This article is written by answering query of our reader. Original query is : Sir, Please send me the difference between loan license, third party manufacturing and pcd/franchise in pharmaceutical marketing.
We will discuss all these individually and try to find out difference between these.
What is Loan License in Pharmaceutical Industry?
For non technical persons, its confusing to differentiate between third party manufacturing and loan license manufacturing.
Loan licensing is like to start own manufacturing without setting up manufacturing unit.
For example, You are a pharmaceutical marketing company and you want to manufacture own medicines but don’t want to set-up pharma manufacturing unit. So, you will tie-up with an already licensed pharmaceutical manufacturing company and apply for loan license to drug authority that you are interested to manufacture your medicines in already licensed manufacturing unit by using their facilities and staff.
Drug authority will issue a separate license to pharmaceutical marketing company to manufacture medicines and avail all benefits of manufacturing unit. This process is known as Loan Licensing and license issued to marketing company is known as loan license.
In Loan license, you will rent a particular space in already licensed manufacturing unit for manufacturing your own brand name products. In that case, marketed by and manufactured by name will be yours own company with manufacturing address detail of hired manufacturing unit.
In loan license you will manufacture product and you will market and supply it. Technical persons and workers will be of manufacturing company but manufacturing is handled by you or you can leave a your authorized person to look after manufacturing process.
Loan licensing is just like hiring/renting others manufacturing premises for manufacturing owns products. Loan licensing require two parties: One is marketing company and second one is manufacturing company. In loan licensing marketing company can use its company name at place of manufactured by address but address will of manufacturer’s company premises. It is similar to third party manufacturing but has few differences. In loan licensing you can use marketed by address and manufactured by name of your company.
Loan License as per Drugs and Cosmetics Rules:
A Loan license is defined as “For the purpose of this rule a loan license means a license which a licensing authority may issue to an applicant who does not have his own arrangements for manufacture but who intends to avail himself of the manufacturing facilities owned by a licensee in form 25 or in form 28 as the case may be.”
Examples
As per below example:
Marketed by:
Pharma Franchise Help
Plot no. —-, Sector—-
Karnal-132001
Manufactured by:
Pharma Franchise Help
V.P.O. Gheer-132023
But manufacturing unit belong to actual manufacturer is
EHI Pharma
V.P.O. Gheer-132023
This process is mainly used by multinational companies to increase their production capacity and meet market demand. Ownership of brand will be property of marketing company. Quality will also be the responsibility of marketing company who is now manufacturing also.
Documentations:
For Loan License manufacturing, A Loan License is required from State Drug Control Department. A file is submitted as in case of parent manufacturing license including manufacturing unit license detail, list of approved ingredients, name of technical person, machinery detail, site plan etc. Other than this, pharma marketing company should have distribution drug license and GST number etc.
Raw Material:
Raw material procurement is responsibility of Loan licensee as loan licensee is working as manufacturer in manufacturer’s unit.
Third Party Pharmaceutical Manufacturing
In case of Third Party manufacturing, you will only give order to manufacturing company for manufacturing product with your brand name and company name. Manufacturer will manufacture product and will supply to you in ready to sell form. You can now supply it to your Cnf and distributors.
Third Party manufacturing is the term used for getting manufactured owns products from a pharmaceutical manufacturer. This is simple process and very less documentation and formalities. Suppose you want to start own marketing company and want to get manufactured your product or if you are manufacturer and don’t have approval for particular product to manufacturer, then you will contract with a Pharma manufacturer to manufacture products for you with your brand names and marketed by address. In third party manufacturing, manufacturer name and address must be mentioned. It requires marketing company and pharmaceutical manufacturer.
Take above example:
Marketed by:
Pharma Franchise Help
Plot no. —-, Sector—-
Karnal-132001
Manufactured by:
EHI Pharma
V.P.O. Gheer-132023
In third party manufacturing you can’t use your marketing company name at place of manufacturing company name. but you can mention your company as marketed by company. Ownership of brands will be property of marketing company. Quality will be responsibility of manufacturing company. Read Complete detail about third party manufacturing
Documentations:
For Third Party manufacturing, Wholesale/Distribution Drug License and GST is mainly required.
Raw Material:
Raw material procurement is responsibility of pharmaceutical manufacturing company, not of pharma marketing company
PCD and Pharma Franchise:
Pcd is the term used for propaganda cum distribution. Pcd is the term used to provide ownership of marketing rights to person/distributor or group of persons/distributors by pharmaceutical company at monopoly right for area or territory as per mutual agreed term and conditions. This requires two parties: one is pcd company and second is pcd/franchisee party/distributor.
Pcd distributor has right to use company name, company’s brand names, sales, promotion, appointment of stockiest etc for his area. Distributor has also authorized to do all commercial activity on behalf of company at authorized territory or area. It is very common term used in Pharma marketing. It is also known as Pharma Franchise marketing. But there are slight difference between Pharma Franchise and PCD pharma.
Check difference between pharma franchise and Pcd Pharma here
Pcd is very much different from other two terms in all aspects. In pcd marketing, ownership of brands and company name are the exclusive property of pharmaceutical company.
Company reserves all right related to brand name, company name etc. Distributors only have authorization to use these names but don’t get ownership of these. Pharma company either be a manufactured or marketed by company. Read Complete about pharma franchise and pcd marketing
Documentations required:
Wholesale/Distribution Drug License and GST (if applicable) is mainly required.
If you find any correction in above detail, please inform us or write in comment box.
Hope this article is useful to you. For further queries and suggestions, please mail us at pharmafranchiseehelp@gmail.com
Related Post:
- What is the procedure for packing material Procurement, Inventory, type in Pharmaceutical/Ayurvedic Manufacturing Company?
- How to start Pharma Marketing Company by Third Party Manufacturing Concept?
given example is not sufficient to understand for non pharma person.
you can given live example like Mr. XYZ wants to start his business and like that
In Third Party Manufacturing, what if The marketeer buys Raw material ? Please help me describing the law that says Manufacturer has to buy RM in third party manufacturing and RM to be bought by Marketeer in Loan Licensing ?
Nice Article.
Informative.
Nice