The pharma industry has shed a significant number of jobs in 2023. Among the companies announcing cuts earlier this year, Bristol Myers Squibb laid off 48 workers in Princeton, New Jersey. Other companies making cuts include Takeda, cutting more than 180 jobs, and Novavax, letting go of one-quarter of its workforce.
Several pharmaceutical companies have continued to navigate challenging financial landscapes in 2023 through layoffs. Sumitomo culled 62 jobs in New York City on July 6 as part of a company consolidation effort. Thermo Fisher implemented its fourth round of layoffs on June 20, resulting in a loss of 88 jobs in San Diego. On May 25, BenevolentAI underwent a strategic realignment, trimming both its workforce and pipeline. Takeda and PTC also made cuts in May, with Takeda cutting its workforce in California following layoffs in Massachusetts, and PTC trimming its early-stage pipeline but advancing its FA drug after a phase 3 setback. In May, Athenex filed for bankruptcy and eliminated 123 jobs across New York. Additionally, Roche shed 165 jobs in New Jersey and downsized its COVID-19 portfolio, and on May 9, EQRx significantly reduced its workforce, cutting more than half of its headcount.
Other companies announcing workforce reductions in the first quarter of the year include Grifols, which cut 2,300 workers. Neoleukin Therapeutics in Seattle went so far to cut 70% of their workforce. Other companies such as Amgen and Thermo Fisher also experienced layoffs in the first few months of the year, with 750 and 230 job cuts respectively.
Notably, some companies made even more drastic cuts, with Cyteir Therapeutics, Jounce Therapeutics, Instil Bio, Frequency Therapeutics and TCR² Therapeutics all reducing their workforces by more than half. Aristea Therapeutics in San Diego shuttered the entire company.
A recent BDO report suggests that 13% of life sciences companies are considering turning to layoffs or furloughs in response to challenging economic conditions throughout 2023. Some industry observers believe, however, that such job cuts are part of larger plans to slash costs and restructure operations.
BDO’s research indicates that other cost-cutting strategies are more popular. A total of 46% of respondents to its CFO survey reported relying on outsourcing scientific and technical functions, while 39% were considering outsourcing IT, HR, or financial functions. Another popular option was licensing deals or collaboration agreements, pursued by 43% of respondents.
BDO notes that the increased focus on cost-cutting in life sciences is a reflection of evolving investor expectations, leading to less readily available cash and pushing businesses to focus on their core capabilities.
Despite the workforce reductions, there are also some signs of optimism in the sector. Many pharma companies entered 2023 on strong financial footing. According to BDO, more than half, 52%, of life sciences companies reported increased revenue and profitability in 2022. Mergers and acquisitions within the sector, for instance, are also on the upswing. More deals are likely for the remainder in areas related to hot areas such as oncology and immunology. Interest in central nervous system and cardiovascular diseases, as well as vaccines, also remains strong.
While the ongoing pharma sector layoffs in 2023 raise concerns about the industry’s stability, they appear to be part of a broader initiative to navigate challenging economic conditions. CytomX Therapeutics, a South San Francisco-based clinical-stage biopharma, offers a clear example of layoffs being part of a broader strategy to navigate challenging circumstances. The company cut its workforce by 40% in July 2022 after its lead candidate failed in clinical trials. The company announced the move on the heels of disappointing results from a phase 2 study of its CX-2029 antibody drug conjugate candidate, which caused its stock price to crash. Despite that setback, CytomX’s first-quarter report showed promising results, with higher-than-expected earnings and revenue.
Amgen has also cited a restructuring effort as the reason for its layoffs in 2023. The company attributed the cuts to various factors, including recent organizational changes, increasing pressure on drug pricing, inflation and rising interest rates.