Starting a pharmaceutical manufacturing company in India is a major technical, regulatory and financial project.

Unlike an ordinary manufacturing business, a pharmaceutical plant cannot begin production merely after:

• Registering a company
• Purchasing machines
• Renting an industrial building
• Hiring production workers

The facility must be designed, constructed, equipped, staffed, documented, qualified, validated, licensed and operated according to the Drugs and Cosmetics Act, the Drugs Rules, revised Schedule M and other applicable laws.

The practical sequence is:

Choose the product category
→ Prepare a feasibility study
→ Select an industrial site
→ Design the plant under revised Schedule M
→ Obtain environmental and factory approvals
→ Install and qualify utilities and machinery
→ Recruit approved technical staff
→ Establish the pharmaceutical quality system
→ Apply for manufacturing licences and product permissions
→ Complete inspection and validation
→ Begin licensed commercial production

A new promoter should not begin construction before finalizing:

• Dosage forms
• Production capacity
• Product categories
• Process requirements
• Utility loads
• Environmental requirements
• Licensing route
• Project investment
• Target market

What Is a Pharmaceutical Manufacturing Company?

A pharmaceutical manufacturing company converts approved raw materials into finished pharmaceutical products through controlled processes.

Activities may include:

• Dispensing
• Granulation
• Blending
• Compression
• Capsule filling
• Coating
• Liquid preparation
• Cream or ointment manufacturing
• Sterile filling
• Packaging
• Testing
• Batch release
• Storage
• Distribution

A manufacturer is responsible for ensuring that every released batch:

• Contains the approved ingredients
• Meets the approved specifications
• Is manufactured through validated processes
• Is tested using suitable methods
• Is packed and labelled correctly
• Remains traceable throughout its shelf life
• Can be recalled when necessary

First Select the Correct Product Category

Different products are governed by different regulatory frameworks.

Allopathic Pharmaceutical Formulations

Examples include:

• Tablets
• Capsules
• Oral liquids
• Powders
• Creams
• Ointments
• Injections
• Eye drops
• Nasal preparations
• Inhalation products

These are primarily governed by the Drugs and Cosmetics Act, Drugs Rules and revised Schedule M.

Active Pharmaceutical Ingredients

API or bulk-drug plants require specialized:

• Chemical-processing equipment
• Solvent handling
• Reaction controls
• Effluent treatment
• Hazardous-waste systems
• Process safety
• Environmental approvals

An API plant is substantially different from a formulation plant.

Ayurvedic, Siddha and Unani Medicines

These products have a separate licensing and GMP framework under the relevant AYUSH provisions.

An allopathic Form 25 manufacturing licence does not authorize Ayurvedic production.

Nutraceuticals and Food Supplements

These are regulated under the Food Safety and Standards framework.

A food-supplement plant ordinarily requires:

• Applicable FSSAI manufacturing licence
• Food-category endorsement
• Food GMP and hygiene controls
• Product-compliance review

A capsule or syrup does not automatically become a pharmaceutical drug merely because of its dosage form.

Cosmetics

Cosmetic manufacturing is governed under the Cosmetics Rules, 2020.

Medical Devices

Medical-device manufacturing is governed by the Medical Devices Rules, 2017.

A pharmaceutical formulation licence does not automatically authorize medical-device manufacture.

Decide the Manufacturing Model

1. Own Manufacturing Facility

The promoter establishes and operates the complete facility.

The company controls:

• Infrastructure
• Production
• Quality systems
• Staff
• Machinery
• Scheduling
• Capacity
• Batch release

This requires the highest investment and compliance responsibility.

2. Loan Licence

A loan-licensee obtains permission to manufacture specified products using another licensed manufacturer’s facilities.

It is not the same as simply purchasing finished products.

The loan-licensee normally has direct regulatory responsibilities and must operate within the approved licensing arrangement.

Common application routes include:

• Form 24-A for applicable non-biological products
• Form 27-A for applicable Schedule C and C(1) products

The final licence forms and requirements depend on the product category.

3. Third-Party or Contract Manufacturing

Under third-party manufacturing, an established licensed manufacturer produces goods for a marketing company or brand owner.

