CDSCO Clarifies Regulatory Approval Requirements for Formulation Intermediates Used in Drug Manufacturing

The Formulation of the Intermediate Regulatory Framework in India

India's formulation intermediate licensing framework sits at the intersection of two regulatory pillars:

• New Drugs and Clinical Trials (NDCT) Rules, 2019, under the Central Drugs Standard Control Organisation (CDSCO), which govern the approval of New Drugs, including all modified or sustained-release dosage forms.
• The Drugs and Cosmetics Act and applicable State Rules, under the State Licensing Authorities (SLAs), govern manufacturing licenses for standard, non-new-drug formulation intermediates.
• CDSCO's clarification, issued via Circular dated 24 June 2026, sits on top of these two pillars and tells manufacturers exactly which pillar applies to which type of intermediate.

The formulation intermediate segment is an important part of India's pharma manufacturing chain:

• Formulation intermediates such as Directly Compressible (DC) granules, taste-masked granules, and modified-release granules/pellets are produced both by API manufacturers moving downstream and by specialised CDMOs.
• These intermediates feed directly into tableting and capsule-filling operations across India's domestic and export-facing pharma industry.

Confusion between Central and State jurisdiction has, for years, led manufacturers to choose licensing routes based on convenience rather than correct classification.

What Has Changed in 2026 - The Full Regulatory Clarification

1. New Drugs Including SR/ER/PR/DR Intermediates Now Require CDSCO Approval

CDSCO checks the definition of "New Drug" from time to time and applies it strictly. The rule it relies on is Rule 2(1)(w) of the NDCT Rules, 2019 - this rule says that any modified or sustained release form of a drug is automatically treated as a New Drug, no matter how long that drug has been sold in its ordinary form.

Here is the key thing: a granule or pellet that was earlier licensed at the State level might now require Central CDSCO approval, even if its active ingredient is decades old. This happens because the release mechanism itself - not the drug molecule - is what triggers New Drug status.

With the 24 June 2026 clarification:

• All SR, ER, PR, and DR dosage forms - including Gastro-resistant Tablets/Capsules and Delayed Release (Enteric Coated) Tablets/Capsules - are deemed New Drugs.
• This deeming applies equally to the bulk formulation intermediate (the SR/ER/PR/DR granule or pellet itself), not only to the finished tablet or capsule.
• Manufacturers must file an application for the finished formulation together with a coordinated application for the formulation intermediate, both with CDSCO.

2. Standard Formulation Intermediates Remain on the SLA Track

CDSCO has also clarified the other side of the line:

• Directly compressible granules and standard taste-masked granules that are not New Drugs continue to be licensed by the concerned State Licensing Authority.
• Applicants must submit the requisite data - stability, impurity, and blend uniformity information - directly to the SLA.

3. The Novel Excipient Override

CDSCO has built in one important exception that applies regardless of release profile:

• If a formulation intermediate, of any kind, contains a new or novel excipient, CDSCO approval becomes mandatory.
• This overrides the SLA route entirely, even for an otherwise ordinary, immediate-release granule.

4. Single Point of Submission

The circular closes by stating that the applicant must submit the application for the formulation intermediate - whether for import, manufacturing, or marketing - to CDSCO or to the SLA, as the case may be, based on the classification above.

Implementation Timeline Summary

Why CDSCO Issued This Clarification - The Core Need

1. Inconsistent State-Level Interpretation Created a Fragmented Market

When formulation intermediates first began moving at scale between CDMOs, API makers, and formulation houses, there was no single, uniform understanding of where the SLA's authority ended and CDSCO's began. Because the underlying rule was open to interpretation, different states reached different conclusions for materially similar products. It was like a national vehicle safety authority allowing one state to certify an engine block while another state insisted the same engine needed national approval.

Manufacturers found themselves choosing the state with the most convenient interpretation rather than the legally correct one. So the licensing system lost its consistency. The 2026 clarification fixes this by drawing one national line that every state and zonal office must now follow.

