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Legal and Regulatory Framework for Manufacturing and Distribution of Drugs in India 

By - King Stubb & Kasiva on March 23, 2023

Overview of the Indian Pharmaceutical Industry

A pharmaceutical is a drug that is used to treat illnesses such as flu, sexually transmitted diseases, and cardiovascular diseases like diabetes, Parkinson's Disease, Cancer, etc. These pharmaceuticals improve the lives of others and manage systems efficiently in comparison to conventional methods.

Indian Pharmaceuticals is a major player and plays an important role in the Global Pharmaceutical Industry. India is 3rd largest producer of drugs by volume and 14th by value. The nation is the largest provider of generic medicines globally and has a 20% share in the global supply by volume, and above all, it is the largest vaccine manufacturer in the world. India is home to the largest number of USA's FDA-compliant plants outside the USA along with being home to more than 3000 pharma companies having more than 10500 facilities and a highly skilled resource pool.

The industry offers 60000 generic brands across 60 therapeutic categories. Major generic drug segments include OTC Medicines, API/Bulk Drugs, Vaccines, Contract Research, Manufacturing, Biosimilars, and Biologics. The market size is expected to reach $65 bn by 2024 and further to reach around $130 bn by 2030.

The imperatives of healthcare and the resultant laws and regulations surrounding the same are very unique when it comes to India. In the very absence of any kind of reimbursement and insurance system in place, the focus of the government had been to reduce people’s pocket expenses to a larger extent. Since 2014, drug prices have been a significant part of campaign rhetoric.

The very establishment of generic pharmacies and policy as well as regulatory measures are all steps towards making India, a generic market. Globally, Indian Pharmaceutical Industry is the 3rd largest in terms of volume and the 10th largest in terms of value. But, to operate a pharmaceutical business in India, knowing about the pharma regulatory regime of the land is highly important.

Regulatory Requirements for Drug Manufacturing in India

It is understood that there are loads of problems that are faced by pharma professionals in accessing the information that is required to comply with the regulatory regime in India as well as abroad. The important Indian guidelines for the pharma industry are:

  1. Central Drugs Standard Control Organization (CDSCO) of the Ministry of Health and Family Welfare of the Government of India is responsible for providing general information regarding drug regulatory requirements in India.[1]
  2. There are orders imposed by the National Pharmaceutical Pricing Authority (NPPA), Government of India, such as Drugs (Price Control) Order 1995[2] etc.
  3. The Drugs and Cosmetics Act, of 1940[3]; simply regulates the import, manufacture, distribution, and sale of all the drugs in India.
  4. The Schedule M of the Drugs and Cosmetics Act, of 1940[4]; specifies the general as well as requirements for the premises of the factory and the materials, plant as well as equipment along with providing minimum recommended areas for the basic installation of certain kinds of drugs.
  5. The Schedule T of the Drugs and Cosmetics Act, of 1940[5]; provides for GMP practice for Ayurvedic, Siddha, and Unani medicines.
  6. Other important applicable legislations are, The Pharmacy Act, of 1948; The Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954, along with The Narcotic Drugs and Psychotropic Substances Act, of 1985.

Drug Distribution and Sales in India: Regulatory Guidelines

  • When it comes to India, the import, manufacturing, sale, as well as distribution of drugs, is regulated by the Drugs and Cosmetics Act of 1940 and Drugs and Cosmetic Rules 1945[6] made there under. The Act also regulates bulk drugs and finished formulations. The drug has been defined under Section 3b of the Act[7]. And any substance that falls within that definition will be required to be registered in India before Import. But not only the drugthe manufacturing site will also be registered for import.
  • For maintaining the quality of the Pharmaceutical Products, and to establish adequate control over the entire distribution chain, CDSCO prepared draft Guidelines on Good Distribution Practices for Pharmaceutical Products[8].
  • Import and Registration Division of Central Drugs Standard Control Organization (CDSCO) of Directorate General of Health Services of Ministry of Health and Family Welfare of Government of India; released Guidance Document on Common Submission Format for Import and Registration of bulk drugs and finished formulations in India[9].

Challenges and Opportunities in the Indian Pharmaceutical Industry


The pharmaceutical Industry in India has shown very promising growth over the last few decades. There has been a rise of dependable third-party manufacturing, which allowed India to become import dependent nation to one of the key players globally in pharmaceutical exports. India ranks third globally in terms of volume and is rather estimated to be worth $ 42 billion. India has more than 206 global export destinations and it supplies more than 60% of the global vaccine demand. This growth is not only significant for bolstering the prospects of growth but also for tremendous innovation in the pharmaceutical space.

