Layoffs in biotech and pharma continue as development costs surge

From startups to big pharma, the impact of the pandemic has taken a toll on the industry and has forced companies to make tough decisions. According to recent reports, some of the biggest names in the biotech industry have announced significant layoffs, including Genentech, BioMarin, and Gilead Sciences. Companies are now grappling with the economic fallout from the pandemic and its effect on the pharmaceutical industry.

Although the COVID-19 pandemic has been the primary cause of the present financial crisis, the biotech sector has been dealing with issues for some time. The present environment is a result of a number of factors, including the high cost of research and development, regulatory barriers, and a dearth of investment in the industry. While COVID-19 may have temporarily increased the possible profits while decreasing the average cost of drug development, this is now over. The price to develop a medicine candidate from the discovery stage to market introduction came to $2.3 billion, up $298 million from 2021 but still less than the prices in 2019 and 2020. The data comes from Deloitte's most recent annual study, which looks at the predicted return on investment (ROI) from the 20 largest pharmaceutical companies' late-stage pipelines to assess the present condition of R&D results.

According to Kevin Kondarski, partner at Deloitte Consulting and leader of the firm's life sciences R&D strategy, "The decline in this year's results is broadly driven by the successful approval and commercialization of multiple new drugs and products this year. This is partly a reflection of the challenges R&D organizations face in cultivating a sustainable pipeline flow.” According to a recent report released by Deloitte the overall ROI in pharma R&D decreased to 1.2% in 2022, the lowest ROI recorded by Deloitte in 13-year history.

Despite the grim outlook, there is some hope on the horizon. Many biotech companies are continuing to invest in research and development, and there are indications that the sector may recover in the coming months and years. The federal government has also stepped in to provide support, with initiatives aimed at helping companies weather the storm and protect jobs.