This model avoids investment in:

• Land
• Factory building
• Machinery
• Utilities
• Manufacturing staff

For a startup whose main objective is to market its own brands, third-party manufacturing is usually more practical than immediately building a plant.

4. Acquisition of an Existing Plant

A promoter may purchase or take over an existing manufacturing facility.

Before acquisition, conduct detailed due diligence covering:

• Licence status
• Schedule M compliance
• Inspection history
• Product permissions
• Regulatory notices
• NSQ history
• Recalls
• Existing liabilities
• Machinery condition
• Utility capacity
• Environmental approvals
• Technical employees
• Pending upgrades
• Data integrity

Purchasing an old plant without assessing Schedule M gaps may create a large hidden investment.

Prepare a Detailed Project Report

A pharmaceutical plant should begin with a detailed project report rather than a machinery quotation.

The report should cover:

• Promoter background
• Product categories
• Dosage forms
• Production capacity
• Manufacturing process
• Market analysis
• Building requirements
• Utility requirements
• Machinery
• Laboratory
• Technical staff
• Regulatory pathway
• Environmental impact
• Capital investment
• Working capital
• Project timeline
• Break-even analysis
• Risk assessment

Market and Capacity Planning

Before selecting machinery, estimate:

• Expected annual sales
• Third-party manufacturing demand
• Number of batches
• Average batch size
• Product mix
• Seasonal variation
• Export plans
• Capacity utilization

Do not install very large machinery merely because the supplier recommends it.

Oversized equipment may create:

• Low capacity utilization
• Cleaning difficulty
• Higher validation cost
• Large minimum batches
• Working-capital blockage
• Higher utility consumption

Select the Dosage Forms

A startup may establish one or more sections.

Non-Sterile Oral Solids

Products include:

• Tablets
• Hard-gelatin capsules
• Powders
• Granules

This section may require:

• Dispensing
• Sifting
• Granulation
• Drying
• Milling
• Blending
• Compression or capsule filling
• Coating
• Packing

Oral Liquids

Products include:

• Syrups
• Suspensions
• Solutions
• Drops

The plant may require:

• Purified-water system
• Manufacturing vessels
• Storage vessels
• Homogenizer
• Filtration
• Filling
• Capping
• Labelling

External Preparations

Products include:

• Creams
• Ointments
• Gels
• Lotions
• Liniments

The section should be designed to control:

• Cross-contamination
• Heating and cooling
• Homogenization
• Bulk holding
• Filling
• Cleaning

Sterile Products

Products include:

• Injections
• Ophthalmic products
• Certain sterile irrigations

Sterile facilities require substantially stronger controls, including:

• Clean-room classification
• Environmental monitoring
• Sterilization
• Aseptic-process simulation
• Microbiology
• Contamination-control strategy
• HEPA-filtered air
• Pressure differentials
• Sterile utilities

A first-time promoter should not treat sterile manufacturing as a simple extension of tablet or syrup production.

Revised Schedule M Compliance

As of 2026, new pharmaceutical manufacturing units should be planned directly under revised Schedule M.

The facility should establish a comprehensive pharmaceutical quality system covering:

• Management responsibility
• Quality policy
• Quality objectives
• Quality-risk management
• Document control
• Training
• Deviations
• Investigations
• Change control
• Corrective and preventive action
• Out-of-specification results
• Product-quality review
• Supplier qualification
• Validation
• Complaints
• Recalls
• Self-inspection
• Pharmacovigilance

The extension granted to eligible smaller manufacturers ended on 31 December 2025. Revised Schedule M applies to smaller manufacturers from 1 January 2026.

Do Not Depend on Old Minimum-Area Tables

Older guides may state fixed minimum areas such as:

• 30 square metres for liquids
• 60 square metres for tablets
• 25 square metres for capsules
• 150 square metres for parenterals

Such figures should not be used as the complete design basis for a new facility.

