- DMSA negotiations routinely stall due to templates being issued before commercial terms are agreed
- A six-stage framework developed with Keystone Law puts the term sheet agreement ahead of any legal drafting
This infographic maps a structured timeline for CDMO contract negotiations, developed in collaboration with Gerry Kennedy, Commercial and IP Partner at Keystone Law and formerly of Lonza, who discussed the framework on the PharmaSource podcast.
The core problem Kennedy identifies is that legal templates arrive before the two sides have aligned commercially. The receiving party marks up based on misunderstandings, and the document begins to bounce back and forth — each cycle adding weeks to the timeline.
“These documents ping pong back and forth. Where the relationship starts going sideways is often due to a lack of communication.”
Gerry Kennedy, commercial and intellectual property partner, Keystone Law
The framework proposes resolving all commercial terms — pricing, batch quantities, cancellation, capacity, etc. — through a plain-language term sheet (Days 7–21) before any legal template is introduced. Once agreed, legal teams translate those terms into the DMSA, with a lawyer-to-lawyer call recommended before the first draft is sent to explain intent and set a collaborative tone.
Once the term sheet is agreed, legal teams translate those terms into the DMSA, with a lawyer-to-lawyer call recommended before the first draft is sent to explain intent and set a collaborative tone. While the framework typically shows the CDMO preparing the first draft, Gerry notes this is interchangeable — either party can lead on drafting depending on circumstance. Simultaneous negotiations on related documents — including the Scope of Work and Quality Agreement — run in parallel.
The target is a maximum of two to three mark-up cycles in the DMSA negotiation phase, with signature by Weeks 8–12.
“Schedule more discussions to delve into the details of negotiated terms, eliminating misunderstandings, with fewer mark-ups being exchanged — all leading to a quicker signature of the DMSA and an improved relationship.”
Gerry Kennedy, commercial and intellectual property partner, Keystone Law
For small biotechs without established legal resources, Kennedy advises against creating a proprietary template. Working from the CDMO’s template, with specialist legal support, is typically faster — provided protections against being deprioritised for larger customers are explicitly addressed in the contract language.
Listen to the full conversation with Gerry Kennedy on the PharmaSource podcast.
