Insight journal - Deals and alliances

Manufacturing and Supply partnering: global trends in pharma industry

Posted on 22 September 2014

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The article here analyses the recent manufacturing and supply partnering trends in the pharma industry. A supply or manufacturing agreement is normally between a product manufacturer and product owner in which an owner outsources the manufacture and supply of its product(s) to the service company in a defined territory.

Both manufacturing and supply agreement have been present in the pharmaceutical industry from the beginning, as innovators have often sought external expertise for manufacturing and supply of finished product.

According to Current Agreements life science deals and alliance database, there have been over 3000 manufacturing and supply deals in the last five years.

Figure 1: Manufacturing and supply partnering since 2009









Source: Current Agreements, 2014

The figure above indicates that the number of option and evaluation agreements announced is seeing a slow decline since 2010. The reason for the sudden dip in the last few years could be due to the risks in dealing with outsourcing companies and other third parties in the manufacturing process that could slow down production or affect quality. Also, the potential impact of climate change on design, marketing and manufacturing of products could effect a change in strategy among companies.

Few attributes of pure manufacturing or supply deals:

  • Pure manufacturing or supply deals tend to occur when the product is already marketed or at registration phase.
  •  Manufacturing or supply deals are agreed in order to enable a primary marketer to extend its capabilities in order to respond to a growing or uncertain market for a product. In effect, the manufacturer is acting as a flexible out sourced contract manufacturer, providing product on demand.

Few attributes of multi-component manufacturing or supply deals

  • It can often be a precondition of a partnering deal that a licensee has its product manufactured by the licensor once the product is launched. This is because the licensor is seeking to control product quality, enhance margins, benefit from manufacturing efficiencies, and prevent manufacturing know-how for falling into the hands of competitors.
  • The manufacturing/ supply expertise may be considered one of the core value added components offered by a licensor, for example in drug delivery.

A useful means of understanding best practice in manufacturing and supply dealmaking is to follow the activities and deal terms used by the most active companies in a certain type of deal.

Figure 2: Most active manufacturing and supply dealmakers 2009-2014








Source: Current Agreements, 2014

It is a significant finding that most of the high value partnership deals involve big pharma as the licensee. This is the primary means by which big pharma have acquired pipeline candidates. However, the table below is topped by a recent equity purchase deal between Walgreens and Alliance Boots with an option to acquire the remaining shares of Alliance Boots.

Figure 3: Top manufacturing and supply deals by value since 2009










Source: Current Agreements, 2014

The data in this article was abstracted from the Manufacturing and Supply Partnering Terms and Agreements in Pharma, Biotech and Diagnostics report, which provides comprehensive understanding and unprecedented access to the Manufacturing and Supply Partnering agreements entered into by the world’s leading biopharma companies. In addition the report provides details of deals broken down by deal type, therapy focus, and company A-Z. The report provides a detailed understanding and analysis of how and why companies enter option and evaluation deals - more details here.


The above information has been abstracted from the following resources:



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Read: more on manufacturing deals in pharma, biotech, life science partnering deal news, insights and glossary

Read: more on supply deals in pharma, biotech, life science partnering deal news, insights and glossary

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