Opening Hours: Mon - Sat 10.00 AM to 07.00 PM

Three Important Distinctions between Contract And Third-Party Pharma Manufacturing.

Talking about pharmaceuticals, it’s a thriving industry that keeps growing. Every year, the need for medicines goes up, giving the pharma business a big push. Especially during the recent COVID-19 pandemic, we saw how crucial the production of medicines and pharmaceuticals is for the healthcare sector.

Now, when we explore the various ways medicines are made, we find two main types – Contract Pharma Manufacturing and Pharma Third Party Manufacturing.

 Let’s see the difference between the two:

  1. Contract manufacturing

Contract Pharma Manufacturing, also known as Private Label Manufacturing, is when a pharmaceutical company hires another company to make its products. This means they outsource the manufacturing process. The company that hires the other company provides the materials needed, like raw ingredients and packaging equipment. The manufacturer then puts everything together and gives the finished products to the hiring company on an agreed-upon date.

This type of manufacturing isn’t just about making products. It also includes tasks like making sure the products meet FDA regulations, testing how long the drugs last, and creating materials for late-stage clinical trials.

Benefits of Contract Marketing

  • Reduction in production costs because there is no in-house production or additional production facilities.
  • Pharmaceutical companies can focus on other activities and sales by outsourcing production and other activities to other companies.
  • Contracted companies work for different pharmaceutical companies at the same time. Their experience in the industry will help you gain insight into the production process.
  1. Third Party Pharma Manufacturing

When discussing third-party manufacturing, we essentially refer to contract pharmaceutical manufacturing with minor adjustments. In contract pharmaceutical manufacturing, companies outsource manufacturing based on customized conditions, receiving products from the manufacturer at specified times under defined terms.

However, this isn’t the situation when it comes to 3rd manufacturing pharma. Here, there is solely a contract, and manufacturing is carried out by the manufacturer based on that contract. The third-party manufacturer executes production tasks according to the work order released by the pharmaceutical company. Additionally, the pharmaceutical company isn’t required to provide raw materials or other items to the manufacturer.

Furthermore, the contract of a third-party pharmaceutical manufacturer is restricted to product manufacturing alone. No additional services such as research and testing are conducted unless otherwise specified in the contract.

Advantages of Third Party Pharma Manufacturing

  • No need to build manufacturing facilities or invest in land.
  • Requires less investment, making it ideal for new companies.
  • Simple way to expand product range without hassle.
  • Speeds up production and distribution processes

Now let’s look at the main differences between these two production models:


Large pharmaceutical companies are the primary users of contract pharma manufacturing, whereas medium-sized to tiny businesses, including those that are just getting started, choose third-party pharma manufacturing.


Pharmaceutical Companies in India create bespoke needs from the manufacturer under contract pharma production; these requirements are subject to periodic updates. Conversely, pharmaceutical companies in India agree on a predetermined quantity of items to be delivered within a predetermined time frame under third-party pharmaceutical manufacture. For instance, a delivery of 1000 goods is required each month.


Businesses provide the manufacturer with all the supplies required for contract pharmaceutical manufacturing, including raw and production materials. But in the case of Third Party Manufacturing Pharma, the manufacturer is accountable for this.

This article focused on the main distinctions between third-party and contract pharmaceutical production. We hope that this information is useful to you!