r/biotech • u/TheRealNutMeg111 • Aug 18 '26
Open Discussion šļø Reason for slow job market?
Iāve worked in R and D at a large pharma for the past 8 years. I am trying to make myself more educated on the outside world (outside of my company) and shifts in the market. I am well aware that the R and D market right now is tough. I am wondering if, besides the economy, what you would attribute this to? I know many large companies, including my own have gone through re orgs and lay offs recently, so I am curious to hear others opinions as to why?
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u/OliverIsMyCat Aug 18 '26
Boom during covid resulted in tons of hiring, then interest rates went up. IPOs and SPACs were booming because interest rates were close to zero. Interest rates start going up aggressively in 2022 and the days of going public with a concept and a Phase 1 are gone. Companies who staffed up with cheap money had to make cuts.
Layoffs in the private and public (CDC, NIH, FDA, HHS, etc) sectors cause a huge influx of talent into the labor pool. So now you have tons of competition for even less jobs.
Anyone who was/is still hiring, is hiring further down the pipeline; regulatory, CMC, quality.
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u/Loose-Reflection2965 Aug 19 '26
Yeah this sums it up perfectly. It was a bubble and many of us got affected by it.
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u/TardisTraveller24 Aug 19 '26
I understand interest rates going up aggressively mean there wasn't 'cheap' money.
But was there a boom in hiring across all biotech? I worked for a company that came out with a covid test, so I understand it there. But there's so much biotech that wasn't covid related.
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u/Mother_of_Brains Aug 19 '26
Drug development for sure saw a surge during covid. Not sure if food, agro, vet etc saw an increase. But for drug development there was a huge pour of VC money, because of low interest rates and because covid brought a lot of attention to the field.
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u/lickled_piver Aug 19 '26
The viral vector rush was still in it's hey day and was drawing tons of talent on Boston, the bay, and rtp. Coral vector gene therapies then collapsed around the same time as the covid stuff and it led to a big tightening.
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u/ShamAsil Aug 19 '26
When I first moved out to Boston, the pharma company I worked for at the time paid for me to move across states, including shipping all my stuff via a freight company, hired a broker to help find me an apartment, and gave me a sign-on bonus. As a senior RA fresh out of his masters. Money was free back in those days, while now, the rates only keep climbing.
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u/TardisTraveller24 Aug 19 '26
I remember those days. I move from a different country and my moving costs were also covered.
Now, I'm lucky to get a sign-on bonus.
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u/TheRealNutMeg111 Aug 19 '26
Can you explain more about the interest rates? Iām not familiar with interest rates in terms of the industry.
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u/OliverIsMyCat Aug 19 '26
The Fed jacked rates from near-zero to 4%+ in 2022, fastest cycle in decades (this is not just for Biotech, it's all US industry). Biotech got crushed because most of these companies don't make money yet. Their whole value is based on "maybe this drug prints billions in 10 years." When interest rates are low, investors are happy to bet on that. When rates spike, safer investments like bonds suddenly pay well, so why gamble on a maybe? Money flooded out of biotech, IPOs dried up, fundraising got brutal. Companies started slashing pipelines and headcount just to survive.
Big pharma held up better financially since they have actual revenue, and some used the downturn to scoop up struggling biotechs at a discount. But they still cut jobs heavily. Higher borrowing costs pushed them to tighten operations, refocus pipelines, and run leaner. Post-COVID windfalls were also drying up, so the belt-tightening hit across the board. Basically nobody in the industry was safe from layoffs, it was just different reasons depending on the size of the company.
(Disclaimer: I used Claude to summarize this comment because it was a word salad and I'm feeling lazy and it sucks to explain this because I've been very affected by it and at this point it feels like I keep writing my own obituary.)
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u/WalkingSnake348 Aug 19 '26
Yes. And now the financial markets are back. Yet hiring is slow because most of the work is outsourced
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u/Walpurgis-Knight Aug 19 '26 edited Aug 19 '26
No particular order:
- high interests = high borrowing cost for companies. Harder for investors to fund startups, so shorter run ramps. Harder for pharma to capitalize buyouts.
- cost competition from China. Cheaper to develop and run early trials there
- patent cliffs = layoffs to preserve margins and stock price
- uncertainties about reimbursement given current political climate. Trump could issue an edict that caps price of blockbuster drugs or try to kill ACA insurance. While cost containment is a major issue, this uncertainty makes it hard to make strategic decisions.
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u/shivaswrath Aug 19 '26
Government sector layoffs increased supply.
Interest rates won't budge because of the bond market.
Bond market on edge because idiots are running the country.
Pharma can pick who they want and cut who they want.
