A quarters-long flurry of layoffs has caused thousands of workers in life sciences to go hunting for their next position sooner than expected, and the latest wave could make it more difficult to get new offers in hand in short order.
At least three dozen biotechs let employees go so far this year, based on Endpoints News reporting, with more having done so under the radar. More than 100 drug developers thinned their organization charts last year.
Jodie MorrisonJodie Morrison, acting CEO of Q32 Bio and leader of a 350-member CEO forum that meets monthly via Zoom, said “90% of people seem to be swept up quickly,” and she’s heard “limited stories” of people not lining up new jobs before their severance ends, but that situation could change if the pace of layoffs doesn’t let up.
“I think it’s going to be harder to find homes because I think we’ve filled the shortages that had existed over ’22, at this point,” Morrison said, “so as we get into ’23, there may be a little bit more detrimental impact to the folks that are in these later waves.”
Executives and investors say the biotech restructurings could be a market correction after years of ballooning capital pools. Couple that with a talent war that has caused many employers to miss out on their first choice. Industry insiders say there are still openings across the field.
The pace of layoffs doesn’t appear to be letting up, though, with February painting a particularly gloomy picture of workforce tidying in biotech. Layoffs in the tech industry have also populated headlines for months, but the broader market seems to be more stable, with December layoffs at the lowest level in two decades, per a New York Times analysis of government data.
“I think we’re gonna get into a situation where it’s going to start to become more difficult to then quickly find another role. Whether that levels out or it’s a long-term problem that makes people leave the industry, that’s something we’ll have to think about,” Morrison said.
‘A little over its skis’
Headline-grabbing layoffs might not spell doom for the industry at large, and employees frequently try connecting their colleagues to new opportunities on LinkedIn. The phrase “comment for better reach” has become common parlance on the site, as people use the phrase to boost others’ posts about layoffs in the hopes that the LinkedIn algorithm will feed it to their connections and potentially play job matchmaker.
The talent migration could be a boon for newer startups that have struggled to get their offer letters accepted because of the high demand for workers. One stealth company CEO said she receives resume books weekly and sometimes still can’t secure desired workers because of the “unsustainable bidding wars.” Layoffs at Merck KGaA’s site in Billerica, MA led to four new job candidates within a week for her biotech.
Rob Byron
“If you get all the biotechs in a room, half of the biotechs are letting people go … and then there’s another half in the room that can’t find good talent,” said Rob Byron, a vice president at Keystone Partners. The Boston firm consults companies on talent and executive development, guiding them through layoff planning and outplacement programs.
The executive, who spoke candidly because her company hasn’t publicly launched yet, said she’d prefer the ability to attract key talent “over a robust funding backdrop any day.”
“Our industry had gotten a little over its skis on a bunch of different fronts, and this is a healthy correction,” the repeat biotech CEO said. “It’s painful for some individual companies, and there will be some not-great collateral damage at times, but for industry as a whole it’s a good thing.”
‘No tree to hide behind’
Damage can come if layoffs are not handled well, and for affected employees, that means how the reductions are communicated. One scientist who was affected by layoffs at a private California biotech told Endpoints: “The CEO did not have the dignity to hand out the notices himself, and no warning (it was the newly appointed ‘leader’ in bio R&D did the dirty work, quite robotic with no emotion might I add. Disturbing).”
Byron said his firm tries coaching clients on “compassionate and empathetic notifications in layoffs.”
Critical to the process is also preserving morale of the remaining employees, he said, so as to stave off further departures from an already thinned-out company.
“The worst-case scenario is you right-size” and then communicate poorly with the remaining employees, Byron said. “If you start to see a mass exodus, you’re in a world of hurt.”
In one acute example, Quince Therapeutics (formerly Cortexyme) warned that layoffs could lead to further attrition, hits to company reputation and “reduced employee morale,” per SEC filings. The biotech has gone through multiple layoffs in the past year.
“Even if the business is sound, everything is sound, the science is sound and the future looks good,” Byron said, “when you have that action, it’s natural to [be] questioning, ‘Should I still be here? And what is my role going to be in this organization moving forward?’”
Patty Adams
Life sciences companies are delaying hiring plans or hitting pause on workforce expansion, said Patty Adams, a 30-year industry HR veteran who helps small drug developers with human resources functions and finds new executives at the consulting firm Mix Talent.
Smaller biotechs, especially, have to be cognizant of every move they make. “There’s no tree to hide behind. If one person fails, the enterprise can fail,” said Adams.
The veteran HR leader said business development heads are a critical role at this time, especially those with technical backgrounds who can convey the company’s plans to potential investors and partners. Management must also have a sound plan in place for three scenarios: clinical success, a neutral data readout or situations that force a company to shutter, such as negative data or lack of funding.
Early-stage biotechs “can drift between terror and euphoria within seconds of each other because everything hinges on a data event,” she said.
