Consumer Products Drug Development
Let’s talk about drugs…no, no…the GOOD ones, ya know, the ones that actually help us stay healthy and live better lives. Because if you work for a large consumer products company who develops, among other things, medicines for the general public, you know that it takes a LOT of work to make that happen. And you know what that means…You have to work out a process to make it into larger quantities, you have to get that process validated, you have to test it, you have to get approval of the Food and Drug Administration. And then you have to package it. That sounds exhausting! AND…that’s only the beginning. But if you want the contract for supplying and/or manufacturing, that’s what it takes. And you have to work out a supply agreement. And often, that begins 3 years in advance of the drug going to market!
And that’s where the negotiation gets hot. Now you, the developer, may very well have the best scale-up processes, but maybe your partner wants to do it in-house or go to another company for the manufacturing and you’re simply being asked to help set it up. Is that a real threat or just a tactic designed to lower your expectations?
But let’s say they’re going to go ahead and give you the business. With a few years until the drug hits the market, you plan to ask for a certain percentage over full factory cost up front, but wait…won’t they then know your margins? THAT’S not good, now is it? With the cost of raw materials and labor consistently on the rise, isn’t it too difficult to forecast that? Maybe you need to rethink your pricing model.
Are there other issues just as important as pricing? What about the payment terms? What about lead times? What about the dreaded “Failure to Supply” if manufacturing gets held up for some reason (gee, THAT never happens!). And what does that really mean? Failure to supply all of it? A certain percentage of it? Oh and, by the way, don’t you also have to discuss who owns the IP? Is that a potential deal-breaker?
With so many moving parts and considerations in such a deal, consider this:
HOW YOU NEGOTIATE THE DEAL CAN BE JUST AS IMPORTANT AS THE DEAL ITSELF!!
Let Mobus Creative Negotiating help you navigate these negotiating landmines.
Mobus…better agreements, better relationships. www.mobusinc.com
Copyright Mobus, Inc. 2014.
Nice work here Marc.