💡 Plain English Explanation

This clause protects drug formulation information, including dosage forms, delivery mechanisms, excipient compositions, and manufacturing processes. Formulation know-how often represents the difference between a successful commercial product and a failed development program.

Drug formulations encompass the science of turning an active pharmaceutical ingredient (API) into a usable medicine. This includes tablets, capsules, injectables, patches, and advanced delivery systems like nanoparticles or liposomes. The formulation determines bioavailability, stability, patient compliance, and manufacturing feasibility.

This clause addresses critical formulation concerns:

⚠ Why This Clause Matters

For the Disclosing Party (Formulation Developer): Formulation know-how is often your primary competitive advantage. Generic companies and competitors can potentially replicate a formulation if they understand your composition and process. This clause ensures that formulation details shared during licensing discussions, CMO evaluations, or partnership negotiations remain protected.

For the Receiving Party (Potential Partner/CMO): You need formulation details to evaluate manufacturing feasibility, estimate costs, and assess technical fit. However, you may work with competing products and need clarity on information segregation requirements.

Trade Secret Considerations: Unlike patents, formulation trade secrets can provide indefinite protection if properly maintained. The clause must support trade secret status by documenting confidential treatment and limiting disclosure to those with a need to know.

📄 Clause Versions

Balanced Version: Comprehensive protection for formulation information with practical carve-outs for publicly disclosed compositions and standard manufacturing practices. Suitable for CMO evaluations, partnership discussions, and licensing negotiations. 
"Formulation Information" means Confidential Information relating to drug formulations, dosage forms, drug delivery systems, and pharmaceutical manufacturing, including without limitation:

(a) formulation compositions, including quantitative and qualitative descriptions of active pharmaceutical ingredients, excipients, carriers, solvents, preservatives, and other ingredients;

(b) drug delivery technologies, including controlled release systems, targeted delivery mechanisms, nanoparticle formulations, liposomal formulations, and transdermal delivery systems;

(c) dosage form specifications, including tablets, capsules, injectables, patches, gels, creams, and other pharmaceutical presentations;

(d) manufacturing processes, including batch formulas, unit operations, equipment specifications, process parameters, and in-process controls;

(e) stability data, including accelerated and long-term stability studies, degradation pathways, and shelf-life determinations;

(f) analytical methods, including assays, dissolution testing, impurity profiling, and release specifications; and

(g) scale-up and technology transfer documentation, including pilot batch records, process validation protocols, and commercial manufacturing procedures.

The Receiving Party agrees that Formulation Information shall be used solely for evaluating a potential business relationship and shall not be used to:
(i) develop competing formulations for the same active pharmaceutical ingredient;
(ii) manufacture any product using disclosed formulation or process information without written authorization; or
(iii) file any regulatory submission incorporating Formulation Information without prior consent.

Formulation Information does not include:
(i) information disclosed in approved product labels, package inserts, or publicly available regulatory documents;
(ii) standard pharmaceutical manufacturing practices widely known in the industry; or
(iii) information disclosed in issued patents or published patent applications.
Disclosing Party Favor: Maximum protection for formulation trade secrets, including restrictions on reverse engineering and competitive development. Extended confidentiality periods and strong personnel segregation requirements. Ideal for sharing proprietary delivery technology platforms. 
"Formulation Information" means all information of any kind relating to drug formulations, pharmaceutical compositions, drug delivery systems, and manufacturing processes, including without limitation:

(a) all formulation compositions, including complete quantitative formulas, ingredient specifications, grade requirements, supplier information, and all ratios and proportions of active and inactive ingredients;

(b) all drug delivery technologies and platforms, including controlled release mechanisms, modified release systems, extended release technologies, targeted delivery systems, nanoparticle and liposomal formulations, polymer matrices, and any proprietary delivery technology;

(c) all dosage form information, including tablet designs, capsule specifications, injectable presentations, implant configurations, transdermal systems, and any specialized pharmaceutical forms;

