A panel of procurement and commercial leaders argued that the most consequential CDMO negotiations happen after the contract is signed, covering risk-sharing structures, governance discipline, and the conditions under which trust compounds or collapses.
The session was chaired by Matthew Holt, Co-Founder of Collaborative Sourcing, with panelists Salomon Engels, Head of External Manufacturing at Par Health; Mark Goemans, Chief Commercial Officer at Bora Biologics; and Thomas Thunnissen, Director of Procurement and Partnerships at Leyden Labs. The discussion moved through four stages of the partnership life cycle: initial negotiation, contract construction, governance, and risk-sharing.
Starting the Negotiation
Engels opened by arguing that price, while unavoidable, is rarely the lever that determines outcome. “Price is just one element of the negotiation,” he said. “What value are we adding? It’s not only a win-win, but it’s a win-more concept.” He described a preference for early conversations around capacity investment and line development, framing procurement as a question of mutual growth rather than cost extraction.
Thunnissen, speaking from the perspective of an early-stage, revenue-free biotech, said speed and flexibility carry as much weight as price for companies that cannot see far ahead commercially. He described the ideal contract manufacturing organization (CDMO) partner as one that functions like a sailboat, able to adjust quickly when the wind shifts. Goemans, from the CDMO side, added that transparency on requirements matters more than polish. He said biotechs sometimes underestimate that CDMOs are the manufacturing experts, and that getting the initial brief right, including the uncertainties, leads to better solutions.
What Contracts Reveal
The panel drew on a real negotiation that Engels and Goemans had conducted against each other, a deal valued at approximately $90 to $100 million, concluded during the COVID-19 pandemic. The deal had stalled before Goemans entered from the CDMO side and reframed a dispute over late-delivery penalties by asking what the CDMO would receive if it over-performed. A bonus-malus structure, which applies financial consequences in both directions depending on whether performance falls short or exceeds targets, broke the deadlock. Engels described the final terms as genuinely fair to both sides. Goemans noted he used the same mechanism in subsequent negotiations.
On contract red flags, Goemans said very rigid IP clauses that leave no room for a CDMO to learn from the manufacturing process are an early warning sign. Inflexible forecasting mechanisms and an unwillingness to absorb volume swings are also problematic, because both parties know those swings will come. Specifications, he noted, need boundaries but also room. He cited a recent case where a biotech’s manufacturing was too consistent in early batches, creating a potential problem at registration because the specification window had effectively narrowed before the product reached regulators.
Engels listed his non-negotiables: take-or-pay clauses and minimum volume commitments are immediate turnoffs, particularly for products still in the regulatory approval pipeline. He presented an alternative framing, replacing volume commitments with reserved capacity agreements or co-investment in capital expenditure (CapEx), which allocates risk without tying the sponsor to volumes that may not materialize. Scope definition was a separate priority. “If you have the scope wrong at the start, you get scope creep, you get cost increases that may drive the product to not be financially viable,” he said, adding that quality and technical operations teams must be in the room during scoping, not brought in afterward.
Governance in Practice
Engels described a vendor segmentation model as the foundation of any governance program. He segments suppliers by revenue contribution and strategic importance, then calibrates the intensity of interaction accordingly: operational supply meetings weekly, business reviews monthly or quarterly, and joint steering committees above that. CEO-to-CEO contact at the top for the most critical relationships. “Focus on the big fish,” he said. “Focus on the ones that are driving value.”
Goemans argued that governance structures lose their purpose when the teams executing them forget why the structure exists. He described telling a junior project manager to call a client every week, not because there was always something urgent, but because by the sixth call, the relationship was deep enough to absorb a difficult conversation. Without that foundation, he said, losing trust triggers a chain reaction: “You start losing time, solutions. And then the worst thing that happens is that you’re assigning the wrong people to the problem. You start losing talent.” He recommended embedding personal client presence inside CDMO facilities where regulatory rules permit, as a way to keep both sides connected to what is actually happening in manufacturing.
Sharing Risk
On risk, the panel converged on the view that unilateral risk allocation produces worse outcomes than shared structures. Thunnissen said the primary risk for a VC-backed biotech is missing the next value inflection point, which means assurance of supply and short-term capacity availability rank above almost everything else. Engels said risks need to be visible and agreed at executive level before they become problems: know them, flag them early, and embed the framework for managing them in a master service agreement (MSA). Goemans argued that CDMOs have little incentive to find manufacturing efficiencies if the sponsor captures all the savings, and that cost-sharing arrangements change the dynamic. He acknowledged the asymmetry: the commercial upside for a successful biotech is typically much larger than anything a CDMO can realize, which creates room to offer incentives without giving away margin.
