In the first quarter of 2023, 56 biopharmas laid off staff—an 87% jump compared to 2022, when 30 companies reported layoffs for the same period, according to a Fierce Biotech analysis.
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“That number is a little staggering,” Darren Nelson, founder and CEO of Recruits Lab, a hiring agency that works with biotechs, told Fierce Biotech.
The layoffs to date equal almost half of all workforce reductions that occurred throughout 2022, with 56 companies taking this route in the first quarter compared to 119 recorded for all of last year, according to data from Fierce Biotech’s Layoff Trackers for 2022 and 2023. Among the three months that make up quarter one, February—the shortest month—had the highest number of layoffs, with 23 companies making cuts in 28 days. The surge came as companies reported end-of-year earnings results, when many biotechs had to grapple with cash burn and low return on investments. The staff reductions then slowed a bit in March, with 19 companies slimming their workforces.
While it’s difficult to calculate the true human impact from all of these cuts, we know at least 1,445 employees were laid off from 18 companies that reported actual numbers of team members impacted in the first quarter. The remaining 38 companies included in the Fierce Biotech Layoff Tracker either reported layoffs as a percentage of the workforce to be cut or did not disclose how many staff members would be laid off.
“Biotech got hit early with this malaise, and so I don’t think it can get terribly worse,” Sci.bio Recruiting founder Eric Celidonio said in an interview.
2023 follows a year defined by aggressive rate hikes from the Federal Reserve and declining VC investment after the industry experienced unsustainable demand and funding highs tied to the pandemic. Biopharma lived in a bubble during 2020 and 2021, high on “COVID mania,” as Celidonio calls it.
“It just went up too quickly,” Celidonio explained. “I think this is just a reversion back to the mean, but an over swing back there, and it’ll slowly kind of get back to a normal state, I would say towards the end of the year.”