(d) all manufacturing process information, including batch formulas, unit operations sequences, equipment types and settings, process parameters, temperature profiles, mixing speeds, compression forces, coating conditions, and all critical process parameters;

(e) all process development information, including design of experiments data, process optimization studies, design space definitions, and scale-up methodologies;

(f) all stability information, including stability protocols, stability data (accelerated, intermediate, and long-term), photostability data, stress testing results, degradation products, and stability-indicating methods;

(g) all analytical information, including method development, validation data, specifications, acceptance criteria, and reference standard information;

(h) all quality information, including quality attributes, critical quality attributes, control strategies, and specification justifications;

(i) all manufacturing site information, including facility layouts, equipment trains, environmental controls, and cleaning procedures; and

(j) all know-how, techniques, and expertise developed in connection with formulation development and manufacturing.

The Receiving Party shall:
(i) not reverse engineer, analyze, or characterize any samples provided in connection with this Agreement;
(ii) not develop any formulation for the same or similar active pharmaceutical ingredient;
(iii) not share Formulation Information with manufacturing personnel working on competing products;
(iv) implement information barriers to prevent Formulation Information from being accessible to personnel working on competitive products;
(v) not use Formulation Information to evaluate, develop, or manufacture any product for third parties; and
(vi) maintain Formulation Information as a trade secret for a period of fifteen (15) years following disclosure or for so long as the information remains a trade secret, whichever is longer.

For any physical samples provided, the Receiving Party shall:
(i) use samples solely for purposes expressly authorized in writing;
(ii) not conduct any analytical testing, dissolution studies, or reverse engineering without prior written consent;
(iii) return or destroy all samples upon request or termination of discussions; and
(iv) not retain any portion of samples for reference or archive purposes.
Receiving Party Favor: Narrower definition focused on specific proprietary formulations with carve-outs for standard industry practices and published information. Preserves right to work on similar products and conduct necessary analytical testing. Suitable for CMOs with diverse client bases. 
"Formulation Information" means only that information which:

(a) relates specifically to the drug formulation(s) identified in Exhibit A (the "Designated Formulations"); and

(b) is disclosed in writing and clearly marked as "Confidential Formulation Information."

Formulation Information includes only:
(i) the specific quantitative formula for Designated Formulations as provided in writing;
(ii) manufacturing process parameters specific to Designated Formulations;
(iii) stability data specific to Designated Formulations; and
(iv) analytical methods developed specifically for Designated Formulations.

Formulation Information expressly does not include:
(i) standard pharmaceutical excipients, carriers, or inactive ingredients commonly used in the industry;
(ii) general formulation principles, techniques, or methodologies applicable to pharmaceutical development;
(iii) standard manufacturing processes, unit operations, or equipment settings commonly used for similar dosage forms;
(iv) information disclosed in drug product labels, package inserts, or publicly available regulatory documents;
(v) information disclosed in patents or published patent applications;
(vi) information that the Receiving Party can demonstrate was in its possession prior to disclosure;
(vii) information independently developed by the Receiving Party without use of Formulation Information; or
(viii) standard analytical methods described in pharmacopoeias or industry guidance.

The Receiving Party may:
(i) conduct analytical testing reasonably necessary to evaluate the Designated Formulations for the proposed business purpose;
(ii) work on formulations for other clients, including formulations for similar therapeutic categories;
(iii) use general knowledge, skills, and experience gained during the evaluation, provided such use does not involve disclosure of specific Formulation Information;
(iv) retain one archival copy of Formulation Information for legal compliance purposes; and
(v) share Formulation Information with subcontractors and consultants under appropriate confidentiality obligations.

Confidentiality obligations with respect to Formulation Information shall terminate upon the earlier of:
(i) five (5) years from disclosure;
(ii) public disclosure of such information through regulatory approval or patent publication; or
(iii) written confirmation from the Disclosing Party that the information is no longer confidential.

💬 Key Considerations