If are you willing to manufacture drugs in India and do not have your own space for manufacturing then here comes the solution for you all. With the help of a loan license for drug manufacturing, you can start manufacturing pharmaceutical products using the manufacturing facilities of another licensee.

So, if you don’t have your own production house then you can simply start the products by using this license. Therefore, you can apply for a Loan License for Drug Manufacturing in India.

In this guide, you will get to know about what is loan license, the process of applying, the documentation & other queries that you are facing before starting your business as a drug manufacturer.

What Is A Loan License?

A loan license is a legal authorization granted by the regulatory authorities. This is a permit for the manufacturing company or individual to manufacture goods. It is typically related to pharmaceutical drugs, using the manufacturing facilities of another company.

In simple words, this is a permit from the government through which one company can produce medicines for another company.

The company holding the loan license ensures the manufacturing process complies with all regulatory standards and requirements. However, the intellectual property rights and ownership of the drugs or products usually remain with the company that holds the original license or formula.

Benefits of Obtaining a Loan License For Drug Manufacturing

Before applying for the loan license for drug manufacturing let’s understand the advantages of having this. Because it is beneficial and avoids many unwanted issues for the smooth manufacturing of drugs.

Cost Effective Production

When a company uses the existing facility under the loan license then this will help them to avoid capital investments. This will reduce the cost and make the arrangement more affordable as compared to having your manufacturing plant.

Faster Market Entry

With the help of loan licenses companies can expedite bringing their products to market by leveraging manufacturing capabilities, enabling quicker production and distribution.

Focus on Core Competencies

When drug manufacturing companies outsource the work of manufacturing then they can simply focus on research, development, marketing, and optimizing resource allocation. Through this, you can simply stand out your work and grow your business quickly.

Regulatory Compliance

This will ensure adherence to the Drugs and Cosmetics Act and quality standards by leveraging an already-compliant facility. This will reduce the risk of regulatory hurdles.

Flexibility and Scalability

Provide the flexibility to test the new product lines without incurring significant costs. The option to scale production volumes based on market demand without long-term infrastructure commitments.

What Is The Loan License Agreement?

The Loan License Agreement serves as a legally enforceable contract between the licensor, who retains ownership of the manufacturing facilities, and the licensee, who is granted the privilege to utilize said facilities for drug manufacturing. 

This comprehensive agreement delineates the terms and conditions governing the utilization of the facilities. It encompasses meticulous specifications regarding quality control protocols, adherence to regulatory standards, and the delineation of financial obligations, including royalties or fees. 

The costs affiliated with the Loan License Agreement are subject to variation contingent upon several factors, notably the duration of the license term and the provision of any supplementary services extended by the licensor.

Who Is Eligible For A Drug Loan License In India?

The eligibility criteria for obtaining a loan license in India vary based on the sought license type. However, standard measures include:

1. Business Structure – The business must register as a Limited Liability Partnership (LLP), Private Limited Company, or public limited company.
2. Ownership – Indian citizens or entities must own and control the business.
3. Net Worth – The business must meet the requirements of RBI’s minimum net worth.
4. Capital Adequacy – Meeting RBI’s capital adequacy requirements is mandatory.
5. Business Experience: The business must possess at least three years of experience in the lending industry.
6. Background Checks—Owners and directors must undergo background checks to ensure they have no prior criminal or financial history.
7. Compliance with Laws – Full compliance with applicable laws, including anti-money laundering regulations, is necessary.
8. Insurance – Adequate insurance coverage is required to protect customers and the business.

It’s crucial to note that specific requirements may vary. Consulting a professional such as a lawyer or financial advisor is advisable to ensure awareness of all eligibility criteria and requirements.