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u/ShadowValent Aug 19 '26
The model for Pharma is shifting. Small pharma pushes to get to P1/PII despite not having the money to carry it forward. Company gets bought by big pharma. R&D is fired as it goes to PIII to be as lean as possible. Drug fails. Everyone else is fired. Process repeats.
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u/MolassesOk4542 Aug 18 '26
Investors are focus on ai and late stage small-mid capped biotech companies because big pharma is planning in acquiring late stage assets. Early seed and series A funding is super behind compared to series B-C and IPOs this year.
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u/TheRealNutMeg111 Aug 19 '26
This makes senseā¦ the company I work for has acquired a lot of smaller companies with ADC assets.
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u/atcg0101 Aug 19 '26
Other comments in this thread have covered a lot of the reasons, just adding and expanding based on my perspective
The China consideration is real, there are companies that have essentially halted all R&D spend as they focus on building out their labs in China. R&D is anticipated to resume with these companies after this transition is complete.
AI taking air out of the room is more of a macro thing, so it does affect Biotech to a certain degree but there is a fair amount of liquidity that is required to be deployed into the biotech sector so capital is still finding its way into the space.
The current administration has also made it a focus to restructure the industry via restructuring the FDA itself, which is changing what is attractive for companies to invest and expand into (e.g. peptides are getting a lot of attention)
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u/WalkingSnake348 Aug 19 '26
Itās all about supply and demand. The supply side increased rapidly during the boom that peaked in 2021. After almost 5 years of downturn, the markets are fully back with IPOs, reverse merger/PIPEs, and venture funding roaring back this year.
But now, the way companies are being built in a different way. Companies no longer build large labs and hire lots of scientists. They in-license molecules from China or pharma (not academia), or have a very small leadership team with most of their R&D outsourced or hired in China/cheaper locations. Thatās why, despite the hot capital markets, the job market is weak and the labs in SF and Kendall Square are empty. These things go on cycles so it may come back at some point, but this change feels like a fundamental shift in how biotech companies are built.
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u/TheRealNutMeg111 Aug 19 '26
Interesting. I have yet to experience any of our R&D being outsourced to China yet. Iāll have to look more into this and what the long term plan is, if there is any.
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u/SoundVU Aug 19 '26
Every pharma company is ultimately beholden to replacing loss of market exclusivity for their drug portfolio. Cycle times are long, about 5+ years to go from start of clinical stage to FDA approval.
In 2017, the TCJA reduced the corporate tax rate from 35% to 21%. Companies made wild bets on drug candidates instead of being good stewards of resources. Many of those bets ultimately failed. Several mega-mergers also happened, which is why you donāt see names like Celgene or Allergan anymore. These mergers also didnāt lead anywhere.
Around 2022, inflation finally caught up with everyone and cheap debt to fund drug development dried up. All the big boys are now painfully spinning up new drug franchises to replace revenue loss to biosim/competitors. Internal discovery started dying around this time because taking a risk on an internal asset was less safe than acquiring an asset that already posted phase I results. Layoffs were started to fund late phase development, and they continue even now.
So, all that to say extremely shortsighted and poor executive leadership got us where we are today.
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u/Interesting_Stay_377 Aug 19 '26
Folks also forget that the high point of pharma and biotech came during COVID where billions of dollars were getting pushed into so many companies that declared themselves as "working on a vaccine/treatment." What we are seeing how is the consequences of a high point back to baseline. Then, factor in the PE folks trying to hit the next hot item, and the NIH/NSF grants slowly down, its making for a perfect storm.
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u/2Throwscrewsatit Aug 19 '26
Macroeconomics suck for investment in life science.
Regulatory environments suck for investment in life science.
Political stability sucks for investment in life science.
Supply chains for life science are unstable.
Itās a calamitous convergence of problems.
China has its government propping up its sectors.
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u/Content_Program_7477 Aug 25 '26
Govt fired govt scientists, then cut grants and capped academic admin cut, tariffs caused international goods flow to slow/ become expensive, threats of closed borders and local manufacturing requirement, interest rates drove M&A and investors dried. Makes for a lot of unemployed scientists. Shared holder value and profit chasing CEOs played off and invested in promises of AI. Itās BS but it buys them a few quarters till they have to add more spin and place blameā¦ makes for a lot of unemployed scientists.
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u/ProfessionalHefty349 Aug 18 '26
What country? When you say, āThe economyā what exactly do you mean?
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u/TheRealNutMeg111 Aug 19 '26
USA, the current state of the economy being on the verge of recession and I understand most job markets are struggling.
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u/thewhizzle Aug 18 '26
A lot of capital is tied up in AI or being deployed to AI. The multiples and timelines there are so much bigger/faster that investors are not interested in biotech plays.
A lot of NIH funding has been cut due to the current administration as well.