Remember the time when the general wisdom was that biotech companies never died, they just changed their name and product focus. That was true for most of the history of the biotech industry until after the 2008 downturn/recession .That’s especially no longer the case in 2015. The “formula” for investors and, therefore, the new environment for most founders and innovators is to obtain proof of concept as quickly as possible with as little staff and cost and sell the product. The industry has adopted short term planning and has not learned from history how this can negatively impact the future of the industry
The immediate next step upon the completion of the “deal” is to merge the company with another, shut down the acquired company and lay off the professionals who developed it. When the innovative company was run with virtual staff, there isn’t any company to close. The experienced staff, usually contractors move on to the next gig.
When this process happens often enough, there is no time for building a staff and providing experience to new graduates and hired professional staff. The system will eventually produce a shortage of new life science scientists capable in the ways of R&D. This process has resulted in large layoffs of R&D professionals in the pharma sector as big companies find it cheaper to pick up products rather than research and develop them. Meanwhile, Ph.D. programs continue to develop more students expecting careers in academia. Formerly, they could move to industry but that avenue is closed if there are insufficient jobs with no chance to get drug development experience.
Some said that big pharma would become development houses as they obtained the research from biotech and academia in the future. What they didn’t see coming was the extensive offshoring and outsourcing of development. Perhaps the good news is the growth of these latter companies. See some data below.
The most recent Batelle/BIO State Bioscience Jobs, Investments and Innovation 2014 report issued in 2014 advised:
- “In 2012, U.S. bioscience companies employed 1.62 million personnel across more than 73,000 individual business establishments.
- Over the past decade the industry has added nearly 111,000 new, high-paying jobs or 7.4 percent to its employment base.
- Economic output of the bioscience industry has expanded significantly with 17 percent growth for the biosciences since 2007, nearly twice the national private sector nominal output growth.
- The industry continues its tradition of creating high-wage, family-sustaining jobs with average wages 80 percent greater than the overall private sector and growing at a faster rate.”
Despite the optimism reported in this 2014 report, Battelle noted some weakness in the form of decreases in NIH and VC funding. The ecosystem must remain healthy to avoid destroying this otherwise promising industry going forward. This 2014 report uses 2012 and 2013 data so they don’t include the major decline in drugs and pharmaceuticals employment that has continued since those data were collected. Medical device employment was more stable and anecdotal reports suggest improvement in the last year.
- “The foundation of a healthy environment includes: Research funding that supports both the understanding of basic biological precepts and their ultimate translation into bioscience relatedproducts and services.
- Regulatory systems firmly grounded in science and predictable in their application.
- Strong protections for intellectual property, both domestically and internationally.
- Medical reimbursement and payment policies that are favorable to the development of new and innovative biomedical products.
- Government trade actions that sustain and improve the “openness” of international markets for U.S. bioscience goods and services.
- Federal and state tax policies and incentive systems that sustain industry competitiveness.
- Education and workforce development programs providing the skilled workforce needed for today and tomorrow.”
The good news for professionals is that the Research, Testing and Medical Laboratories staffing has increased by 9.7 percent while the drugs and pharmaceuticals has declined by 10.0 percent in the 2007-2012 period. See page 6 of the above mentioned Battelle Report for chart summarizing the changes in workforce.
Highlights of This Coming Week’s Life Science Events
- Golden Gate Polymer Forum, Monday Evening, August 24, 2015; Topic: “Computationally Inexpensive Simulation and Modeling for Future Lithography Processes;” Speaker: Prof. Hayden Taylor, Dept. of Mechanical Engineering, U.C. Berkeley
- Bio2Device Group, Tuesday Morning, Aug. 25, 2015; Topic: “MALDI TOF MS: An Ongoing Revolution in Microbe Identification and Characterization;” Speaker: Dr. Gongyi Shi, Director of Scientific Affairs, Bruker Corporation
- BioScience Forum, Wednesday Evening, August 26, 2015; Topic: “Oncology Meets Immunology: Revolution of the Cancer-Immunity Cycle;” Speaker: Daniel Chen, M.D., Ph.D., Cancer Immunotherapy Franchise Head, Product Development, Oncology, Genentech
You can download details for the above events in a complete list of upcoming events by right clicking on Audreys Picks August 23, 2015.
Note that I am not able to send my blog and lists directly to you as I did for over 10 years. You can access them by reading my weekly blog and downloading my lists at https://audreysnetwork.wordpress.com/ You can also access via my website http://www.audreysnetwork.com.