Cost cutting is just one factor driving biopharmas to whittle away at their workforces. An analyst discusses more common reasons layoffs occur and which employees are most at risk.
With biopharmas laying off scores of employees this year, some biotech and pharma professionals may be actively looking for signs that their companies are planning job cuts. However, if they focus only on generic corporate cost-cutting measures, they may be missing the mark, according to Audrey Greenberg, venture partner and chair at Mayo.
Workforce decisions are more often tied to a biopharma’s stage of development, asset performance, financing strategy, pipeline breadth and the company’s ability to pivot, Greenberg told BioSpace in an emailed response.
There are several early signs that biopharmas are preparing for layoffs, according to Greenberg.
“If a company is entering a period of tighter prioritization, signals may include shorter cash runway, delayed or reprioritized clinical programs, a hiring slowdown, fewer backfills, reduced discretionary spending, reduced use of consultants or external vendors, delayed expansion plans, or leadership language around focus, prioritization, capital efficiency or extending runway,” she said.
Value creation key in workforce assessment
The most important signals of impending layoffs, according to Greenberg, are those tied to value creation: clinical milestones, cash runway, financing access, pipeline prioritization and commercial traction. For example, she explained, at a precommercial biotech, cash runway and the next clinical or regulatory milestone are critical. For a single-asset company, a program’s outcome can define the whole organization. For a platform company or one with multiple assets, there may be more ability to pivot resources from one program to another. For a commercial-stage company, the drivers may be different and could include launch performance, reimbursement, salesforce productivity, manufacturing costs, competition and revenue growth.
The stage of a company’s asset also matters, according to Greenberg. A preclinical program, Phase 1 safety study, Phase 2 proof-of-concept readout, pivotal trial and commercial launch all have different capital needs and workforce implications, she explained.
“The same is true for the role an employee plays,” Greenberg said. “Someone tied directly to a deprioritized asset may have a different risk profile than someone supporting a core platform, lead program, regulatory strategy, BD, manufacturing, quality, finance or commercial execution. That is why I do not think layoff risk is evenly distributed across a company. It is often tied to the asset, milestone, function or business line that remains central to the company’s next value inflection.”
Greenberg also noted that seniority alone does not determine an employee’s risk.
“The better question is whether a role is essential to the next milestone and the next phase of value creation,” she said.
Patterns more important than one-off signs in predicting cuts
When looking for signs layoffs are coming, Greenberg recommended biopharma employees search for patterns rather than focus on isolated signals.
“A hiring pause may simply reflect discipline after a period of growth,” she said. “Reduced travel may be smart expense management. A delayed trial may reflect regulatory, operational or scientific complexity rather than financial distress. AI investment may mean a company is modernizing workflows, not necessarily reducing its workforce.”
What’s more meaningful, Greenberg noted, is whether several factors point in the same direction.
“Is the company trying to extend runway?” she said. “Is it narrowing the pipeline? Is it dependent on one major data readout, financing or partnership? Is it shifting more work to external partners, automation, lower-cost geographies or a different operating model? Is the employee’s role tied to a core priority or to something that may no longer be central to the next stage of the company?”
Focusing on skills, not predictions
While biopharma employees may spot any number of signs that layoffs are coming, Greenberg recommended they don’t try to predict every organizational decision. Instead, she said, they should try to understand the business context around them, build transferable skills and stay close to where value is being created.
“In biopharma, the people who will thrive are those who can connect science, capital, technology and execution,” she said.
