Loan License for Drug Manufacturing

Many companies sell medicines without a factory. A loan license allows those companies to manufacture drugs at a licensed plant. The Drugs and Cosmetics Rules govern this system. State Drug Control Departments act as the main approving bodies. They check documents, plant facilities, staff, testing labs, hygiene, and record systems. The Central Drugs Standard Control Organization supports regulatory rules and updates.

A loan license needs consent from the host manufacturer. Once issued, the authority adds approved products to the permit. Quality standards, Good Manufacturing Practices, and safety rules stay active during the whole license period.

Regular inspections happen to ensure safe drug production. Any change in products or place needs permission. Loan licensing supports new pharmaceutical businesses and reduces costs since no new factory is required.

What is a Loan License for Drug Manufacturing?

A loan license gives legal permission to manufacture drugs at another licensed facility. The applicant brand uses the host factory's machines, building, and qualified team. The host plant must hold a valid manufacturing license. The applicant remains responsible for product labels and brand marketing. Two main forms apply:

• Form 25 / Form 25A for medicines not covered in Schedules C & C1
• Form 28 / Form 28A for medicines covered under Schedules C & C1

Fresh applications generally use Form 24 or Form 27 based on the product type. The State Drug Authority verifies every detail before granting approval. Once satisfied, the loan license number is issued in the relevant Form A variant for drug manufacturing.

This license does not give ownership of the plant. It only grants permission to use the approved facility and staff for making specific drugs. Every drug batch must meet safety, quality, and record standards under strict rules.

Who Needs a Pharma Loan License? 

Businesses or individuals who want to manufacture pharmaceutical products but do not have their own approved drug manufacturing facility require a license. It allows them to legally outsource production to a licensed unit. The following entities typically need a drug loan license:

• Pharma Startups: New pharmaceutical companies planning to launch medicines without heavy investment in infrastructure.
• Marketing Authorization Holders (MAH): Businesses that focus on branding, marketing, and distribution of drugs while outsourcing manufacturing.
• Companies Expanding Product Lines: Firms that want to add new formulations beyond their existing manufacturing capabilities.
• Businesses Without Manufacturing Permission: Entities that do not hold Form 25 / Form 28 licenses but still want to produce drugs legally.
• Importers & Exporters of Pharmaceuticals: Companies that trade medicines internationally and require compliant production of licensed products.
• R&D-Based Pharma Firms: Research organizations that develop formulations and need a partner unit for commercial-scale manufacturing.
• Entrepreneurs Entering Pharma Market: Individuals planning to enter the drug industry without setting up a full manufacturing plant.

A loan license is very helpful for companies that want to make medicines but do not have their own factory. It helps them start their business in a smart and simple way.

• Low Investment Requirement: The company does not need to spend money on making a factory or buying big machines. This saves a lot of money in the beginning.
• Faster Market Entry: The company can start making and selling medicines quickly. They use a factory that is already approved and ready for work, so there is no long waiting time.
• Access to Skilled Technical Expertise: The partner factory already has trained workers and good knowledge. They follow all rules and make safe and quality medicines. This helps the company give better products to people.
• Regulatory Support & Compliance: Since the host facility follows GMP and other drug regulations, the applicant benefits from established standards and approvals.
• Flexibility to Expand Product Range: Companies can manufacture multiple formulations without additional infrastructure investment.
• Reduced Operational Burden: The host unit handles production, equipment maintenance, quality control, and operational activities.

Eligibility for a loan license in drug manufacturing is based on compliance with the Drugs & Cosmetics Act, 1940. The company must work together with a factory that already has a legal license to make medicines. These are the main rules to get this license:

• Registered Business Entity: The business must be properly registered with the government. It can be a Private Limited Company, LLP, Partnership Firm, or even a small Proprietorship that works in the medicine field.
• Written Consent from a Licensed Manufacturer: A valid consent agreement must be signed with a host company that already holds a drug manufacturing license (Form 25/28).
• GMP Compliant Host Facility: The manufacturing premises must comply with Schedule M – Good Manufacturing Practices (GMP).
• Availability of Quality Control Setup: Quality control arrangements must be ensured for testing raw materials, in-process quality, and finished products.
• Legal & Regulatory Compliance: The business should follow all CDSCO and State FDA regulations, including product approval and labeling standards.

