The biotech sector could see a period of relative stability, according to a time-series analysis of the NASDAQ Biotech Index. In recent years, however, performance of the NBI has had little bearing on the rate of layoffs in the pharma and biotech sectors. A statistical analysis of the relationship between the NBI performance and the rate of layoffs in the pharma and biotech sectors in recent years found practically no correlation. Layoffs in biopharma have slowed since the beginning of 2024, following a volatile 2022–2023 period.
Layoffs in biopharma fairly steady for now
Data from https://layoffs.fyi/ shows a relative reduction in layoffs of all types relative to the biopharma sector since the beginning of 2024. According to the layoffs data, there were more than 90 biotech and pharma companies with significant layoffs from 2022 to 2023, impacting thousands of jobs.
In biopharma, layoffs are still occurring consistently in 2024 across company sizes, with companies like Pfizer, Thermo Fisher, Allogene, Novavax, and others announcing new rounds of job cuts. Several of the 2024 layoffs are occurring after clinical trial failures or regulatory setbacks for key pipeline candidates, a continuation of a trend apparent in prior years. Examples include Affimed dissolving its research and preclinical departments after disappointing phase 2 results and AlloVir cutting 95% of its workforce following the failure of three Phase 3 studies of its cell therapy.
The 2024 layoffs appear more targeted compared to the broad cost-cutting seen in 2022-2023. Companies are citing reasons like pipeline reprioritization, facility closures, and post-merger restructuring. This is a shift from pandemic-related financial instability that affected many industries, but also benefitted COVID-19 therapy makers significantly in the first years of the pandemic.
A time series model based on iShares US Pharmaceuticals ETF data. Observed values are block dots.
An analysis of a decade of data from iShares US Pharmaceuticals ETF (IHE) shows a considerable amount of volatility as well. Base projections from a simple model based on the IHE ETF also indicate a period of relative stability in the coming year.
Filed Under: Drug Discovery, Drug Discovery and Development