The actual plant size must accommodate:

• Production capacity
• Machinery
• Personnel movement
• Material movement
• Airlocks
• Change rooms
• Sampling
• Dispensing
• In-process storage
• Cleaning
• Equipment washing
• Quarantine
• Approved materials
• Rejected materials
• Finished products
• Laboratory
• Utilities
• Documentation
• Waste handling

A plant may technically contain the required machine area yet still fail inspection because the flow and contamination controls are unsuitable.

Site-Selection Requirements

Select an industrial location that supports pharmaceutical activity.

Check:

• Industrial land use
• Building permissions
• Approach road
• Electricity availability
• Water availability
• Drainage
• Effluent disposal
• Fire access
• Flood risk
• Nearby contamination sources
• Labour availability
• Logistics
• Expansion potential

Avoid locations near uncontrolled sources of:

• Dust
• Smoke
• Odour
• Chemical vapour
• Sewage
• Pest infestation

Ownership or Lease

The premises may be:

• Owned
• Leased
• Rented under an acceptable long-term arrangement

Before investing in a rented building, confirm:

• Industrial use is permitted.
• Pharmaceutical construction can be carried out.
• The lease duration supports the investment.
• The owner permits structural and utility modifications.
• Drug and environmental authorities will accept the possession documents.

Environmental Approvals

Depending on the project, state and manufacturing process, approvals may include:

• Consent to Establish
• Consent to Operate
• Environmental clearance
• Effluent-treatment approval
• Hazardous-waste authorization
• Air-emission consent
• Water-use permission
• Groundwater approval
• Waste-disposal arrangements

Environmental, forest, wildlife and coastal approvals, where applicable, are processed through the PARIVESH framework. Applicability depends on project type, capacity and location.

A formulation plant with limited wastewater and an API plant using solvents will have very different environmental requirements.

Factory and Labour Approvals

The project should examine applicable requirements relating to:

• Factory-plan approval
• Factory licence
• Occupational health and safety
• Employee welfare
• Contract labour
• Electrical safety
• Boiler approval
• Pressure vessels
• fire safety
• Employee insurance
• Provident fund
• Professional tax

Factory rules are administered by state authorities and may differ between states.

Fire and Safety Requirements

Plan for:

• Fire NOC where applicable
• Fire extinguishers
• Hydrant or sprinkler systems where required
• Emergency exits
• Alarm systems
• Evacuation plan
• Chemical-spill controls
• Safety showers
• Personal protective equipment
• Solvent-storage controls
• Emergency training

Business Constitution

The manufacturing business may operate as:

• Proprietorship
• Partnership
• LLP
• Private Limited Company
• Public Limited Company

For a substantial manufacturing investment, an LLP or company structure may provide clearer:

• Ownership
• Governance
• Liability separation
• Investment
• Banking
• Expansion

The legal entity applying for the manufacturing licence should have lawful possession of the premises.

Common Pharmaceutical Manufacturing Licence Forms

Form 24 and Form 25

Form 24 is commonly used to apply for a manufacturing licence in Form 25 for drugs other than those in specialized Schedule C, C(1) and X categories.

Form 27 and Form 28

Form 27 is commonly used to apply for a licence in Form 28 for applicable Schedule C and C(1) drugs.

Loan Licences

Common routes include:

• Form 24-A application and Form 25-A licence
• Form 27-A application and Form 28-A licence

Schedule X and Specialized Products

Separate application and licence forms apply to Schedule X and other specialized products.

The exact licence combination should be confirmed from:

• Drug category
• Dosage form
• Schedule
• State Licensing Authority
• Central approval requirements

State drug authorities list Form 24 for a licence in Form 25 and Form 27 for a licence in Form 28 among the common manufacturing routes.

State and Central Regulatory Roles

The State Licensing Authority generally handles manufacturing licences for many routine formulations.

CDSCO or the Central Licensing Authority becomes directly relevant for categories and approvals such as:

• New drugs
• Certain fixed-dose combinations
• Vaccines
• Sera
• Blood products
• Specified biological products
• Certain special categories
• Clinical-trial products
• Import and export-related approvals

Do not assume that a State manufacturing licence alone authorizes an unapproved new drug or FDC.

