What’s Driving The Surge in Biotech Lay-offs and Is That the Real Problem?

Posted: September 9, 2019

API Manufacturing and Pharmaceutical Manufacturing

This summer it seems like one biotech firm after the other has announced significant lay-offs or restructuring plans. Merrimack Pharmaceuticals announced it intends to lay off its entire staff, including its executive leadership; Dynavax announced its plans to lay off more than one-third of its staff; and Johnson & Johnson reported plans to lay off 61 employees, to name only a few of the recent announcements. 

In an ironic twist, at the same time that many pharma firms are on house-cleaning missions, the other big trend in the industry is a shortage of qualified talent.  So what gives?

Lay-offs and reorganization occur based on very specific business issues. Clinical results drive portfolio management and ultimately business growth. Especially for boutique pharma firms with everything riding on specific molecules, If a project fails to meet expectations or produce results, it can be devastating for the firm, leading to the need to trim staff. In other cases, the volatile nature of the biotech industry has caused lots of transition. For many companies with new corporate board members or a new CEO, projects can be nixed in favor of other ones, and along with the project cut, can come cuts to staff.

While the lay-off issue can seem like something new, it’s really just about companies trying to recalibrate and a fairly normal occurrence, yet the talent shortage is something else entirely. A lack of formal STEM career education, increasing complexity in regulatory and other aspects of the industry and the lure of other careers, has created the shortage.  Even with many qualified scientists and other biotech professionals polishing up their resumes and looking for new jobs, there’s still many more positions than qualified professionals.

Given the talent shortage, the good news is that if there has to be a rise in corporate lay-offs in biotech, now is the best time for it to happen. 

The job market has never been better. In the first quarter of 2019 alone, gross domestic product grew at an annual rate of 3.2 percent, up from 2.2% at the end of last year; and business investment is expected to outperform most expectations in 2019 and beyond.

In addition, API manufacturing and other life sciences markets are highly specialized and complex industries, and breakthroughs in areas such as gene editing, pharmacogenetics or immune-biotechnology have made the industry even more complex with a need for specialized expertise. This combined with a fusion of venture funding is fueling biotech expansion and emboldening start-ups to expand and bring on the qualified staff that just might be available because of lay-offs across the industry.

So while news about staff cuts and massive corporate lay-offs have seemed to dominate the headlines of late, it’s not really the issue that the industry should be worried about. What is perhaps the bigger challenge is ensuring a solid pipeline of qualified talent to fuel continued growth.

Three Questions Sponsors Should Ask CDMOs About Their Recruiting

This is as important to sponsors as it is to Contract Development & Manufacturing Organizations (CDMOs) because sponsors want talented teams working on their outsourcing project, and they want to work with CDMOs that have low turnover rates because turnovers can disrupt processes.  Sponsors, therefore, should look for CDMOs who can attract the desired scientists, QA professionals and other qualified employees, and should ask if the prospective CDMO is taking any of the following three steps:

  1. Don’t be afraid to compete against big pharma. Even the most eager and enthusiastic young biotech professionals can become less than enthused when they work for a large pharma firm in a major city and only work on the most routine and tedious of tasks. It’s important to showcase the unique opportunities for professional growth you can provide.  For example, while Seqens N.A. is located in Newburyport and Devens, MA, young professionals who work for us can be assured that they will be exposed to many diverse projects and have the opportunity to take on much more responsibility than would ever be possible at a big pharma firm. This gives them the critical experience they need to build their careers and becoming the leaders of tomorrow.
  2. Provide meaning to the work.  Today’s professionals seem to be as focused on making a difference as they are on earning a paycheck.  As many professionals would agree,  especially at the upper management levels, many companies can provide salaries that are very comfortable to live on, but what is essential, however, is having a meaningful position that gives them the opportunity to make a difference. Showcasing the breakthrough projects you work on and how they can make a difference to patients is key to attracting the best talent.
  3. Continue investment in STEM fields. To turn the tide on eroding interest in science fields, everyone in the industry needs to get behind the growth of STEM education to spark interest among younger generations and ensure a solid pipeline of qualified talent.

Professionals recently laid off from biotech firms most likely have many options available to them if they possess the right skill-sets and expertise needed for an industry changing daily. The key is staying up to date on new technologies, methodologies and SOPs and before accepting a position, understanding that they’re in the driver’s seat and can accept positions that meet their standards for not only good salaries and titles, but also ones that provide meaning and purpose, as well as quality of life.

For more insights into the state of the biotech industry, please read: The Hunt for Qualified Biotech Talent Continues.

About the Author

Ed Price CEO of PCI Synthesis
Ed is President & CEO of SEQENS North America (formerly PCI Synthesis). He serves as a co-chair of the New England CRO/CMO Council and sits on the Industrial Advisory Board for the Department of Chemical Engineering at UMass, Amherst. Ed is also a long standing member of the American Chemical Society and advises the Bulk Pharmaceutical Task Force of the Society of Chemical Manufacturer’s and Affiliates (SOCMA)...

Do you have questions? Talk to Ed.