Research has shown that the pharmaceutical industry, which is $42 billion currently in India, is expected to grow to reach $65 billion by 2024 and is ambitioned to grow threefold to reach $120-130 billion by the year 2030. During the pandemic, Indian-manufactured drugs and vaccines were imported by more than 80 countries all over the globe, enabled by the strong network of the best third-party manufacturing. Having a huge and strong industrial base, massive human resources, and the gigantic capacity of pharmaceutical third-party manufacturing, India exhibits an opportunity for competing with nations like the USA.


Although, very much like any industry trying to capture the international market; Indian Pharmaceutical Industry has its share of problems. There are many quality and regulatory challenges. And these can potentially restrict the growth of the industry in the upcoming years. There is a lack of a stable policy environment, along with a defined regime for pharmaceutical products, with the market being known to show considerable fluctuations in drug pricing which have been discouraging the expected investment in third-party drug manufacturing.


With a wide range of third-party manufacturers for the pharmaceutical industry in India, there also is a need for the effective implementation of quality standards, to ensure the delivery of high-quality and reliable products to the consumers. It is because of the lack of proper comprehensive quality control and insurance regime in the pharmaceutical industry that India underwent the largest number of FDA (Food and Drug Administration) inspections since the year of 2009.

Although having a strong third-party pharmaceutical manufacturing base gave India the resilience that was witnessed on a global level during the pandemic, to unleash potential growth, it is important to overcome issues related to regulations and quality.


What are the licensing requirements for the manufacturing and distribution of drugs in India?

The license for the sale or distribution of drugs that is notified by the Central Government from time to time in the Official Gazette of India is granted by Central License Approving Authority (CLAA). For other drugs, the application for either the grant or for the renewal of the license to manufacture for selling or distributing must be made to the licensing authority that is set up by the State Government.
For any company, distributor, or independent agent to be the authorized Indian Agent to deal with local or foreign drugs or cosmetics, one must have a manufacturing license from Central Drug Standard Control Organization (CDSCO). For, the manufacturing of notified medical devices, under the Central License Approving Authority (CLAA) for selling in India, a manufacturing license under Form 28 is required under the Drugs and Cosmetics Rules. The Rule 76 of Drugs and Cosmetics Rules describe the information that is required for the grant of a manufacturing drug license.
Although the manufacturing for sale of certain devices like Disposable Hypodermic Syringes, Needles, and Disposable Perfusion Sets along with in-vitro Diagnostic Devices are regulated by the concerned State Drug Licensing Authority

What is the role of the Central Drugs Standard Control Organization (CDSCO) in the Indian pharmaceutical industry?

The Central Drugs Standard Control Organization (CDSCO) comes under the Directorate General of Health Services under the Ministry of Health and Family Welfare which is under the Government of India and is the National Regulatory Authority of India (NRA).The CDSCO endeavors to bring out transparency, accountability as well as uniformity in the services and to further ensure safety, efficacy, and quality.

What are the penalties for non-compliance with the legal and regulatory framework for the manufacturing and distribution of drugs in India?

The penalty for non-compliance is at the discretion of the regulatory authority. There had been a 2019 report[1], about how the same punishment was given for drugs that were spurious and the drugs that were of not-so-standard quality. And the report also found out how neither the inspectors nor the States Drug Regulatory Authorities are required to maintain a record or repository of information about non-compliant, errant, and offending drug manufacturers. There also does not exist any record or repository about departmental action against a manufacturer or a retailer. The lack of data makes it difficult to identify repeat offenders. In the four years from April 2015 to January 2019, prosecution for non-compliances ranges from 0.4% to 2.8% for Mizoram, Odisha and Jharkhand
Hence, it is pertinent to develop proper punitive rules for non-compliance.

[1]CENTRAL DRUG STANDARD CONTROL ORGANIZATION,,with%20a%20view%20of%20bring, (last visited, March 20, 2023)

[2]Drugs (Price Control) Order 1995, 1995 (India)

[3]The Drugs and Cosmetics Act, 1940; No. 23, Acts of Parliament, 1940 (India)

[4]The Drugs and Cosmetics Act, 1940; Schedule M, No. 23, Acts of Parliament, 1940 (India)

[5]The Drugs and Cosmetics Act, 1940; Schedule T, No. 23, Acts of Parliament, 1940 (India)

[6]The Drugs and Cosmetic Rules 1945, Notification No. F.28-10/45-H (1), Department of Health of Ministry of Health and Family Development, 1945 (India)

[7]The Drugs and Cosmetics Act, 1940; No. 23, Acts of Parliament, 1940 (India)


[9]Guidance Document on Common Submission Format for Import and Registration of bulk drugs and finished formulations in India, Document No. IMP/REG/200711, Central Drugs Standard Control Organization, (India)

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