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While the biotech investment market continues to recover from the post-COVID-19 downturn, the layoffs are a frequent reminder of lingering problems across the life sciences industry.
Arda Ural, EY’s Americas life sciences leader, said job cuts often come down to four main factors: slowing investment in preclinical assets, patent expirations, regulatory changes around drug pricing, and challenges unique to each company.
The overall biopharmaceutical industry layoff rate has remained steady so far this year, with Ural saying roughly 5,000 to 7,000 layoffs are being reported each month across the biopharmaceutical industry. Industry Media TrackerAdditionally, according to the Bureau of Labor Statistics, the biopharmaceutical industry workforce has maintained roughly the same growth pattern since 2005, Ural said, suggesting a continuing balance between the number of jobs being created and the number of jobs being eliminated, with research and development headcount increasing in recent years.
However, two major events in the near future could upset this stability.
The Federal Reserve Board (FRB) cut interest rates, May be announced The announcement, expected later this month, is likely to spark renewed enthusiasm among investors.
With the US presidential election looming in November, it’s not just a question of who wins, Ural said. Rather, the market’s reaction will depend on whether there is a smooth transition of power from the current president to the next.
Ural said if these factors work in the market’s favor, it could help ease the “optimism fatigue” investors have felt in recent years and lead to “real market activity.”
“I would like to believe that the worst will soon be over,” Ural said. “Macroeconomic conditions may shift to a more favorable environment, which will highlight company-specific challenges.”
For now, here’s what three of the most recent layoff announcements by pharmaceutical companies suggest about the industry’s rocky road to improving health.
Bayer
story: Bayer Reveals ‘Significant’ job cuts The company cut jobs earlier this year as part of a larger restructuring effort to turn around the struggling conglomerate, cutting 1,500 positions in the first quarter alone, two-thirds of them management positions, with more cuts to come.
In late August, Swiss newspapers reported that Bayer 150 employees laid off Cuts were also made at the company’s international headquarters for its consumer health division in Basel. Influenced executivesThe company laid off three executives from its crop science division and six from its pharmaceutical division earlier this year.
The legal burden associated with Bayer’s $63 billion acquisition of Monsanto in 2018 includes an estimated 54,000 lawsuits Issues related to the herbicide Roundup remain a major drag on overall growth. Patent Cliff The blockbuster blood thinner Xarelto has also become subject to government restrictions. First round of Medicare price negotiations It will be activated in 2026 by the Inflation Control Act.
Bayer plans to complete the job cuts by the end of next year. While the restructuring is still underway, Bayer recently reported some positive results in its latest earnings report. Overall, the company made just over $12 billion in revenue in the second quarter, Exceeding analyst expectations The company also announced that its consumer health division “Return to growth.”
Key Points: Bayer’s acquisition of Monsanto posed unique legal challenges, but the merger also illustrates the difficulties that come with megamergers, which have come under increased scrutiny from the Federal Trade Commission in recent years, such as the proposed merger of Sanofi and Maze Therapeutics. Discarded Last year’s consolidation could also make pharmaceutical companies nervous about merging, especially if they have overlapping capabilities in their pipelines or portfolios.
“We would never say there will never be a mega-merger,” Ural said, “but the bar is now higher for a mega-merger to make the deal hypothesis a reality.”
Biomarine Pharmaceuticals
story: BioMarin Pharmaceuticals has been cutting jobs throughout the year as it seeks to streamline operations.
Last spring, SEC Filings The company announced that it would cut 170 jobs. The changes come as part of a larger round of reductions in its research and development division. Four Pipeline ProgramsThe company said it would focus on three other programs, including a clinical asset for metabolic dysfunction-related steatohepatitis.The company said it would instead focus on three other programs, including a mid-stage drug for Duchenne muscular dystrophy.
BioMarin now plans to cut an additional 225 employees worldwide, the company reported. Recent Applications.
Since its approval last year, BioMarin has struggled with sluggish sales of its gene therapy drug Roctavian, with just five patients receiving the hemophilia A treatment for $2.9 million in the second quarter. Revenue: $7 millionThe company is now revising its commercialization strategy to focus on just three countries, and the CEO has suggested that it may eventually exit the BioMarin portfolio.
Key Points: Gene therapy remains an attractive approach for tackling rare diseases, Ural says. There are about 7,000 rare diseases, about 80% of which are genetic. And of those, 80% are linked to a single gene mutation. But it remains to be seen how well the industry can overcome the challenges that come with commercializing gene therapy. So far, only one gene therapy has achieved blockbuster status: Novartis’ Zolgensma.
“It’s a case-by-case situation at this point,” Ural said, “but in general, commercialization is still a big hurdle.”
Tom Bioscience
story: Gene editing technology scored a major win in December when the first CRISPR-based drug for sickle cell disease won FDA approval. Despite that momentum, Tome Biosciences, a company that specializes in gene editing, is now 131 employees laid offthe majority of its staff.
The startup came out of stealth in December. A gaudy $213 million The company is on a mission to back ventures and develop the next phase of gene editing. In particular, Tome leverages programmable genome integration, which allows the company to “precisely choose where in the genome to insert a genetic sequence.” This approach is “All Therapeutic Areas.”
The company’s pipeline includes preclinical candidates for the treatment of phenylketonuria (a rare liver disease) and an autoimmune kidney disease.
Despite “clear scientific advances,” the spokesman said He told StatNews Tome said the shift in investor sentiment has hit companies “particularly in the preclinical stage” hard.
Tome’s layoffs will affect nearly the entire workforce. CEO and other officers.
Key Points: There were roughly 2,000 gene editing and gene therapy clinical trials last year, rising to 1,800 in 2022, indicating high interest in the field, Ural said. But the market is currently seeing challenges around commercialization, and a drop in investment after the pandemic’s “sugar addict” continues to hit biotech companies in the early stages of preclinical development hardest.
“There was a willingness to take risks,” Ural said, “but then fundraising was pretty tough.”
