What are common CDMO insurance challenges?

Five challenges recur across CDMO insurance programs. First, sponsor MSA scope creep into uncapped indemnity. Standard sponsor MSAs include indemnity provisions that can extend well beyond the CDMO's insurance limits if read literally. The negotiation question is whether the indemnity is capped at insurance limits or at contract value.

Second, products liability tower adequacy. A CDMO accepting work under multiple sponsor MSAs needs a tower scaled to the largest demand and structured so the aggregate is not exhausted by one sponsor's claims at the expense of another. Per-project or per-location aggregate endorsements solve this.

Third, first-party recall execution funding. Sponsor MSAs increasingly require recall extension on products liability sized at $1M to $5M, separate from third-party limits. This is first-party coverage (the CDMO's own cost of pulling product), not third-party.

Fourth, validation and cGMP property downtime. Loss of qualified state on critical manufacturing equipment can mean weeks of revalidation downtime even when the physical loss is small. Standard property forms do not address this without a manuscript extension.

Fifth, IP and trade secret exposure across sponsor work. CDMOs handling proprietary sponsor processes face third-party patent infringement claims and sponsor-vs-sponsor cross-contamination risk requiring specialty IP and tech E&O coverage.