List Of Documents Required For Loan License For Drug Manufacturing

When you apply for a loan license to manufacture drugs in India, you must attach a few mandatory documents with the application for registration form. The mentioned list only indicates the necessary documents. But as per the consultants, the documents vary as per your products and business needs. So before applying, you must consult with the experts first. The list of documents for loan license is as follows:

• Application Form – Fill out the application Form 27A for the drug manufacturing loan license in India.
• Cover Letter – Format a letter to the CDSCO regulatory authority to explain the intent of your business and provide application details.
• Proposed Site Plan – This includes a layout plan of the manufacturing premises.
• Site Master File – Submit detailed infrastructure, facilities and equipment documents that are required for the manufacturing of drugs and pharmaceuticals.
• Technical Staff Details – This documents contains information on the qualifications and responsibilities of technical personnel.
• Quality Control Documents – These include the specification, testing methods, and procedures.
• Agreement With Licensee – You must attach a copy of the contract with the licensee.
• Power Of Attorney – If needed, then you must submit a power of attorney authorizing representation.
• Declaration Of Compliance – The application provides the declare compliance with CDSCO and regulatory requirements.

Process To Obtain Loan License For Drug Manufacturing

What Is The Cost Of Loan License For Drug Manufacturing?

The cost of a loan license for drug manufacturing varies depending on the drug’s classification. Generally, Class A and B drugs incur lower fees, while Class C and D drugs typically have higher associated costs. Regulatory bodies determine the prices, which may be subject to periodic updates or revisions.

What Is The Validity Of a Drug Manufacturing Loan License?

Typically the validity of the loan license for drug manufacturing is 5 years. It may vary depending on factors such as the type of drugs being manufactured, compliance with regulatory requirements, and any specific terms and conditions stated in the license.

Renewal Process of Loan License For Drug Manufacturing in India

After 5 years you have to apply for the renewal of your license if you don’t want to bring any government hindrance in your work. We recommend you to apply earlier for the registration of renewal for a loan license in India. The steps are as follows or you can consult with the medical device registration expert for advice:

• Review Expiry Date – Ensure you are aware of the expiry date of your current loan license to initiate the renewal process on time.
• Prepare Renewal Application – Complete the renewal application form provided by the regulatory authority. Ensure all required information is accurately filled out and up to date.
• Gather Required Documents – Compile all necessary documents as specified by the regulatory authority for the renewal process. This may include updated site plans, technical staff details, quality control documents, and other relevant paperwork.
• Submit Application and Fees – Within the stipulated timeframe, Submit the completed renewal application and the prescribed renewal fees to the regulatory authority.
• Compliance Verification – Regulatory officials may conduct inspections of the manufacturing premises to verify compliance with regulatory standards.
• Await Approval – Wait for the regulatory authority to review your renewal application. Once approved, your drug manufacturing loan license will be renewed, allowing you to continue operations legally.
• Maintain Compliance – Throughout the renewal process and beyond, ensure continued adherence to all regulatory requirements and standards to maintain the validity of your license.

You can successfully renew your drug manufacturing loan license by following these steps and fulfilling all regulatory requirements

What Is The Renewal Cost Of The Loan License For Drug Manufacturing?

The loan license for drug manufacturing renewal costs several components. These include a Renewal Fee of ₹6,000 and an Inspection Fee of ₹1,500. Additionally, there is a Late Fee of ₹1,000 per month for overdue payments. 

It’s important to note that the total renewal cost varies according to the duration of the payment delay. Therefore, to determine the exact renewal cost, one must consider the base fees and any applicable late fees incurred due to delayed payment.

How will ELT Corporate help You get a Loan License For Drug Manufacturing?

ELT Corporate, a top-notch legal firm, simplifies the process of obtaining a loan license for drug manufacturing. Here’s how we make it easy for you:

1. Expert Guidance: Our experienced team provides expert support.
2. Documentation Assistance: We help prepare and organize all necessary documents.
3. Regulatory Compliance: We ensure strict adherence to legal standards.
4. Application Submission: We handle timely submission of your application.
5. Follow-up and Communication: We keep you informed and handle queries.
6. Customized Solutions: Our services are tailored to your unique needs.

With ELT Corporate, obtaining your loan license is stress-free and efficient. Let us handle the complexities while you focus on your business growth.