Legal challenges with Indian One-Stop-Shop pharmaceutical CMO – You say ‘tomato’ I say ‘tomatoes’, still sliced the same!


CEO, FDASmart Inc., New York, USA


A recent article  in the “5 Minutes” daily section announcements at CPhI Worldwide 2017 published by Tekno Scienze Publisher includes an interview with a Global CEO of a member, subsidiary company of an India-based CMO that operates as a ‘single entity’ by their own admissions on their corporate services brochure and disclosure for delivery of seamless, global pharmaceutical chain development capabilities & operations. The article states that the CEO does not like to use the term “one-stop-shop” while at the same time sharing their capability for delivering end-to-end services across the board for the same client. Why would that company fear the pharmaceutical CMO ‘one-stop-shop’ label?

What does one-stop-shop mean to you? Does it not mean one company that offers an entire stream of end-to-end services to the same client across the drug life cycle? Why would Indian CRAMS/CMO care if they’re tagged with the one-stop-shop label but essentially do what one-stop-shops do, i.e.  deliver a seamless set of services from pre-clinical to formulation to pilot scale then commercial production.? A tomato is a tomato so to speak whether you label it a  tomato or tomatoes!

This article explores legal aspects of the one-stop-shop label from a prospective of commercial contract (101) laws, contract interpretation, legal court jurisdictions, etc. using a hypothetical outsourcing case scenario where an Indian one-stop-shop allegedly fails to deliver and breached its contract with a hypothetical small pharmaceutical New York client that outsourced for CMO services in India.

In this new era of high-demand HPAPI, High Potency APIs, it  turns out, India is largely relevant  for outsourcing a wide spectrum of the drug development process, i.e India is emerging as a must-consider destination for pharmaceutical companies to outsource either high potency process research or optimization, HPAPI development, pre-clinical& clinical development, lab-grade then pilot-plant scale-up and commercial manufacturing. This emerging trend seems logical given India’s current role with generic drugs in the pharmaceutical industry so much it’s been dubbed as “pharmacy to the world” (Figure 1, Figure 3).

The not-so-obvious facts are the legal challenges dealing with Indian vendors &  commercial contracts with outsourcing to an  India vendor/partner located in a distant time zone, with unique work ethics/culture where  Services Contracts may be  governed by Indian laws.

What happens when the Indian CMO you contracted happens to be a group of discrete but ALL wholly owned subsidiaries of a parent, holding company operating as single-entity or a one-stop-shop under the same brand or umbrella ...