Efficient use of contract templates in the life sciences sector

The use of templates in contract negotiations is widespread among biotech and pharmaceutical companies. The extent to which and how efficient they are used in the life sciences sector varies greatly. Most large companies have a variety of contract templates with instructions for all types of contracts common in their business. Within certain types of contracts, further differentiation is often made, for example according to different typical cases, contractual partners involved and country-specific peculiarities. However, for many medium-sized and smaller companies, the number of contract templates used is relatively limited.

Advantages of the efficient use of contract templates

The efficient use of contract templates in the context of contract negotiations can lead to significant time savings, cost reduction and risk limitation. It not only helps to avoid errors and violations of legal requirements, but also makes it easier to focus on the issues that are really important from a business and legal perspective. It also improves the negotiation process by enabling the rapid submission of the first draft by your own company - with all the associated advantages – or at least making it easier to quickly identify the deviations of the other party's draft from your own standards.

Relevance of market standards for contract templates in the life sciences sector

Because of the internationality of the life sciences sector and the widely accepted market standards that have emerged for many of the contracts common in the industry, there is great potential for biotech and pharmaceutical companies to make contract negotiations more cost-effective through the efficient use of contract templates. Experience shows that at the end of contract negotiations, most contracts have come relatively close to the industry standards that are usual for the respective contract type. How time-consuming and difficult the process of concluding such a contract is depends not least on the quality of the contract templates used during the negotiations.

Important factors for drafting contract templates in the life sciences sector

In practice, it has been shown that contract templates can generally significantly speed up and facilitate negotiations in the life sciences sector if the following principles are taken into account when drafting them:

• A contract template in the life sciences sector should be tailored as specifically as possible to a typical case, the respective role as a contractual partner (e.g. customer or service provider) and a specific group of typical contractual partners (e.g. universities or companies). The more cases a contract template tries to cover, the longer it takes to make it “ready for use” for a specific project - if necessary with legal support.

• It is also important that a contract template in the life sciences sector contains clear instructions for which case and which contractual partner it can be used and, if it contains alternative regulations for different cases, in which cases which provisions should be applied or deleted.

• The content of a contract template in the life sciences sector should not deviate too far from the industry standard for the respective contract type. Within the usual market standard for a particular contract, there is regularly a certain scope for widely accepted typical solutions from which one side or the other can benefit in individual cases. As a rule, the limits of this scope should not be exceeded.

• The negotiation goals that are really important for your company from a business and legal perspective should be worked out when creating a contract template in the life sciences sector and clearly regulated in the contract. For each of these points, several fallback clauses based on the market standard should be prepared, which the company can quickly fall back on as a second or third best solution in contract negotiations if necessary. In order to avoid making the contract template too confusing, separate documents, e.g. in table form, may be a good idea.

• It is also important for a contract template in the life sciences sector to have a structure and language that is as clear and understandable as possible. The use of contract templates that have “historically grown” over many years and the structure and terminology of the contract being too heavily influenced by country-specific legal categories can lead to an unnecessary delay in contract negotiations. One should not be too afraid of using legal terms from Anglo-American law because definitions of such terms can often easily provide the necessary clarity according to the categories of your own law.

• Regular updates should ensure that a contract template in the life sciences sector meets all legal and regulatory requirements even if these change after it is first created. The same applies to contractual provisions that reflect the usual market standard for the respective contract.