“Contract negotiation are often perceived as a power game, but in reality, it has to be a collaboration. ” says Dr. Roxana Timmermans
“There are no winners or losers—only opportunities for mutual gain. Without a “win-win” mindset, the chances of establishing a long-term relationship diminish significantly.”
Dr Roxanna Timmermans has extensive experience in strategic pharmaceutical supply chain management, and global sourcing from companies such as Biogen and Bristol Myer’s Squibb. She is an expert in negotiating sustainable partnerships that streamline operations, optimise costs, and enhance global access to life saving treatments.
In the latest episode of the PharmaSource podcast she explains why contract negotiations are of critical importance in biologics and pharmaceutical outsourcing, and shares her advice on how to be successful in creating robust, well-documented partnerships.
Why negotiation skills matter in pharma contract manufacturing
“Proper negotiation, is the foundation of a strong partnership” says Roxana. In the highly regulated world of pharma contract manufacturing, precise terms are essential.
“In such a regulated industry, you need to ensure quality compliance, and you have to be able to really write this down in order to be able to measure it. Negotiators must strike a balance between managing costs, risks, and opportunities and to have it documented. “
Negotiation skills are not just desirable; they are paramount, says Roxana. “If you not trained you will put the company in a very damaging position.”
“Companies must invest in contract negotiation skills. It is important for trained negotiators to understand cultural differences, the needs of company has completely different than yours, all the technicalities that negotiation requires.
“The importance of good contracts needs to be understood at highest level of the organisation.”
“A business relationship is defined – at least on the planet Earth – so that both sides are protected. Contracts aren’t looked at when things are going well. But if we don’t know how to write a contract, there will come a moment of chaos and relationships when something goes wrong. It’s the same as any marriage – when people get married they aren’t expecting the breakup that happens 20 years later.”
Navigating hidden pressures
From the moment where the negotiation starts, there will always be some critical tensions, but the job of the negotiators from both parties, is to align and advocate for their organization’s interests in order to establish this Win Win.
Some demands arise from within an organization, hidden from external view. “There is a huge part that is hidden in negotiations. Part of the demands that are made you do not know where this is coming from, and usually is coming from within their organisation.”
Positioned between external realities and internal dynamics, negotiators must rally stakeholders to support their cause.
“The negotiator it’s always in the middle. You need to align your stakeholders in order to support your negotiation otherwise you are not going to be successful. “
Three pillars of robust contracts with CDMOs
When it comes to crafting a solid contract manufacturing contract, Roxana explains there are three fundamental pillars that deserve careful attention:
1. Technical specifications
The first pillar centres around the technical and technological aspects.
- Product Definition: Clearly state the product details, including its purpose, specifications, and intended use.
- Quantities: Specify the desired production quantities.
- Market Considerations: Acknowledge the significance of market dynamics. In a regulated industry, adherence to Good Manufacturing Practices (GMP) and quality control standards is paramount.
- Supply Chain Management: Address minimum order quantities, tiers, and any campaign-related advantages or negotiated pricing adjustments.
2. Obligations and Risk Mitigation
The second pillar revolves around obligations and risk management.
- Third-Party Intellectual Property (IP) Liability: In extreme cases, how will IP issues be handled? Define governance mechanisms and responsibilities.
- Indemnifications and Liabilities: Clearly outline indemnification clauses and the types of liabilities involved.
3. Payment Terms and Provisions
The third pillar focuses on practical matters related to payment and contract termination:
- Payment Timeframe: Specify the number of days within which you must remit payment to the supplier.
- Shipment Delivery: Detail the logistics of product delivery.
- Dispute Resolution: Address dispute resolution procedures.
- Termination Clauses: Don’t underestimate the importance of termination provisions to safeguard both parties.
Roxana says she is surprised by how many people forget about termination clauses. “It’s super important” she says.
“Look at the mergers and acquisitions and changes in company control can occur unexpectedly. It’s a very fast-moving landscape at the moment”
The importance of preparation
When it comes to negotiation, thorough preparation is your secret weapon. Roxana shares these tips to be prepared before you enter the room:
1. Know Your Presentation Inside Out: Whether it’s an Excel file or a slide deck, your presentation holds critical information. Understand it thoroughly and identify key project-dependent details that can sway the negotiation in your favour.
2. Strategic Zones for Negotiation. Within your presentation, pinpoint areas ripe for negotiation which you will have agreed in advance with stakeholders. These zones are where you can flex your skills and advocate for what truly matters.
“In procurement you must make it very clear to the stakeholders that these are the limits of the negotiations – this is the best you can do and this is the worst you can do. And with these limits, you have to make it work.”
3. Bring Your Calculator. Be agile and calculate figures on the fly—whether it’s cost savings, ROI, or other metrics. Surprises won’t catch you off guard when you’re armed with facts.
“I’m a big advocate of pen and paper.” says Roxana. “You will see me in all the negotiations with a whiteboard going and write them down. I believe you act immediately, so if what you’re telling me is true, I want to have it written down. In that moment, you see the entire picture.”
Don’t miss Dr. Roxana’s talk at CDMO Live: Sustainable Frontiers: Revolutionising Contract Manufacturing through Green Outsourcing.