Product Permissions

A manufacturing licence does not automatically permit every product.

The manufacturer must apply for approval or endorsement of specific products.

Product documentation may include:

• Composition
• Strength
• Dosage form
• Specifications
• Manufacturing process
• Analytical methods
• Stability data
• Packaging
• Labelling
• Regulatory status
• Pharmacopoeial reference
• New-drug approval, where applicable

CDSCO issued guidance on dossier-based licensing in March 2026 to support more uniform product licensing.

Fixed-Dose Combinations

Before developing an FDC, confirm:

• Whether it is approved
• Whether central permission is required
• Whether the exact strength and dosage form are permitted
• Whether the combination is prohibited or under review

Do not manufacture an FDC merely because another brand appears to be selling it.

CDSCO continues to publish regulatory action relating to unapproved and prohibited combinations.

Manufacturing for Test or Analysis

Small quantities intended only for examination, testing or analysis follow a separate regulatory route.

Form 29 has traditionally been used for applicable test-manufacturing activity. Regulatory processes were further simplified in 2026 for certain analytical and non-clinical testing categories, but commercial production still requires the applicable manufacturing licence and product permission.

Wholesale Licence

A manufacturing licence authorizes manufacturing activity.

Where the company separately stocks, sells or distributes products through a wholesale establishment, the applicable wholesale-licence structure should also be reviewed.

Forms 20-B and 21-B are commonly used for ordinary allopathic wholesale activities from approved premises.

Do not assume that every branch, depot or warehouse is automatically covered by the factory licence.

GST Registration

The manufacturing entity should establish its GST structure before commercial purchase and sale.

From 22 September 2025:

• Most drugs and medicines attract 5% GST.
• Specifically notified medicines may be nil-rated.
• Other products require classification under their correct HSN.

GST should be checked separately for:

• Raw materials
• Packing materials
• Finished medicines
• Job work
• Machinery
• Services
• Nutraceuticals
• Cosmetics

Plant Layout

The layout should prevent:

• Mix-ups
• Cross-contamination
• Unauthorized movement
• Incorrect material flow
• Incorrect personnel flow
• Entry of pests
• Dust accumulation
• Confusion between approved and rejected materials

Typical Facility Areas

A non-sterile formulation plant may require:

• Security and reception
• Personnel entry
• Change rooms
• Raw-material receiving
• Quarantine
• Sampling
• Approved raw-material store
• Rejected-material store
• Dispensing
• Manufacturing rooms
• In-process storage
• Equipment washing
• Packaging-material store
• Primary packing
• Secondary packing
• Finished-goods quarantine
• Released finished-goods store
• Returned-goods area
• Recalled-goods area
• Quality-control laboratory
• Quality-assurance office
• Retention-sample area
• Stability chambers
• Utility area
• Engineering workshop
• Waste area

Personnel and Material Flow

Create separate and controlled movement wherever required for:

• Employees
• Visitors
• Raw materials
• Packing materials
• Finished products
• Waste
• Returned goods

The layout should reduce crossing between:

• Clean and unclean movement
• Incoming and outgoing material
• Approved and rejected stock
• Personnel and material routes

HVAC System

HVAC design should be based on:

• Product risk
• Dust generation
• Temperature
• Humidity
• Pressure differentials
• Air changes
• Filtration
• Cross-contamination risk
• Operator safety

The system may include:

• Air-handling units
• HEPA filtration where required
• Return-air controls
• Dust extraction
• Differential-pressure monitoring
• Temperature and humidity monitoring

HVAC should be qualified and maintained—not treated as ordinary comfort air conditioning.

Water System

Depending on the product, the plant may require:

• Potable water
• Purified water
• Water for injection
• Clean steam

A pharmaceutical water system may contain:

• Pretreatment
• Reverse osmosis
• Deionization or equivalent treatment
• Storage tank
• Distribution loop
• Sanitization system
• Sampling points

The system should be:

• Qualified
• Monitored
• Sanitized
• Sampled
• Maintained

Other Utilities

Utilities may include:

• Compressed air
• Nitrogen
• Steam
• Vacuum
• Chilled water
• Hot water
• Power backup
• Dust extraction
• Effluent-treatment system

Critical utilities should be qualified and monitored for suitability.

