Rights and Liabilities in Manufacturing the Drugs Under Loan License

Q: We wish to enter in the manufacturing and selling of drugs. However, as of now, we are not in position to establish our own manufacturing unit. Kindly advise us, what arrangements can be done, and how we can enter in this business without having our own manufacturing unit, under the provision of Drugs & Cosmetics Act?
– M. Geetey DalalA: As per the provision of Drugs & Cosmetics Act, if you are not having your own manufacturing unit, you can enter into the business of drugs manufacturing and trading. For that you may enter through the Loan License, by which you can avail the facilities of other drug manufacturer and within the meaning of Loan License you will be treated the manufacturer. The Loan License can be applied to the concerned authority to manufacture for sale or for distribution of drugs. On applying, the licensing authority may issue the license to the applicant who intends to avail the manufacturing facilities owned by a licensee to manufacture the drugs. The Licensing Authority shall, before the grant of a loan license, satisfy himself that the manufacturing unit has adequate equipments, staff, capacity for manufacture, and facilities for testing, to undertake the manufacture on behalf of the applicant for a Loan License.

Since such license is given to the person who uses the premises of other manufacturer, therefore called Loan License. Here, loan licensee is bound to comply with the provisions of the Act and Rules and any rule subsequently made under Chapter IV or any other relevant chapter, if any, of the Act. The Loan Licensee shall test each batch or lot of the raw material used by him for the manufacture of his products and also each batch of the final product and shall maintain records or registers. The Licensee shall allow an Inspector to inspect all registers and records maintained under the rules and shall supply to the Inspector such information as he may require for the purpose of ascertaining whether the provisions of the Act and the rules have been observed.

Therefore, it is opined that you can be the manufacturer and trader of the drugs even in case you don’t have your own manufacturing unit and establishment. However as suggested above, being Loan Licensee you will have to comply the requirements of the act & rules including the rules made under chapter IV or any other relevant chapter, if any. Since, in case of non-compliance or failure of any drug you as Loan Licensee will be held liable.

Dr. Javed Hasan, Advocate
(from New Delhi)
For, Drugs & IPR Laws
Email : info@alfauniversallaw.com


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