Correct papers play a very important role in getting a loan license in India. Both the applicant (Loanee) and the manufacturing unit (Host firm) must share proper documents to follow CDSCO and State FDA rules. These are the main documents needed:

Documents Needed from the Loanee Firm

These papers show that the business is real and trusted:

• Aadhaar Card and PAN Card of all company directors
• GST Registration Certificate
• Loan Assignment Agreement signed with the host manufacturer
• Form 20B/21B copy, if the business has a wholesale drug license

Documents Needed from the Host Manufacturing Firm

These documents prove the factory has legal approval and skilled staff to make medicines:

• Drug Manufacturing License in Form 25 and Form 28
• Certificates of technical staff showing their skills and experience
• Site Master File that shows the working system and GMP rules followed inside the plant
• Stability study reports to check that the medicine stays safe and good
• Product approval copy from the Drug Authority

Getting a Loan License for Drug Manufacturing in India needs a careful and strict checking process. This system makes sure that medicines are made in a safe place that already has a legal license. Every step is important to follow the rules, keep the medicine quality high, and protect people’s health. Here is the full process explained in a very clear way:

• Choose a Licensed Manufacturing Facility

A loan license holder must partner with a manufacturing plant already registered under the Drugs & Cosmetics Act, 1940. The selected facility must have proper infrastructure, a skilled workforce, and certified equipment.

• Prepare Required Documents & Permissions

All documents, such as product details, technical personnel qualifications, and a consent letter from the manufacturing site, must be arranged before filing the application.

• Apply to the State Licensing Authority

The application is submitted online or offline to the respective State Drug Licensing Authority. The required application forms (Form 24A/27A) and government fees must be included.

• Detailed Document Screening

Officials review and check the submitted information, technical details, and compliance history of the manufacturing site.

• On-Site Factory Inspection

A Drug Inspector verifies the host plant's facility, hygiene, machinery, and adherence to GMP standards during inspection.

• Address Compliance Remarks

If there are any queries raised by the authority, the applicant must respond quickly and complete corrective actions.

• Grant of Loan License

Once fully compliant, the license is issued in Form 25A or Form 28A, allowing commercial drug manufacturing to begin.

Cost depends on many factors such as type of drug, product class, number of items, inspection needs, document preparation, and consultant support. State fee rules differ and are often updated. Complex products may require additional approval fees or testing investments. The host plant may also charge a commercial manufacturing fee based on volume and product nature.

A loan license usually stays valid for five years. The exact time period is written clearly on the license paper. During this time, all safety rules, quality checks, and important documents must remain accurate and up to date. The authority must approve any change to the factory, the list of medicines, or the technical staff. Government officers may visit the factory to check whether all rules are followed. If the rules are broken, the license can be stopped or cancelled. 

Renewal must begin before the license ends. A new form must be filled out and submitted with updated documents like the consent letter from the host factory, details of trained staff, and proof that all rules are followed. The authority checks the factory and makes sure no law has been broken. A fresh visit may also happen to see that the place is safe and clean. When everything is correct, the license is renewed for more years. Making medicines should continue only after the renewal is approved. If the renewal is late, the license may stop working and can create legal trouble.

Corpseed is one of the top consulting firms, offering comprehensive assistance in medical device and pharmaceutical compliance, guiding businesses through the necessary processes. We help in getting a loan license in a simple and stress-free way. Our expert team supports you at every stage so that your business can start medicine manufacturing smoothly and follow all legal rules. Here are the ways we help:

• End-to-End Assistance: We guide you from the first step to the final license approval, so you do not get confused at any stage.
• Document Support:  We help you prepare all important documents correctly to avoid mistakes and delays.
• Finding Licensed Manufacturers:  We support you in choosing the right GMP-approved factory for medicine production.
• Application Submission: We help in filing the online and offline applications with CDSCO or State FDA.
• Inspection Guidance: We help you get ready for site inspections by explaining what officers check.
• License Renewal Help: We also support timely renewal so that your business never stops.