Machinery Selection

Machinery should be selected according to:

• Process
• Batch size
• Capacity
• Material of construction
• Product-contact surface
• Cleanability
• Automation
• Data recording
• Maintenance
• Validation
• Operator safety

Tablet and Capsule Equipment

Depending on the process:

• Sifter
• Rapid mixer granulator
• Mass mixer
• Fluid-bed dryer
• Tray dryer
• Multi mill
• Blender
• Tablet compression machine
• Capsule-filling machine
• Metal detector
• Deduster
• Coating system
• Blister or strip-packing machine
• Bottle-packing line

Liquid Equipment

Possible equipment includes:

• Manufacturing vessels
• Sugar-syrup vessel
• Storage vessels
• Homogenizer
• Colloid mill
• Filtration unit
• Filling machine
• Capping machine
• Labelling machine
• Bottle-washing system

External-Preparation Equipment

Possible equipment includes:

• Manufacturing vessel
• Planetary mixer
• Homogenizer
• Colloid mill
• Storage vessel
• Tube-filling machine
• Jar-filling machine

Quality-Control Laboratory

A plant requires a suitable quality-control system.

Depending on products, the laboratory may include:

• Chemical-analysis area
• Instrument room
• Microbiology area
• Stability section
• Sample-receiving area
• Reference-standard storage
• Retention-sample storage
• Washing area
• Reagent storage

Laboratory Equipment

Equipment may include:

• Analytical balances
• pH meter
• UV-visible spectrophotometer
• HPLC
• Gas chromatograph where required
• Dissolution apparatus
• Disintegration tester
• Friability tester
• Hardness tester
• Moisture analyser
• Karl Fischer apparatus
• Stability chambers
• Microbiological equipment

The equipment list should be based on actual product specifications and testing requirements.

Outsourcing Tests

Certain specialized tests may be outsourced to an approved laboratory where legally permitted.

However, outsourcing does not remove the manufacturer’s responsibility for:

• Reviewing results
• Approving methods
• Qualifying the laboratory
• Investigating failures
• Releasing the batch

Technical Staff

A pharmaceutical plant requires qualified full-time personnel.

Key functions include:

• Production
• Quality assurance
• Quality control
• Warehouse
• Engineering
• Regulatory affairs
• Microbiology, where applicable
• Validation
• Pharmacovigilance

The educational qualification and experience required for licence approval depend on:

• Product category
• Role
• Drugs Rules
• State Licensing Authority

Production and Quality Independence

Quality decisions should not be controlled solely by production or sales.

Quality personnel should have authority over:

• Material approval
• Batch release
• Rejection
• Deviation investigation
• Change control
• CAPA
• Product complaints
• Recall decisions

Pharmaceutical Quality System

Prepare controlled procedures for:

• Document control
• Record control
• Training
• Vendor qualification
• Material receipt
• Sampling
• Dispensing
• Manufacturing
• Packaging
• Cleaning
• Calibration
• Maintenance
• Validation
• Change control
• Deviation
• OOS and OOT results
• CAPA
• Complaints
• Recall
• Returned goods
• Self-inspection
• Data integrity
• Product-quality review
• Pharmacovigilance

Documentation Required

Important documents may include:

• Quality manual
• Site Master File
• Validation Master Plan
• Standard operating procedures
• Master formula records
• Batch manufacturing records
• Batch packing records
• Specifications
• Standard testing procedures
• Equipment logbooks
• Cleaning records
• Training records
• Calibration records
• Maintenance records
• Environmental-monitoring records
• Distribution records

An undocumented activity is difficult to prove during inspection.

Qualification and Validation

The plant should qualify and validate:

• Building areas
• HVAC
• Water system
• Compressed air
• Equipment
• Cleaning
• Manufacturing processes
• Analytical methods
• Computerized systems
• Hold times
• Transport where critical

Typical equipment stages include:

• Design qualification
• Installation qualification
• Operational qualification
• Performance qualification

Process Validation

Process validation demonstrates that the process can consistently produce material meeting approved specifications.

