Contract manufacturing in generic drugs, and who actually makes the pill

For the federal fiscal year that began on Oct. 1, 2026, FDA expects to bill 247 drug plants as contract manufacturers. Each is a finished-dose factory named in at least one approved generic drug application but in none held by the factory's own owner. Ninety-two are in the United States and 155 are abroad, according to the Federal Register notice that set fiscal 2027 generic drug user fees¹.

Those 247 sites are a third of the 735 finished-dose plants the agency expects to bill this year, up from 30 percent in fiscal 2023. A large share of generic tablets, capsules and injections sold in the US are made by a company other than the one that holds the FDA approval, and often by a company other than the one whose name is on the pharmacy bottle.

Contract manufacturing is legal, routine and closely regulated. It also shapes how quality problems travel, because one plant can make product for several approval holders at once. The label tells a patient very little about which plant made a given bottle.

How many contract plants FDA counts

FDA does not publish a list of contract manufacturers. The closest public count comes from the Generic Drug User Fee Amendments (GDUFA), which charge a yearly fee to every finished dosage form (FDF) facility named in an approved generic application. A plant owned by the application holder or an affiliate pays the full FDF fee. A plant that makes product only for other companies' applications pays the contract manufacturing organization (CMO) fee, which the statute fixes at 24 percent of the FDF fee. For fiscal 2027 that works out to $55,208 for a US contract plant and $70,208 for a foreign one, against $230,033 and $245,033 for an owner's plant, the notice shows¹. Our GDUFA explainer covers the rest of the fee schedule.

GxRadar compiled the facility counts FDA used to set those fees in each year of the current five-year cycle, from the Federal Register notices for fiscal 2023³, fiscal 2024¹³, fiscal 2025¹⁴, fiscal 2026² and fiscal 2027¹.

Two things stand out. Contract plants grew from 204 to 247 over five years while owner-operated plants barely moved, from 469 to 488. And nearly all of that growth happened abroad. US contract plants numbered 90 in fiscal 2023 and 92 now; foreign contract plants rose from 114 to 155, or 63 percent of the contract total. These are fee-setting estimates, built from approved applications and checked against inspection records to drop facilities that no longer operate. They cover generic finished-dose plants only, so they leave out ingredient makers, testing labs and packagers.

Who answers for a drug someone else made

Federal rules settled the basic question long ago. A 1975 regulation on contract facilities says FDA "regards extramural facilities as an extension of the manufacturer's own facility," and it names testing laboratories, contract packers or labelers, and custom grinders as examples, according to 21 CFR 200.10⁵. The agency's inspection power reaches those sites just as it reaches the owner's plant.

Part 211, the core manufacturing rulebook, puts the final call on the company that owns the product. Its quality control unit "shall be responsible for approving or rejecting drug products manufactured, processed, packed, or held under contract by another company," 21 CFR 211.22⁶ says. The contract plant carries its own obligations under current good manufacturing practice (CGMP) on top of that, so both firms can be cited for the same batch. Our explainer on CGMP covers those rules in more detail.

In November 2016, FDA issued final guidance on quality agreements⁴, the documents that spell out which party does what. The agency recommended a written agreement between every owner and contract facility covering who tests incoming materials, who approves process changes, how deviations are reported and investigated, and who makes the final release decision. FDA said these agreements should sit apart from commercial contracts about price, delivery and liability, and that inspectors may review them. It was blunt about their limits, writing that "quality agreements cannot be used to delegate statutory or regulatory responsibilities to comply with CGMP."

Why an approval holder hires another plant

FDA's guidance lists the work that commonly gets contracted out, from formulation, fill and finish, and chemical synthesis to analytical testing, packaging, labeling and sterilization. Its stated rationale is a single sentence. "Contracting can enhance speed and efficiency, provide technological expertise, and expand capacity," the guidance says. For a company holding many approvals, some of them for low-volume products, renting time on another firm's validated line can make more sense than building one. Margins on older generics are thin, as our piece on the economics of making a generic lays out.

FDA has also described the cost of that choice. In its 2019 report on the root causes of drug shortages¹⁰, the agency wrote that the supply chain had become "longer, more complex and fragmented" as companies moved production overseas and "increased the use of contract manufacturers." That complexity, the report said, can limit how quickly manufacturers raise output after a disruption. Our explainer on why drug shortages happen follows that thread.

When the plant has a problem

A compliance problem at a plant follows every application that names it. FDA's FY2025 Report on the State of Pharmaceutical Quality⁹ examined nearly 10,000 original applications and supplements received in fiscal 2024 and 2025 that needed a facility assessment. As of May 2026, 28 percent had received a complete response letter, FDA's formal notice that a submission cannot be approved as filed. Of those letters, 43 percent (12 percent of all submissions) were "facility withholds," holds placed because of concerns about the plant that would make the drug.

More than half of the withholds traced to facilities already carrying an official action indicated (OAI) status, or a preliminary OAI flag, before the application arrived. "Many of these CRLs could have been prevented had the submission included only facilities with a compliant status," the report said. One of the citations most often behind withholds concerned oversight itself, quality control unit responsibilities or procedures "not written or followed."

FDA's report also counted 1,309 drug quality inspections in fiscal 2025, including 61 conducted by foreign regulators under mutual recognition agreements. Twenty-two percent ended with no action indicated, 60 percent with voluntary action and 18 percent with official action. Our guide to inspections, Form 483s and warning letters explains those categories. Recall records show the split from the other end. Of the 18,076 drug recall records in FDA's enforcement data from June 2012 through Oct. 28, 2026, which feed our recalls page, about 5,500 product descriptions include a "manufactured for," "Mfd. for" or "distributed by" line, GxRadar found.

What the bottle says, and what it leaves out

A drug label has to name the manufacturer, the packer or the distributor, so a bottle can legally carry only the distributor's name. Under 21 CFR 201.1⁷, a company name printed with no qualifier is a representation that the firm is the "sole manufacturer." A distributor's name must carry a phrase such as "Manufactured for," "Distributed by" or "Marketed by." That phrase is the clearest public signal that someone else made the product. It does not say who.

FDA's listing data show how far the names on bottles drift from the approvals behind them. GxRadar counted finished-product listings in the openFDA NDC directory¹¹ (data as of Nov. 3, 2026) for six common generics, counting single-ingredient listings marketed under generic applications across all strengths of their oral forms. We compared the number of distinct labeler codes, the first segment of the National Drug Code, with the number of distinct generic applications those listings cite.

Levothyroxine shows the gap most clearly, with seven applications behind 27 labeler codes. Some of the extra labelers are repackagers that buy bulk bottles and relabel them for pharmacies, clinics or mail-order programs. Others are private label distributors, which FDA's registration rules⁸ (explained in GxRadar's guide to establishment registration) define as a firm "under whose label or trade name the drug is commercially distributed" without making, repacking or relabeling it. Neither group shows up in the GDUFA contract-plant count, which covers only finished-dose factories.

The name on the bottle is a poor guide to the factory, and a change of supplier at the pharmacy can mean a different plant even when the name stays the same. Our explainer on the NDC number shows how to read the labeler code, and why your pill changed color covers what a supplier switch looks like. A pharmacist can look up which company supplied a given fill.

GDUFA III, and with it the fiscal 2027 rates, expires on Sept. 30, 2027, FDA's GDUFA page¹² notes. The agency has opened its reauthorization process for GDUFA IV, covering fiscal 2028 through 2032, and the fee formula for contract plants is part of what Congress will be asked to renew.