2. Therapeutic Risk Tied to Modified-Release Mechanisms

Modified-release granules and pellets work because of a polymer coating or matrix structure that controls how and when the drug is released inside the body. Even a small failure in that mechanism at the bulk intermediate stage - before the product is even compressed or filled - can mean:

• Dose-dumping, where the full intended dose is released far too quickly, which is especially dangerous for narrow-therapeutic-index drugs
• Bioavailability variance, where batch-to-batch differences in coating change how much drug actually reaches the bloodstream

Coating failure during compression or capsule filling, which can compromise the release mechanism before it even reaches finished-product testing

CDSCO's job under the NDCT Rules, 2019, is to ensure that any product carrying this kind of therapeutic risk is evaluated centrally, with full clinical and technical scrutiny, rather than locally.

3. Closing the Gap Between API, Intermediate, and Finished Dose

Previous regulatory oversight was confined to only the final tablet or capsule product. The actual intermediate drug substance in its bulk SR/ER/PR/DR form – that is, the process wherein the delivery system is made – had somehow eluded the same extent of oversight. This gap is bridged with the 2026 clarification.

4. Protecting the SLA Track From Misuse

The novel excipient override has the same reason behind it; an otherwise conventional granule could turn out to be more risky after the addition of an untested excipient. The absence of the override would have made it possible for manufacturers to submit novel granules for approval under the SLA process due to their conventional release pattern.

Impact on Indian Pharma Businesses in 2026

1. Large Formulation Manufacturers and CDMOs

Modified-Release Portfolio:

The companies that have specific multiparticulate or SR/ER pellet production lines will be directly impacted. Now, such companies will have to:

• Identify all SR/ER/PR/DR SKUs vis-a-vis the new CDSCO requirement
• Submit dual applications - one for the formulation and one for the intermediate – to CDSCO
• Re-align their SLA licensing for modified-release intermediates vis-a-vis the CDSCO requirement

Standard Granule Portfolio:

In the case of DC granules and taste-masked granules, large-scale manufacturers should:

• Improve upon stability, impurity, and blend uniformity data for a smooth SLA renewal
• Screen every excipient used across their portfolio for novelty status under Indian regulatory precedent

2. Specialised Pellet and Granule CDMOs

This group sits at the centre of the circular's impact. Many CDMOs built their business specifically around multiparticulate SR/ER pellet manufacturing for client formulators.

Impact:

• A CDMO supplying SR or ER pellets under an SLA-only license is now operating outside the correct regulatory channel.
• Pellets without the correct CDSCO clearance cannot legally be supplied for use in a finished formulation.

To continue operating, these CDMOs must:

• Identify every pellet/granule SKU that falls under the SR/ER/PR/DR or novel excipient category.
• File the coordinated CDSCO application alongside their client formulator, since the rule expects parallel filing for the intermediate and the finished product.
• Update batch records to separate intermediate-stage data clearly from finished-dose data
• There is no formal grace period attached to this clarification, which makes early realignment important.

3. API Manufacturers Moving Downstream

A growing number of API manufacturers have begun producing granulated or pelletised intermediates to capture more value in the supply chain.

Impact:

• The moment an API is converted into an SR/ER/PR/DR granule or pellet, the entity is no longer simply an API producer for regulatory purposes - it becomes a formulation intermediate manufacturer.
• These manufacturers need to assess each downstream product individually against the CDSCO/SLA matrix rather than assuming their existing API manufacturing license is sufficient.

4. Importers of Formulation Intermediates

India imports certain specialised pellets, coated granules, and excipient-based intermediates.

Impact:

• Imported SR/ER/PR/DR intermediates require CDSCO clearance before import, manufacturing, or marketing.
• Importers need to verify, with their overseas suppliers, the declared release profile and excipient composition of every consignment before filing for clearance with the correct authority.

5. Finished-Dose Formulators Procuring Intermediates Externally

Formulation houses that buy granules or pellets from third-party CDMOs rather than manufacturing them in-house must:

• Confirm that every externally sourced intermediate carries the correct license - SLA or CDSCO - before incorporating it into a finished product.
• Update vendor qualification and supplier audit checklists to specifically capture this classification
• Recognise that a finished formulation built on an incorrectly licensed intermediate carries the same compliance exposure as the intermediate itself.