It should not be treated as preparation of three retrospective documents after commercial production.

Cleaning Validation

Cleaning validation should consider:

• Product potency
• Toxicity
• Solubility
• Equipment design
• Batch size
• Residue limits
• Microbial risk
• Cleaning agents
• Sampling methods

Data Integrity

Electronic and paper records should be:

• Attributable
• Legible
• Contemporaneous
• Original
• Accurate
• Complete
• Consistent
• Enduring
• Available

Avoid practices such as:

• Backdated entries
• Uncontrolled Excel files
• Shared passwords
• Trial injections deleted without explanation
• Rewriting records
• Uncontrolled correction fluid

Vendor Qualification

Approve suppliers for:

• APIs
• Excipients
• Packing materials
• Printed materials
• Contract laboratories
• Calibration
• Pest control
• Transport
• Waste disposal

Approval should be based on:

• Documentation
• Quality history
• Testing
• Audit where required
• Regulatory status
• Supply capability

Pharmacovigilance

Manufacturers and marketing-authorization holders must establish appropriate systems for collecting, assessing and reporting product-safety information.

CDSCO specifically reinforced implementation of pharmacovigilance systems under Schedule M in June 2026.

The system may cover:

• Adverse-event reports
• Safety complaints
• Medical review
• Signal assessment
• Regulatory reporting
• Periodic safety reports
• Record retention

Product Complaints and Recalls

The company should maintain procedures for:

• Receiving complaints
• Logging complaints
• Batch investigation
• Trend analysis
• Health-risk assessment
• Recall classification
• Customer notification
• Stock reconciliation
• Regulatory reporting
• Effectiveness checks

Batch distribution records must identify where every batch was supplied.

Application Documents

Exact state requirements vary, but a manufacturing application may require:

• Covering letter
• Prescribed application form
• Fee receipt
• Entity documents
• Premises ownership or lease
• Site plan
• Building layout
• HVAC design
• Machinery list
• Laboratory-equipment list
• Technical-staff documents
• Appointment letters
• Product list
• Product dossiers
• Water-analysis reports
• Site Master File
• Environmental approvals
• Factory approval
• Fire documents
• Testing arrangements
• Declarations and affidavits

The Delhi Drugs Control Department lists plant plans, machinery, testing equipment, technical staff and proposed formulations among the common application requirements.

Application and Inspection Process

Step 1: Pre-Application Meeting

Where possible, discuss the project with:

• State Licensing Authority
• Pollution Control Board
• Factory department
• Fire authority
• Technical consultant

Step 2: Complete Construction and Utilities

The facility should substantially match the submitted design.

Step 3: Install and Qualify Equipment

Maintain:

• Purchase records
• Manuals
• Qualification documents
• Calibration
• Maintenance plans

Step 4: Recruit Technical Staff

Submit genuine full-time staff records.

Step 5: Prepare the Quality System

Complete core SOPs, specifications, formats and validation protocols.

Step 6: Submit Application

Applications may be submitted through ONDLS or the applicable State Licensing Authority system.

Step 7: Regulatory Inspection

Inspectors may review:

• Premises
• Equipment
• Utilities
• Laboratory
• Documentation
• Technical staff
• Storage
• Validation
• Product dossiers
• Environmental controls

Step 8: Respond to Observations

Prepare:

• Root-cause analysis
• Corrective actions
• Evidence
• Revised documents
• Completion dates

Step 9: Receive Licence and Product Permissions

Do not begin commercial manufacturing before applicable approvals are granted.

WHO-GMP and CoPP

Schedule M compliance is part of domestic manufacturing requirements.

WHO-GMP certification and Certificate of Pharmaceutical Product requirements are particularly relevant to certain export markets.

Do not describe the plant as WHO-GMP certified merely because:

• It follows Schedule M.
• The design consultant used WHO terminology.
• An application has been submitted.

Certification should be claimed only after formal grant by the competent authority.

