is Manufacturing License. A list of generally required licenses are:
  1. Company Registration (If required)
  2. Drug Manufacturing License
  3. Drug Distribution License (For Distributing finished goods)
  4. Testing Laboratory License
  5. Good and Service Tax (GST) or any Tax registration required in concern country
  6. NOC from other departments if required

Company Registration:
Depending on the type and size of the organization, company registration may or may not be required. Company registration is optional for sole proprietorship and partnerships. 


Procedure and Documents for Manufacturing License Required:
Manufacturing licenses for pharmaceutical products and medicines are granted by the Drug Control Authority in the respective country, such as the USFDA (USA), DCGI (India), DCC (South Africa), and so on. You should be aware of where in your country you can apply for a drug manufacturing license.

(In India, Drug manufacturing License is issued by state drug controller generally located at capital region of concerned state of Indian Territory. State Drug Controller is appointed by state government and work under the guidelines of Drug Controller General of India (DCGI).You have to apply for grant of a pharmaceutical manufacturing unit to state drug controller.)

Complete all requirements and acquire all documents related to justifying requirements. Apply for a medicine manufacturing license at concerning authority. After receiving the application (Online or Offline mode), drug authorities inspect the plant by visiting at plant and check for requirements and manufacturing/quality procedures as per laws and regulations, and good manufacturing practices.
If requirements are found to be satisfactory, a manufacturing license has to be issued and you can start manufacturing of medicines.

List of general documents we are listed below (Documents requirements may be changed according to concern country laws and regulations and/or any amendments):
  1. Introductory Covering Letter mentioning Name and address of plant and administration office
  2. Application at prescribed Form and format
  3. Prescribed Fee Receipt
  4. Details of the constitution of the firm, partnership or Company
  5. Documents related to Ownership of premises or Rent or Lease documents
  6. Identification Proof of all Authorized persons, proprietors, partners and/or directors
  7. Details of Technical Staff e.g. Manufacturing Chemist and Analytical Chemist with education documents and approval certificates which is applicable
  8. List of machinery and laboratory equipment
  9. Site Mater File
  10. Blueprint of Plant and layout of premises specifying installation of machinery and equipment
  11. Design and Layout of HVAC system
  12. List of medicines to be manufactured in the manufacturing unit
  13. Water analysis report
  14. NOC if required from other departments like health department, pollution departmentor MC etc.
  15. Factory Act Registration if applicable


Drug Wholesale and Distribution License:
While manufacturing drug license documents are nearly identical in most countries, drug wholesale and distribution license requirements vary by country. In some countries, a drug distribution license is not required for a manufacturing unit. In many countries, distributing medicines with a manufacturing license also necessitates obtaining a distribution license.

To distribute and sell finished goods to marketing companies and distributors in India, you must obtain a wholesale and distribution license as well as a manufacturing license.


Registration for Goods and Services Tax (GST)
Each country has its own tax structure and method of collecting tax. The names of taxes may also differ depending on the country. Almost every country has its own set of tax laws and structures. Registering your company/firm under tax laws is also an important part of any business. Confirm the taxes and laws that apply to the sale and purchase of medicines in your country, and register accordingly.

All businesses and services in India are subject to the Goods and Services Tax. Currently, medicines are taxed at 5% and 12% under GST, and firms/companies with more than 20 lakh in annual revenue must obtain a GST identification number.

Machinery and Analytical Equipments:
Different sections required a different type of machinery and analytical testing required. If we will discuss detailed machinery here, this article will become excessively lengthy. 

The essential Machinery list is as follow:
All the machines are in SS-304 and the contact part in SS-316



Liquid /Syrup/Suspension Section:
  • High speed mixer for 1000 liter tank
  • S. tank- 1000 liter capacity with wheel and cover lid
  • S. tank- 200 liter capacity with wheel and cover lid
  • Colloidal Mill
  • Liquid filling machine
  • P. cap sealing machine
  • Liquid filtration unit
  • Tables

Capsule/ Tablet/Powder Section:
  • Air compressor
  • Air conditioner
  • Blister packing machine
  • Alu-Alu Packing Machine
  • Capsule filling machine
  • Capsule Loader
  • Dehumidifier
  • Tablet Punching Machine
  • Coating Pan
  • Sifter
  • Mass mixer- 100 kg
  • Multi mill
  • FBD- 30 kg// tray drier(24 treys)
  • Double cone blender 100 kg
  • Powder Filling and Sealing Machine

Miscellaneous:
  • Batch printing machine
  • RO plant
  • Lab equipment’s
  • Balances
  • AHU (Air Handling Unit) and Air Lock System
  • HVAC

Competent Individuals
The qualifications and eligibility of technical personnel may differ by country. A pharmaceutical manufacturing unit typically requires a minimum of two technical personnel to run efficiently and in accordance with GMP standards. One handles manufacturing processes, while the other handles analytical processes such as quality control and assurance. Manufacturing chemists, production chemists, production officers, supervisors, and other titles are given to those who manage manufacturing processes. Analytical processes are handled by people who are known as Quality Control Chemists, Analytical Chemists, and so on.

Starting a Pharmaceutical Manufacturing Unit
  • Make a Business Plan
  • Select a Company Name
  • Finalize the location of the manufacturing unit's premises (must compile with norms)
  • Company formation (sole proprietorship/partnership/private limited company, etc.)
  • Company Formation
  • Document organization, authorized personnel, and requirements
  • Furnishing and finishing of premises in accordance with WHO:GMP regulations or in accordance with the rules and regulations of the concerned country. (According to Schedule M of the Drug and Cosmetic Act of India)
  • Purchase of necessary machinery and analytical equipment to ensure the smooth operation of the plant
  • Create a file containing all necessary documents.
  • NOC for any other department, such as the pollution department, CLU, or others, as requested.
  • File must be submitted to the Manufacturing Licensing Authority.
  • After acceptance of file, Drug authority will conduct physical inspection before grantingmanufacturing license
  • Apply for Wholesale and Drug Distribution License
  • Apply for Goods and Service Tax (GST) Registration
  • After getting manufacturing license, start of manufacturing of medicines can started.

General Manufacturing Sections
You have a number of options in the pharmaceutical Manufacturing unit. You can set-up single section/unit and/or more than one and/or all sections together in your manufacturing unit. Manufacturing Unit Sections are:

Scope of Pharmaceutical Manufacturing Unit:
  • Ethical/Branded Medicine Company
  • Generic Medicine Company
  • OTC (Over the Counter) Medicine Company
  • Pharmaceutical Distribution and Hospital Supply
  • Export
  • Import
  • Derma and Other specialty Products
  • Surgical Dressing Company

Methods of Marketing and Sales

Required Investment:
Fixed assets and liquid assets were required for a pharmaceutical manufacturing unit. Fixed assets include investments in construction, land, infrastructure, and finishing-furnishing, among other things. Liquid assets include investments in labor, raw materials, rent, promotional and marketing expenses, and so on.

It is impossible to calculate an exact investment theoretically because it is dependent on many factors such as area, location, country, land cost, rent, machinery and equipment cost in that area, employee and worker salaries, and so on. To calculate investment, we need actual data.

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