India’s pharmaceutical industry is booming. Valued at over USD 50 billion in 2024 and expected to reach USD 130 billion by 2030, it’s a sector ripe with opportunity. From generic drugs to high-end biosimilars, the country is a global pharma hub, exporting to over 200 countries.[1]
But here’s the kicker: not every pharma startup succeeds due to various factors.
Some other factors- Because the foundation – the business model – is either flawed or misaligned with their resources and market strategy.
the right business model is not just about investment—it’s about sustainability, growth, and control. For Indian pharma entrepreneurs, three proven models dominate:
- PCD Pharma Franchise
- Third-Party Manufacturing
- Own Manufacturing Plant
In this blog, we’ll simplify each model, compare them across critical parameters, and help you decide which route is best for your pharma startup.
Understanding the Three Pharma Business Models
A. Pharma PCD Franchise
A Pharma PCD (Propaganda-Cum-Distribution) franchise is a marketing arrangement where a pharma company authorizes a distributor or entrepreneur to sell and market its products in a specific territory.
Key Features:
- Low Entry Barrier: No need to invest in manufacturing units, R&D, or complex licensing.
- Monopoly Rights: Most PCD deals offer exclusive rights in a district or region.
- Brand Support: The parent company provides promotional materials, visual aids, product samples, and sometimes even digital marketing.
- Compliance Assistance: Licensing, labeling, and regulatory documentation are handled by the parent company.
- Focus on Sales: Your core job is building a doctor network, managing chemists, and collecting payments.
Who is it for?
First-time entrepreneurs, medical representatives, or distributors looking for a low-investment business.
B. Third-Party Manufacturing
Third-party manufacturing is a model where a pharma brand outsources its drug manufacturing to another company while retaining full rights over branding, packaging, and marketing.
Key Features:
- Cost Efficiency: No need to buy land, and machines, or hire technical staff.
- Custom Formulations: Ideal for those with proprietary or niche products.
- Scalable Model: Ramp up or scale down production as per demand.
- License Requirement: You need a wholesale drug license and sometimes an FSSAI or manufacturing loan license, depending on product type.
- Quality Control is Your Responsibility: Choose your manufacturers carefully, and conduct regular audits.
Who is it for?
Startups focused on brand building, marketing innovation, or niche product categories.
C. Own Manufacturing Plant
Definition: You set up a complete manufacturing facility—from procuring land and machinery to hiring staff and complying with government regulations.
Key Features:
- High Capital Investment: Equipment, cleanrooms, HVAC, water systems, manpower, etc.
- End-to-End Control: From API selection to finished dosage forms.
- Long-Term Scalability: Ideal for large-scale production or product portfolios.
- Export Readiness: Better control over WHO-GMP, EU-GMP, and USFDA certifications.
- Custom R&D and IP: Create your formulations, control shelf life, and manage sourcing.
Who is it for?
Well-funded companies or established players aiming to enter high-margin segments like oncology, critical care, or international markets.
Comparative Analysis: Key Factors for Startups
| Factor | PCD Franchise | Third-Party Manufacturing | Own Manufacturing Plant |
|---|---|---|---|
| Initial Investment | ₹50,000 to ₹5 lakh | ₹2 lakh to ₹10 lakh (depending on product range) | ₹1 crore to ₹10+ crore depending on scale |
| Infrastructure | Office | Office + Warehouse | Full-fledged plant + QA/QC labs + compliance setup |
| Licensing | Retail or wholesale license only | Need wholesale + FSSAI (if nutraceuticals) | Manufacturing license, GMP, GLP, pollution control, etc. |
| Control | Very low (limited product range, dependency) | Medium (brand ownership, choose your vendors) | Very high (complete autonomy over R&D and operations) |
| Scalability | Limited | High (dependent on market demand) | Unlimited (if managed well) |
| Profit Margins | Moderate (15–25%) | High (15-20% depending on products) | Very High (10-20%+ if efficiently run) |
| Time to Market | Immediate (1–2 weeks) | Moderate (3–6 weeks) | Slow (12–24+ months setup) |
| Compliance Burden | Handled by parent company | Must handle audits, quality checks | Full responsibility including regulatory inspections |
Which Model Suits Your Startup?
Bootstrapped Startups → Go for PCD Pharma Franchise
- Minimal capital investment
- Quick market entry
- Low operational hassle
- Ideal for district-wise expansion
Innovators or Niche Marketers → Choose Third-Party Manufacturing
- Custom formulation for diabetic care, cardiac, skincare, etc.
- Retain branding rights
- Flexibility to switch vendors
- Partner with Laafon Galaxy Pharmaceuticals or Glauben Pharma
Well-Funded Companies → Set Up Your Own Manufacturing Plant
- Long-term play for high profits
- Build international partnerships
- Control over quality, cost, and timelines
- Good for players targeting oncology, injectables, or export markets
I make it easy for you to decisions making
| Question | Recommended Model |
|---|---|
| Have a tight budget? | PCD or Third-Party is for you |
| Want to build your own brand? | Third-Party or Own Plant right choice |
| Need fast market entry? | PCD Franchise will be the best. |
| Looking to export in future? | Own Manufacturing Plant is the only. |
| No regulatory experience? | PCD (mfgr. handles it) |
| Want control over R&D/innovation? | Own Manufacturing Plant |
Case Studies
Case 1: PCD for Regional Domination
Background: A medical rep from Gujarat started a PCD franchise with an investment of ₹1.5 lakh.
Strategy: Focused on general medicine and pediatric range.
Result: Built a strong doctor network across three districts. Now expanding to dermatology and gynecology.
Key Takeaway: Start small, focus on one segment, and scale geographically.
Case 2: Third-Party for Diabetic Care
Background: A mid-sized pharma marketer wanted to enter the diabetic segment without a manufacturing setup.
Strategy: Tied up with two contract manufacturers with WHO-GMP certification.
Result: Launched 12 products under their own brand. Partnered with endocrinologists across 5 states.
Key Takeaway: Ideal for segment-focused marketing with minimal infrastructure.
Case 3: Own Plant for Oncology
Background: A well-funded startup raised ₹15 crore via venture capital.
Strategy: Built a fully automated facility for oral and injectable oncology drugs in Himachal Pradesh.
Result: Secured WHO-GMP, planning for USFDA approval. Exports started in 6 countries already.
Key Takeaway: Big risk, big rewards—perfect for experienced teams and niche markets.
Conclusion
There’s no one-size-fits-all approach when it comes to entering the Indian pharmaceutical market.
- PCD gives you a fast, low-risk entry into the market—perfect for beginners.
- Third-party manufacturing offers control and brand ownership—ideal for marketers and niche innovators.
- Own Manufacturing gives ultimate control and scalability—suitable for well-capitalized, long-term players.
Before jumping in, revisit your goals:
- Are you ready to build a brand?
- Can you manage compliance and operations?
- What’s your risk appetite?
Choose your model wisely. And remember—many successful pharma companies started with PCD or third-party models including Mankind and Leeford, and later graduated to own their plants. You can too.
Ready to Take the Next Step?
- Looking for a reliable PCD Pharma partner? Explore Irene Pharma, Vibcare, or Orange Biotech.
- Need a WHO-GMP-certified third-party manufacturer? Check out Albia Biocare or Elkos Healthcare.
- Planning your own pharma plant setup? Consult experts in pharma machinery, layout, and licensing.
References:
- Indian Pharmaceutical Industry-IBEF
