74 TWENTYFOURSEVENBIOPHARMA Issue 1 / March 2026 FLAMMA After two decades straddling the sponsor and CDMO sides, I’ve watched gorgeous proposals fall apart the moment real chemistry, real analytics, and real supply chains enter the chat. The fix isn’t cynicism, it’s discipline. One needs to make partners show their work, structure risk up front, and run a Plan A and Plan B supply architecture that builds resilience without abandoning cost efficiency. Industry data confirm why this matters right now. Pricing is competitive yet reliability and U.S. capacity still command premiums, and the outlook points to China and the U.S. leading growth into 2026.7 1) Market Reality: Competitive Prices, Premiums for Reliability Analysts at CPHI Frankfurt noted 2025 pricing turned more competitive versus 2024, but sponsors continued to pay up for proven delivery and domestic capacity. These are the things that actually protect timelines and filings. The 2026 growth outlook places China and the U.S. in the strongest positions for CDMO expansion.7 2) Beware the Low‑Bid, Late Scope‑Change Trap When budgets tighten, low numbers multiply. Far too often, they are rescued later with change orders once you are captive to your timeline. The pattern has been especially acute amid fierce price competition and macro pressure. Meanwhile, buyers still pay more for high‑demand, high‑reliability slots1 (although I never understand how some CDMOs command reservation fees and contracts guaranteeing them 70% of production in perpetuity but that is for another article in the future). One needs to demand transparent risk registers, pre‑priced change‑order triggers, and early risk retirement as conditions of award so you aren’t paying for optimism six months into a project.7 3) Interdependence, Not Decoupling: Build Resilience, Not Illusions Even when the small molecule is not made in China, upstream inputs often are. Complete near‑term decoupling is impractical as critical inputs and RSMs remain concentrated.2,4 Smart sponsors counter this with a dual‑path strategy that keeps the efficient global route warm as Plan A while qualifying an ex‑China or alternate‑region pathway as Plan B, allocating a minimum volume to maintain the ability to switch if needed or required. 7 I have a customer doing this exact process to ensure supply chain stability all the well knowing that Plan B is significantly more expensive.
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