The tech industry and the life sciences have been forging an ever-closer alliance in recent years. By 2030, the pharma industry is projected to invest a staggering $4.5 billion in digital transformation, and by 2025, a further $3 billion is expected to be committed to artificial intelligence. This unprecedented level of collaboration promises to revolutionize the healthcare industry.
It’s no surprise, then, that as the tech industry suffered a staggering 98,000 layoffs in the first month of 2023 alone, people are asking if biotechnology layoffs will reach similar heights. With the unprecedented impact of the tech industry, many are left wondering what this could mean for biotech.
The tech industry has been forced to take drastic cost-cutting measures, the result of a series of decisions that have put them in a position of financial insecurity. From outsourcing labor to utilizing automation, these decisions have been made in an effort to remain competitive in an ever-changing marketplace. However, the effects of these measures have had a drastic impact on the industry, forcing many to reevaluate their strategies and look for more sustainable solutions.
What Goes Up Must Come Down
The tech industry has been rocked by mass layoffs due to the unprecedented challenges posed by the COVID-19 pandemic – with the advent of software and tech platforms that enable remote working and collaboration, Joe Mullings, CEO of The Mullings Group, explains. This shift has left many tech companies struggling to adapt and stay afloat, ultimately leading to devastating job losses.
The technology sector experienced a surge in hiring during the COVID-19 pandemic due to what has been dubbed “The Great Resignation.” Companies sought to hedge their bets in the uncertain economic climate by recruiting new talent, resulting in an unprecedented hiring spree. According to industry expert David Mullings, this was done “for a number of reasons” and served to create a unique opportunity for job seekers.
Tech companies are fiercely competitive when it comes to recruiting talent, as they don’t want to risk losing potential candidates to their rivals. This competitive spirit is one of the reasons why tech companies strive to provide attractive offers and competitive compensation packages to top candidates.
The consequence of this is that salaries and bonuses are being artificially and inappropriately inflated, leading to retention salaries and bonuses that are far too high.
As the demand for tech workers soared in the first quarter of 2022, U.S. employers posted a staggering 1.1 million tech jobs–an increase of 43 percent from the previous year. To attract the best talent, companies began offering significantly higher wages, with many increasing salaries by 20 to 30 percent. This surge in job postings and salaries reflects the ever-growing need for tech professionals.
Companies that had previously been able to afford generous pay increases for their employees are now feeling the pinch and have been forced to make difficult decisions to reduce costs. With wages on the rise and costs increasing, these companies have found themselves unable to sustain the growth in pay and have had to resort to cutting back.
One Man’s Layoff is Another Man’s New Hire
Sheila Rocchio, the Chief Marketing Officer at eClinical Solutions, has seen first-hand the impact of the recent wage inflation. In her own words, she described it as an unsettling trend that has the potential to negatively affect businesses.
Finding top-notch engineers and software developers has been a major challenge for us in recent years. According to Joe Rocchio, our chief technology officer, this has been our greatest hurdle in staying ahead of the competition.
With the tech layoffs, Rebecca views it as an opportunity to hire great talent for the areas her company is investing in, such as software and product development. Whether experienced or early stage, she believes the right people can bring the skills and knowledge needed to take the company to the next level.
Rocchio anticipates that the pharmaceutical industry may face minor downsizing, as companies seek to streamline operations and prioritize their resources. Although the scope of layoffs will likely be limited in comparison to other sectors, they are expected to have a meaningful impact on the industry.
A recent study by Mckinsey revealed that companies that engage in strategic M&A and partnerships to rotate and reprioritize their portfolios have outperformed their competitors in terms of total shareholder returns. Furthermore, the study found that biotechs are actively divesting in order to prioritize innovation. This signifies that smart portfolio management can offer businesses a significant competitive advantage.
As firms embark on these restructuring projects, it is likely that some employees may be displaced in the process. However, with the right strategies, such changes can be used as an opportunity to make improvements and create positive future outcomes.
As the tech industry evolves, we’ll start to see more and more companies emerging to take advantage of the talented tech professionals that have become available. In particular, the life sciences sector will be well-positioned to capitalize on this influx of skilled individuals. This will lead to an exciting new era of growth and innovation in the industry.
A Temporary Problem
The tech and life science industries may rely on similar external funding and investors, but there is one key distinction between the two. Historically, the performance of publicly traded tech companies has been more closely intertwined with the stock market than life science companies. This has created a unique dynamic between the two industries, where the performance of one can have a major impact on the other.
When the market takes a turn for the unpredictable, tech companies react by looking for ways to cut costs. But biopharma companies face a different challenge: they must be proactive and plan ahead, due to the lengthy and resource-intensive process of taking a drug from preclinical research to the FDA. It’s a demanding endeavor that requires a keen eye for the future and an understanding of the risks involved.
The journey of a biotech or med-tech company takes a unique path, one which focuses on science rather than revenue. It is imperative to remain on that pathway in order to be successful.
These early-stage biotechs are like sharks, who must keep swimming or else face certain death, no matter what the overall market is doing. It’s a high-stakes situation that requires tenacity and resilience to survive.
The influx of tech talent into the life sciences is a trend that has not gone unnoticed – and it’s no wonder why. According to Rocchio and Mullings, this stability is highly attractive to tech candidates, making it an enticing prospect for those looking to make a career change.
The medical technology industry is attracting the attention of software, systems, firmware, and robotic engineers, who recognize the stability and security of this field in times of economic uncertainty. Experienced engineers are drawn to the promise of a recession-proof career path in med-tech, as this industry continues to grow and develop.
For biotechs with the resources to take on top talent, the influx of qualified tech candidates is sure to be a boon, driving forward innovation and progress in the industry.
As the pandemic subsides and the world economy begins to recover, the renewable energy industry is poised to seize the moment and reap the rewards of all the investment that has been waiting to be tapped. According to industry expert, Joe Mullings, we just have to make it through the next few months and then the industry is set to enter a period of strength and growth in the second half of 2023. Get ready to revolutionize the way we power our homes, businesses and lives with renewable energy!