BioBuzz CEO and founder Chris Frew discusses the complex biotech sector and the hopeful signs that it is getting ready to blossom once again.
Despite major scientific achievements, for example recent CRISPR breakthroughs, globally the biotechnology industry has had a tumultuous couple of years, culminating in what has been collectively referred to as the biotech winter.
Characterised mostly by mass job layoffs, insecurity and a freeze in hiring, the biotech winter is the result of a wide range of economic factors, notably Covid-19, but more specifically, the post-pandemic landscape that resulted in a surplus of life science professionals.
“Today’s landscape is a stark contrast to 2020 and 2021”, explained Chris Frew, the CEO and founder of life science talent platform BioBuzz. “The industry was in a hiring frenzy after billions of dollars of investment and government spending went into the biotech industry to fund new vaccines, medicines and diagnostic tests as a result of the Covid-19 pandemic.”
“Macroeconomic factors such as high interest rates, combined with a post-Covid-19 retraction due to over-hiring across the industry have resulted in a life science sector recession. This down-turn was marked by record low levels of investment into biotech accompanied by tens of thousands of layoffs starting in late 2022.”
Furthermore, many biotechnology companies have had to make the difficult choice to lay off staff to “preserve runway”, while larger pharmaceutical firms have cut costs, refocused strategies and taken part in a series of mergers and acquisitions, resulting in additional disruption and job loss across the industry. “This has become two of the bleakest years in the biotech industry in several decades – the biotech winter.”
Change in the air
For Frew, “pain is a powerful thing for altering behaviours” and certainly for many organisations, the efforts to grow their programmes over the last few years within a harsher climate and with significantly less resources have indeed been painful. He explained that many companies have sought to de-risk their growth by prioritising the next milestone, which in turn has led to a change in hiring practices, as organisations turn to flexible alternatives in lieu of full-time employees.
“This industry is built on human capital and scientific expertise so it will always need to leverage traditional full-time employee hiring models in order to develop new IP and innovate. However, we have seen many biotech companies move towards more flexible hiring practices, utilising more consultants, fractional leadership and contractors for non-critical roles and project-based positions.”
Particularly with early-stage start-ups and SMEs, venture capitalist (VC) funding can be crucial to long-term success and achievements, not only to provide the necessary capital, but to offer security and the guidance needed to bring a strong idea to fruition. For Frew, when it comes to investment, while not perfect, he has noticed an improvement throughout 2024, noting VCs are building financial reserves, signalling better times ahead for early-stage investment.
“Just this fall, Bain Capital Life Sciences and Arch Venture Partners each raised new $3bn funds for biotech and healthcare-focused investment. Several new funds have also launched, such as Regeneron’s $500m fund and Goldman Sachs’ first life sciences fund, which raised $650m.”
Defrosting the future
Globally, across many sectors, working life and expectations have been dramatically altered by the pandemic, a worldwide shift in working dynamics and mass technological evolution, leading to a change in what was once considered ‘normal’. According to Frew, to attract and retain top-tier talent, as well as appeal to non-traditional, flexible hires, collaboration between HR, marketing teams and organisational leaders will be paramount.
“The biotech industry is still recovering from this major adjustment period while also dealing with advancements in automation and AI, which are further disrupting how we work and what a modern biotech company’s path looks like. However, I believe that the winter is thawing and spring is on the horizon.
“With all of the cost-cutting that Big Pharma has done over the past 24 months and all of the money sitting on the sidelines right now in the coffers of investment firms, the industry has to start investing in early assets sooner or later in order to feed the biopharma innovation pipeline. It’s only a matter of time before things start buzzing again.”
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