In the field of pharmacy, compounding (performed in compounding pharmacies) is preparation of a custom formulation of a medication to fit the unique need of a patient which cannot be met with commercially available products. This may be done for medical reasons, such as to be administered by a different route (ex: tablet to liquid), to avoid a non-active ingredient the patient is allergic to, or to provide an exact dose that isn't commercially available. Medically necessary compounding is referred to as "traditional" compounding. Compounding may also be done for medically optional reasons, such as preference of flavor or texture, or dietary restrictions.
Hospital pharmacies typically engage in compounding medications for intravenous administration, whereas outpatient or community pharmacies typically engage in compounding medications for oral or topical administration. Due to the rising cost of compounding and drug shortages, some hospitals outsource their compounding needs to large-scale compounding pharmacies, particularly of sterile-injectable medications.
Compounding bulk preparations of a given formulation as opposed to preparation for a specific patient is known as "non-traditional" compounding. Different jurisdictions have different rules regarding the applicability of regulations which apply to drug manufacturers to pharmacies which perform bulk compounding.