Export Planning

For export, additional requirements may include:

• Importing-country registration
• Product dossier
• CoPP
• WHO-GMP certificate
• Free-sale certificate
• Export NOC
• Stability for target climatic zone
• Country-specific labelling
• Serialization
• Bioequivalence
• Site inspection by foreign regulators

A domestic licence does not automatically authorize market entry in every foreign country.

Manufacturing Process Overview

Tablet Manufacturing

A typical process may involve:

1. Raw-material receipt
2. Sampling and approval
3. Dispensing
4. Sifting
5. Granulation or direct compression
6. Drying
7. Milling
8. Lubrication and blending
9. Compression
10. Coating, where applicable
11. Packing
12. Testing
13. Batch release

Capsule Manufacturing

A typical process may include:

1. Dispensing
2. Sifting
3. Blending or granulation
4. Capsule filling
5. Weight checking
6. Polishing
7. Metal detection
8. Packing
9. Testing and release

Liquid Manufacturing

A typical process may include:

1. Water preparation
2. Raw-material dispensing
3. Syrup-base preparation
4. Ingredient addition
5. Mixing or homogenization
6. Filtration
7. Bulk holding
8. Filling
9. Capping
10. Labelling
11. Packing
12. Testing and release

Actual processes must follow the approved product formula and validated method.

Investment Required

There is no statutory fixed investment amount.

Investment depends on:

• Land
• Building
• Dosage forms
• Capacity
• Utilities
• Machinery
• Laboratory
• Automation
• Environmental controls
• Staff
• Working capital

Broad Planning Ranges

These are only preliminary planning ranges.

Facility Type	Broad Illustrative Investment
Focused leased non-sterile unit	₹5–15 crore or more
Multi-dosage non-sterile facility	₹12–40 crore or more
Sterile or injectable facility	₹40–150 crore or more
API or bulk-drug project	₹25 crore to several hundred crores

Land cost may be additional.

A detailed project report and vendor quotations are required before financing.

Main Investment Heads

Fixed Capital

• Land or lease deposit
• Building
• Clean-area construction
• HVAC
• Water system
• ETP
• Utilities
• Machinery
• Laboratory
• Warehouse
• Electrical system
• Power backup
• Fire and safety
• Software

Pre-Operating Investment

• Design
• Consultancy
• Licensing
• Validation
• Trial batches
• Recruitment
• Training
• Documentation
• Product development
• Stability studies

Working Capital

• Raw materials
• Packing materials
• Salaries
• Electricity
• Testing
• Maintenance
• Finished stock
• Customer credit
• Marketing
• Contingency

Break-Even Planning

Use:

Break-Even Sales

=

Annual Fixed Cost

÷ Contribution-Margin Percentage

Example:

• Annual fixed cost: ₹6 crore
• Contribution margin: 20%

Break-Even Sales

= ₹6 crore ÷ 20%

= ₹30 crore annually

The project should test whether expected demand can support the proposed capacity.

Funding Sources

Possible sources include:

• Promoter equity
• Term loan
• Working-capital limits
• Investor funding
• State industrial incentives
• MSME schemes
• Technology-upgradation support
• PLI schemes for eligible projects

Government incentive schemes have specific eligibility conditions and should not be assumed in the base budget.

Step-by-Step Roadmap

Phase 1: Business Decision

1. Select product category.
2. Select dosage forms.
3. Estimate market demand.
4. Choose own plant, loan licence or third-party manufacturing.

Phase 2: Feasibility

5. Prepare detailed project report.
6. Calculate capacity.
7. Obtain preliminary machinery and construction estimates.
8. Calculate fixed and working capital.

Phase 3: Site and Design

9. Select industrial location.
10. Confirm zoning and environmental applicability.
11. Prepare Schedule M-compliant layout.
12. Finalize utilities and process flow.

Phase 4: Approvals and Construction

13. Obtain applicable building, pollution and factory approvals.
14. Construct clean areas and utilities.
15. Install laboratory and machinery.

Phase 5: Quality System

16. Recruit technical staff.
17. Prepare the Site Master File.
18. Prepare SOPs and specifications.
19. Qualify utilities and equipment.
20. Validate processes and cleaning.

