As mentioned in our previous articles in this magazine, the manufacturing agreement is the perfect example of an industrial partnership between two companies, in which sustainability and stability are essential issues for both partner companies.

This contract, whose legal qualification combines the sale and the provision of services, is based primarily on the sale by the manufacturer of a pharmaceutical specialty developed on behalf of the client.

Therefore, one of the essential clauses in the contract of course concerns the definition of the price of the specialty being manufactured, how it is determined (with the details of its components, where applicable) and, above all, the price revision mechanisms.

The manufacturing agreement is a long-term contract. It constitutes the basis of the partnership between two industrial companies whose interests are intertwined, and its stability is therefore essential for both parties. Stability also implies economic balance.

On this point, the price revision clauses in these contracts are absolutely essential. On the client's side, the challenge is to avoid an uncontrolled price drift which might lead to an economic imbalance that could call into question the continuation of the contract.

On the manufacturer's side, the challenge is to provide for the inclusion of any price rises it might incur in the new revised price, so that it can continue to manufacture without the operation losing its economic profitability.

And of course, in the event of disagreement on the revised price, it will be essential to provide an exit door, allowing the parties to terminate the agreement early, if the need should arise, for a reasonable price.

In practice, the difficulties can often be summed up as below:
Agreeing on a new price and changing the price in a contract drawn up with a fixed or revisable price; Changing a contract by inserting a revision index that was not initially planned;
Changing a contract that has an unsuitable revision clause (irrelevant indices, unsuitable frequency);
Incorporating a significant price increase occurring between the time the offer was submitted and the time the contract comes into force;
Changing a contract in the face of increases in various costs (raw materials, energy, packaging, etc.).

There are, of course, legal solutions to each of these issues. Overall, the question of price revision in manufacturing agreements can arise at two different stages in the life of the contract:
- Regularly, each year, at the time of price revision,
- Exceptionally, in the event of unforeseeable events (hardship clause).

Finally, it will be necessary to address the case of contracts that make no provision of any kind in terms of a price revision or hardship clause.

In all cases, the question of the terms and mechanisms of the revision will arise, and of the situation in the event of a disagreement on the price.