In India, the terms “contract manufacturing” and “third-party manufacturing” are often used interchangeably, but there are some differences between the two.

Contract Manufacturing: In contract manufacturing, a company outsources the entire manufacturing process of a product to a third-party manufacturing company. The contract manufacturing company is responsible for procuring raw materials, manufacturing the product, packaging, labeling, and shipping. The product is manufactured according to the specifications provided by the contracting company. The contracting company retains complete control over the product, including its formulation and packaging, and is responsible for regulatory compliance.

Third-Party Manufacturing: In third-party manufacturing, the contracting company provides the formula or formulation for the product to the third-party manufacturing company. The third-party manufacturer is responsible for procuring raw materials, manufacturing the product, packaging, labeling, and shipping. The third-party manufacturer is responsible for complying with regulatory requirements, and the contracting company is responsible for marketing and distribution of the product.

The key difference between the two is that in contract manufacturing, the contracting company retains complete control over the product, including its formulation and packaging, while in third-party manufacturing, the third-party manufacturer has control over the manufacturing process, and the contracting company provides the formula or formulation.

Both contract manufacturing and third-party manufacturing are commonly used in the pharmaceutical industry in India, and both offer several advantages, including cost savings, access to specialized equipment and expertise, and the ability to focus on core competencies.