Phase 6: Licensing

21. Apply to the State Licensing Authority.
22. Submit product dossiers and approvals.
23. Complete inspection.
24. Resolve observations.
25. Obtain manufacturing licence and product permissions.

Phase 7: Commercial Operations

26. Approve suppliers.
27. Purchase materials.
28. Manufacture approved validation and commercial batches.
29. Complete testing and QA release.
30. Establish distribution, complaints, recalls and pharmacovigilance.

Common Mistakes

Avoid:

• Starting construction without finalizing dosage forms
• Using an old Schedule M layout
• Depending only on minimum area figures
• Selecting land before checking industrial permissions
• Underestimating HVAC and utility costs
• Buying machinery before capacity planning
• Mixing incompatible product sections
• Using technical staff only on paper
• Manufacturing unapproved FDCs
• Treating QC and QA as the same function
• Ignoring validation
• Maintaining weak data-integrity controls
• Ignoring pharmacovigilance
• Starting commercial batches before licence approval
• Assuming domestic GMP equals WHO-GMP certification
• Underestimating working capital
• Building excessive capacity without confirmed customers

Frequently Asked Questions

1. Which licence is required to manufacture pharmaceutical drugs?

Forms 25 and 28 are common manufacturing licences for applicable allopathic product categories. The correct form depends on the drug schedule and dosage form.

2. Who issues the manufacturing licence?

The relevant State Licensing Authority generally issues many routine formulation manufacturing licences. Certain products also require CDSCO or Central Licensing Authority approval.

3. Is revised Schedule M compulsory?

Yes. From 1 January 2026 it applies to manufacturers with turnover up to ₹250 crore; it was already applicable to larger manufacturers.

4. Is there a fixed minimum plant area?

There is no single area suitable for every plant. The facility must provide adequate space and controlled flow for its products, processes, capacity, equipment and quality systems.

5. Can I start a pharmaceutical plant in a rented building?

Potentially yes, provided the premises is legally suitable, accepted by authorities and can be modified to meet applicable requirements.

6. Is a wholesale drug licence also required?

It depends on how finished products are stored, sold and distributed. Separate wholesale premises or depots generally require the applicable sale licences.

7. Can one plant manufacture tablets, syrups and injections?

Potentially, but each section requires appropriate separation, utilities, equipment, validation and licensing. Sterile products require a substantially different facility.

8. Can I manufacture a product already sold by another company?

Only after confirming that the formulation, strength and dosage form are legally permitted and obtaining the applicable product permission.

9. How much does a small pharmaceutical plant cost?

A new compliant non-sterile project commonly requires several crores. A focused leased facility may begin around ₹5–15 crore, but actual cost depends on the project.

10. Is third-party manufacturing better for a startup?

For promoters mainly interested in brand marketing, third-party manufacturing is usually faster and less capital intensive than building a plant.

11. Is WHO-GMP certification automatic after obtaining Form 25?

No. WHO-GMP and CoPP certification involve a separate regulatory assessment and formal grant.

12. Is a registered pharmacist enough to run the factory?

No. A manufacturing plant requires suitable approved production, quality-control and quality-assurance personnel according to its products and licence.

Final Thoughts

Starting a pharmaceutical manufacturing company is not a machinery-purchase exercise.

It is the establishment of a controlled system combining:

**Facility design

• Qualified utilities
• Validated processes
• Approved products
• Competent technical staff
• Independent quality control
• Documented quality assurance
• Regulatory licensing
• Pharmacovigilance
• Financial sustainability**

The safest approach is:

Start with a detailed project report
→ Build only the capacity you can sell
→ Design directly under revised Schedule M
→ Complete approvals before construction decisions become irreversible
→ Obtain licences before commercial manufacturing

Entrepreneurs whose primary objective is to launch and market pharmaceutical brands should seriously compare an own plant with:

• Third-party manufacturing
• Contract manufacturing
• Loan licensing
• Acquisition of an existing compliant facility

A plant should be established only when expected production volume, technical capability and capital justify the long-term compliance burden.

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