After a turbulent few months in the biopharma market, there are signs that more trouble could be ahead.
U.S. Treasury Secretary Janet Yellen warned in a letter to House Speaker Kevin McCarthy (R-Calif.) earlier this week that there could be “serious harm to business and consumer confidence, should the U.S. default on its debt obligations by early June.” Other economists have painted a more dire picture for industry.
In the event of a default, the U.S. government would stop spending overnight — leaving unpaid bills to federal workers, bondholders and more. The financial impacts of such an event are widely unknown and “depend on how long the situation lasts, how it is managed and the extent to which investors alter their views about the safety of U.S. Treasuries,” economists at The Brookings Institution wrote in a blog post.
When in 2011 congress narrowly avoided a default, striking a deal 72 hours before its deadline, the consequences were still severe — causing $1.3 billion in additional borrowing costs, a downgrade in the country’s S&P credit rating and plunging stock prices that took six months to recover. The risks of a similar, or worse situation today could be calamitous. In updated estimates based on 2013 projections, the Brookings economists predicted a default now could cause the loss of upwards of 3 million jobs.
Those prospects leave an uneasy landscape ahead for the already battered biopharma market. After a boom during the height of the COVID-19 pandemic, available capital shriveled in 2022 and the number of companies listing IPOs fell from a height of 104 in 2021 to just 21 in 2022. And market anxieties continue to persist. NGM Biopharmaceuticals CEO David Woodhouse referenced the difficulties in raising capital in an April 4 email announcing plans to cut a third of its staff.
“As a result, and in light of our current strategy, we must take steps to reduce our operating expenses and extend our cash runway for long enough to put us in a position to generate meaningful clinical data,” he said.
NGM isn’t alone. Biopharma companies large and small have slashed their workforces over the last five months. Some of the largest include 450 layoffs at Amgen, 265 at Genentech’s San Francisco production facility, 230 at Thermo Fisher Scientific and 130 U.S. R&D workers at Merck KGaA.
Even with these layoffs, competition for talent in the biopharma market remains fierce.
With the potential for more uncertainty ahead, here’s a look at how biopharma companies can navigate workforce challenges.
