• More than 8,000 employees have been let go from biotech and pharmaceutical companies so far this year, according to data compiled by BioPharma Dive.
• The biotech industry is now faced with a string of layoffs following the lead of big pharma like AbbVie and Bristol Myers Squibb last year.
• A recent BDO report suggests that 13% of life sciences companies consider turning to layoffs or furloughs in response to challenging economic conditions throughout 2023.
• Pharma lays off people because of expired patents and an increasingly hostile environment towards profits and drug prices.

Cheryl had just relocated to Thousand Oaks to take a job with Amgen and was closing on her new condo when she received an email from her manager asking her to come to the office ASAP.

When she arrived, she met her manager in a meeting room with the person from HR who had hired her two months ago. At that meeting, she discovered Amgen was laying her off with two weeks’ severance. “I was in total disbelief,” she told me. “I had moved there from New Jersey to take a great marketing position and bought a new condo. As I was leaving their campus, I pulled off to the side of the road and started crying. How could anyone ask me to join their company, move me across the country, and lay me off?”

Unfortunately, Cheryl’s story is not uncommon. The pharma industry is bracing for a future where drug prices are ging to come under intense scrutiny, and more drugs are coming off patent.

When Lilly lost the patent on Cialis, a very profitable product, the brand team had to find new jobs, although they were among the top company performers, which set the bar higher for marketing a new drug. Most have left the company and taken other jobs within the industry, but this happens all the time.

There are a number of reasons why pharma companies might lay off people. Here are some of the most common:

• Restructuring or downsizing. Pharma companies are constantly evolving, and sometimes this means that they need to reorganize their workforce. This can lead to layoffs, especially if there is an overlap in job roles or if the company is looking to reduce costs.

• Mergers and acquisitions. When two pharma companies merge, they often have to consolidate their operations. This can lead to layoffs, as the combined company may not need as many employees as the two separate companies did.

• Patent expirations. When a drug’s patent expires, it becomes available as a generic drug. This can lead to a significant decrease in sales for the brand-name drug, forcing the company to lay off employees.

• Financial difficulties. If a pharma company struggles financially, it may lay off employees to reduce costs. This is especially likely to happen if the company faces competition from generic drugs or is developing new drugs that are not yet profitable.

When I was asked to talk to MBA students at a leading school in Cambridge about careers in pharma, I used data to tell them the reality of working in an industry where profit is king and patients are not considered customers. I also showed them a chart of industry layoffs. The hardest thing for them to grasp was that outstanding performance was no guarantee of staying employed. I advise, “find a company that wants to make a difference and where YOU can learn and excel.”

The pharma industry uses golden handcuffs to attract employees, but those are often cut at the first sign of a profit downturn. Some employees refuse to believe it will happen to them, but BMS and Biogen demonstrate that employees can easily be replaced.

Pharma will have to learn to get faster and leaner to compete. Their outdated processes are holding them back. Forget the slogans in the lobby for pharma. It’s all about the profits and share prices.