If you’re in the drug or device industry, you already know there’s a big difference between the big companies and the little ones.  It’s not just about size—it’s about structure, strategy, and speed. There are key contracting components to negotiating agreement terms that are most beneficial for your company.  Understanding how small pharma and big pharma negotiate contracts gives you a big advantage.  Here are some key differences that will help you recognize opportunities, avoid traps, and understand the contract language of both sides with confidence.

 

Big pharma are the big pharmaceutical companies

Big pharma is made up of big pharmaceutical companies that you hear about like J&J, Pfizer, Eli Lilly, and Baxter. These are the major companies that produce products or devices currently sold in the global marketplace. 

Big pharma operates like the Titanic (before it sank) —large, slow to turn, but extremely capable. These companies run pipelines across many therapeutic areas, have tens of thousands to hundreds of thousands of employees, and in-house teams for every requirement from early stage research to commercialization and global distribution. 

Their internal departments are developed to manage complexity at scale. Big pharma absorbs assets into their portfolio or collaborate through partnerships, licensing, and acquisitions. They have the scale to take promising science across the finish line and into the hands of physicians and patients around the world. They can activate global supply chains, scale up manufacturing, and execute commercial rollouts across continents.

 

Small pharma are small independent pharmaceutical companies

They are research-based companies with less than 100 employees. They may be in the development phase or in the pre-clinical or clinical stage where they’re trying to determine if the product or device is safe and effective. 

Small pharma is built for precision. Think speedboats: agile, driven. Many small companies are focused on a single product or device. They keep teams lean and outsource strategically, turning to Service Providers, and other contract management organizations that can move quickly without the need for heavy oversight. 

Small pharma often takes a product or device through Phase 1 or 2 clinical trials, or are post market and facing pricing, purchase and supply agreements of their approved products. Either way, these small companies must structure and negotiate dozens of critical deals to help them achieve the best outcomes for their company and their products—to work with or be acquired by big pharma. 

 

Big pharma isn’t better than small pharma—it’s just optimized differently

Insights like these, provide you with better contracting opportunities, fewer costly mistakes, and beneficial contract terms. Knowing who does what, when, and why positions you to guide decisions, anticipate moves, and avoid pitfalls that others miss. Whether you are a brand new team or a small company with a single in-house counsel, you will benefit GREATLY from having contracts set up the right way.

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