Pharmaceuticals and Biotech companies are approaching 2026 as players in the midst of a major paradigm shift. Scientific discovery, Artificial Intelligence, personalized medicine, advanced treatments, data-driven science and global licenses will shape the way that life-sciences companies create and market their products. At the same time, increased attention to patient safety, data protection, supply chain integrity and proper technology usage is being demanded from regulators.

This means that the drug and biotech contracts of 2026 are not merely commercial contracts. They are sophisticated legal instruments meant to allocate risk related to science, regulation, finance, intellectual property and data amongst many parties.

The Changing Contractual Landscape

Pharmaceutical and biotech companies almost never create medications by themselves. One product can incorporate a small biotech company, a big multinational pharmaceutical corporation, CROs, CMOs, universities, hospitals, tech companies and data companies.

Thus, licenses, collaborative research agreements, clinical trials agreements, manufacturing agreements, coproduction agreements and technology transfer agreements become vital documents for this industry.

Also, the business environment fosters deal. In 2026, big pharmaceutical corporations have to deal with many patent expirations in the future, thus they try to buy or license innovations and new drugs. According to Reuters, biotech mergers and acquisitions totaled about $84 billion in Q1 2026, indicating a desperate need for the strengthening of the pipeline.

Thus, the contracts should be able to cover not only the current deal but also a possible evolution of one medication through various developmental stages and jurisdictions.

Intellectual Property Remains the Foundation

Intellectual property (IP) is the key element of most major deals involving pharma and biotech.

The contract may require the definition of the difference between background IP (which one party already owns) and foreground IP (which has been developed through the collaboration). It will have to be decided by both parties what inventions, patents, know-how, biological materials, research results and improvements belong to whom.

Moreover, license agreements should also include:

• The territorial extent of the license
• Whether exclusive or non-exclusive license rights are granted
• fields of use
• development responsibilities
• regulatory responsibilities
• up-front payments
• milestones payments
• royalties
• sub-licensing and termination rights
  
  

This is becoming more and more crucial as more and more pharmaceutical companies look for innovation outside. As of 2026, global licensing activity involving Chinese biotech firms has greatly increased as well.

Clinical Trials and Regulatory Compliance

Clinical trial contracts represent yet another field of legal complexity.

The Clinical Trials Regulation (CTR) offers a harmonized approach to conducting clinical trials in the EU, where CTIS is the single-entry point for applications. Since January 2025, ongoing EU/EEA clinical trials have been required to be conducted under the CTR scheme.

Thus, clinical trial contracts should contain provisions about

• regulatory responsibilities
• informed consent
• patient safety
• adverse-event reporting
• clinical data ownership
• confidentiality
• publication rights
• monitoring and auditing
• insurance and indemnification
• termination of the trial
  
  

The regulatory landscape keeps developing, and the workplan for ACT EU of 2026-2027 developed by the European Medicines Agency and its partners focuses on clinical trial analytics, patient engagement, access to clinical trial data, and prompt publications.

It means that regulatory obligations should be transformed into contractual obligations.

Data Protection Gains Importance Still Further

Modern biotechnology is very data-intensive. Genomic data, patient data, results of clinical trials, and other research data may have immense scientific and economic value.

Health and genetic data, however, are especially sensitive data types. The European Data Protection Board and European Data Protection Supervisor singled out the need for effective protection of health and genetic data in connection with the draft European Biotech Act.

Thus, 2026 agreements will have to contain provisions concerning:

Who can access the data? Who owns it? Where can it be stored? Can it be transferred internationally? Can it be used to train artificial-intelligence systems? What happens to the data when the agreement ends?

These issues may be just as significant as payment issues.

Artificial Intelligence Is Changing Contract Drafting

AI is now increasingly becoming incorporated into pharmaceutical R&D. Pharmaceutical companies employ AI for target identification, molecule design, clinical trial optimization and manufacturing process.

The proposed European Biotech Act also makes explicit that the application of AI, data and digital technologies are crucial to biotechnologies. The 2026 European Commission materials also provide for guidelines on the utilization of advanced technologies along the life-cycle of the medicinal product.

This raises new contractual concerns.

In case a biotech company employs an AI platform in order to identify the drug candidate, who will own the generated IP rights? In case the AI algorithm was fed by patient data, who should make sure that this is done lawfully? What party will be at risk if the output of the AI algorithm leads to the failure of the clinical trial?

Thus, contemporary agreements more often than not incorporate specific AI-related provisions such as data rights, model ownership, confidentiality, cyber security, validation, regulatory compliance and liability for the output generated by AI.

Recent transactions show this trend. On September 2026, Boehringer Ingelheim concluded licensing deal regarding the use of Owkin's AI research platform and patient data for drug discovery.

Manufacturing & Supply Chain Terms

The contract of pharmaceuticals needs to cover manufacturing and supply as well.

The manufacturing term needs to ensure quality standards, regulatory compliance, right of inspection, batch release process, forecasting, minimum order quantity, delivery, and product recall process.

It is now very important that the supply chain be resilient since shortage of medicines may cause adverse effects on patients. Terms related to alternate supplier, continuity of business, force majeure, and emergency manufacturing may thus need more emphasis in 2026.

Risk Allocation and Indemnification

One of the key elements of pharma and biotech agreements is risk allocation.

Clinical trials are always uncertain. The development of an exciting compound may not prove to be successful in a clinical trial, may suffer from regulatory issues, or may be commercially unsuccessful.

Consequently, the agreement needs to clarify which party is responsible for the following risks:

• clinical-trial failures;
• regulatory violations;
• product liability;
• intellectual-property infringement;
• data breaches;
• manufacturing defects;
• recalls; and
• third-party claims.
  
  

Indemnification clauses, liability caps, insurance requirements and exclusions become particularly important in these circumstances.

European Biotech Act and the Future

Another major event in the 2026 legal framework is the European Biotech Act. According to the European Commission, this Act seeks to enhance Europes biotech and biomanufacturing industries by addressing innovation, financing, artificial intelligence, clinical trials and biosecurity.

While legislative proposals cannot be equated to existing laws, their direction is critical for companies that are negotiating long-term business agreements. It would be wrong for organizations to negotiate agreements on the assumption that the current regulatory framework would remain constant throughout the development period of drugs.

Contracts should include proper clauses that cater to the change of law or regulation.

Conclusion

Contracts in the 2026 legal environment will be more complex than ever before for pharma and biotech companies, as there will be interdependencies between intellectual property, clinical research, regulation, patient information, artificial intelligence, manufacturing, logistics and international marketing.

A good contract will not only address the commercial aspect of the deal but will also prepare for science, regulation and technology in advance, assigning rights and obligations in the process.

For pharmaceutical and biotechnology companies, contract drafting today means much more than just securing a transaction it means ensuring that scientific innovation happens effectively at each stage of its life cycle.

In the context of globalization of biotechnology, its dependence on data and AI, legal teams will become more and more involved in defining how scientific discoveries can reach their patients.

Join our upcoming Pharma and Biotech Contracts in the 2026 Legal Order Masterclass, where the crucial discussion on CQA will take place!

By Shara Najimudeen, Digital Marketing Executive, GLC Europe, Colombo Office, Sri Lanka.