Blog | May 4, 2021

Two Tips On Navigating C&G Outsourcing Relationships In A Competitive Landscape

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By Anna Rose Welch, Editorial & Community Director, Advancing RNA


It can be a bit overwhelming to keep tabs on all the movement occurring in the C&G industry today. You can’t open a newsletter or read an article without learning about company launches or acquisitions, clinical/manufacturing/regulatory milestones (or pitfalls), new partnerships, or facility ribbon cuttings/shutterings. While most of the glitzier headlines on C&G manufacturing highlight firms’ decisions to keep manufacturing in-house, outsourcing still plays — and will always play — a critical role in the development of these complex therapies.

In a previous article, I shared several C&G manufacturing and outsourcing landscape learnings I garnered from a recent discussion with Mark Davis, founder and principle of NegotiumBio.

In particular, Davis unpacked the history behind the current C&G outsourcing landscape, as well as how the push towards consolidation in the CDMO space could impact C&G companies.

However, he also recommended two critical best practices to help companies manage short- and long-term partnership needs and contract negotiations. Though demand for outsourcing partnerships may be high, Davis urges innovators to not let the current competition for CDMO capacity dictate how they approach their partnership decisions now — and in the future.   

Long-Term Vision Is Important, But Don’t Overlook The Present

 An innovator’s partnership strategy will be dependent upon the stage of development and the company’s (hopefully) access to financial resources. In the earlier phases of development for a cell or gene therapy, there may be more tolerance for risk and error compared to when you’re approaching later-stage development. Financially, this is also a far from static time in the development lifecycle; surpassing the proof-of-concept phase can mean the ability to raise additional funding in the near future for the C&G company. Increased funding can open doors to additional or higher-profile partnerships with CDMOs that have more established quality systems and expertise. As such, companies approaching the end of their phase 1/2 trials should view this as a critical inflection point to step back and evaluate how their current partnerships are working or could work in the future.

“This doesn’t necessarily mean you neglect your original partnerships,” Davis clarified. “If it’s working and you’re finding that your partnership is delivering, why mess that up?”

But this also doesn’t mean that an early stage biotech needs to approach their early partnerships as the be-all, end-all of their commercialization journey, either. There’s a delicate balance between managing short-term needs and long-term goals — especially for such complex therapies.

“Though it’s important to think about the long-term and what your next steps will be, you also don’t want to overlook what is going on right now in front of you with your partners,” Davis explained. “There’s a benefit in approaching your partnership in the here-and-now by saying, ‘I need X, Y, Z right now; here is what those needs may look like if we successfully reach the market; here is where we’re facing shortcomings in this partnership and here is how you [the vendor] currently stand in our development plans.’”

In other words, given the quickly shifting landscape today, C&G companies must remain cognizant that their partnerships will evolve, especially given the personnel, management philosophy, and market dynamic changes that will no doubt occur over time.  

Avoid This Critical Oversight In CDMO Negotiations

Given just how much buzz there currently is around capacity constraints, Davis had one word of caution for innovators seeking to establish partnerships today: don’t be too quick to whittle down your partnership options to one final player. Engaging in final partnership discussions with only one CDMO player can often result in what he referred to as the “car salesman dilemma.” It’s a situation we’ve all likely faced in the past; just as you think you’re going to nail down a deal, the salesman goes in the back to check something out. When they return — usually a significant amount of time later — with the paperwork (now containing some unexpected small print), you are already psychologically invested and “just want to get the heck out of there,” Davis said. 

Innovators can run into a similar dynamic when establishing their CDMO partnerships. After a few weeks or months of discussion with an anticipated partner, negotiations may become less desirable for the innovator at the finishing line. At this point however, the innovator has already invested a significant amount of time grooming that one partner. So, to be faced with less favorable negotiation terms that close to the end is a tricky place to be, especially when a firm is anxious to begin manufacturing or facing pressure at the leadership level to lock down a partnership.

“My advice for C&G innovators is to never go into this negotiation with just one firm,” Davis concluded. “You can pick a primary, but make sure you also line up a secondary partner and engage in final negotiations with them both. This strategy will add additional work and require some skilled juggling. But this is worth it, given just how big a decision this is for those of you managing partner selection. Making sure you’re weighing at least two options as you approach the finish line means you don’t find yourself at the end of lengthy negotiations fully invested, but with your hands tied.”