How Businesses Will Achieve Compliance

Phase 1: Portfolio and SKU Classification Review (Do This Now)

For each formulation intermediate, check and record:

• Whether it carries any SR, ER, PR, or DR release function
• Whether it is gastro-resistant or enteric-coated
• Whether its formula includes any excipient not previously used in an approved Indian product
• Compare each SKU against the CDSCO/SLA matrix to determine the correct licensing track
• Flag any SKU currently held under an SLA-only license that should be on the CDSCO track

Phase 2: CDSCO Dual-Application Preparation (Where Needed)

• Compile release kinetics, dissolution, and stability data for the bulk intermediate
• Align this data with the finished-formulation dossier, since both applications are evaluated together
• Submit the coordinated application to CDSCO's New Drugs Division

Phase 3: SLA Dossier Strengthening for Standard Intermediates

• Upgrade stability data, impurity profiling, and blend uniformity reports for DC and standard taste-masked granules
• File or renew the application with the concerned State Licensing Authority

Phase 4: Excipient Novelty Screening

• Screen each excipient with respect to Indian regulatory precedent of usage, beyond just its worldwide approval.
• When novelty is established, prepare a safety package for CDSCO assessment
• Whenever feasible, screen excipient replacement that would maintain the SLA designation

Phase 5: Inspection Readiness

• Amend batch manufacturing logs to differentiate intermediate stage data from final dose data
• Perform internal mock audits for the CDSCO/SLA classification prior to the next regular audit

Benefits for Businesses After Implementation

For Compliant Manufacturers and CDMOs

For Patients and the Healthcare System

Is This the Right Decision or an Additional Burden?

Why It Is the Right Decision

Where It Adds Burden

Business Opportunities Created

1. CDSCO Dual-Application Filing Services (Core Opportunity for Corpseed)

2. SKU Classification and Portfolio Audit Services

• Reviewing every formulation intermediate SKU against the CDSCO/SLA matrix
• Identifying SKUs currently under SLA licenses that should be reclassified to the CDSCO track
• Corpseed can manage the full classification process for clients, including:
• Reviewing release-mechanism data for each product
• Screening excipients against Indian regulatory precedent
• Flagging high-risk SKUs requiring urgent CDSCO filing

3. Inspection Readiness Audits for CMOs and Formulators

CMOs and formulators face show cause notices and batch seizures in case the intermediate licensing does not coincide with the present CDSCO categorization.

Corpseed will audit intermediate licensing for:

• CDSCO authorization for SR/ER/PR/DR pellets & granules
• SLA authorization for standard DC and taste-masked granules
• Apply for approval from CDSCO/SLA prior to the next audit cycle

4. Technical and Regulatory Advisory for Smaller CDMOs

Not all smaller pellet and granule makers can afford to have an in-house regulatory team. What they need is affordable and targeted assistance for:

• Evaluating if their current SKUs qualify for the CDSCO or the SLA path
• Preparing the comprehensive application data package
• Answering any queries that may arise from CDSCO or SLA during the dossier review
• Corpseed can provide such assistance through defined advisory packages

5. M&A and Investment Due Diligence Support

Pharma companies undergoing fundraising, acquisition, or licensing-out transactions need a clean intermediate licensing record.

Corpseed can:

• Compile a classification report covering every formulation intermediate in the target company's portfolio
• Identify and quantify any CDSCO/SLA misclassification risk ahead of due diligence
• Support remediation before disclosure to counterparties

Corpseed's Core Message for This Service

Given Corpseed's existing work in pharmaceutical regulatory compliance, CDSCO's 2026 formulation intermediate clarification is a direct, time-sensitive opportunity. Because the circular operates as an immediate enforcement baseline rather than a future-dated rule, manufacturers and CDMOs holding SLA-only licenses for SR/ER/PR/DR intermediates are already exposed, with no formal grace period to fall back on. This urgency, combined with a clear and well-defined service scope, makes CDSCO/SLA dual-track compliance a high-demand service for Corpseed.