My STAT Essay — Volatile is the new normal for the biotech workforce
In 2023, ReNAgade Therapeutics launched with $300 million to exploit an “all in one” technology solution for RNA-based therapies. That same year, Tome Biosciences emerged from stealth with $213 million to develop new gene editors, and Aera Therapeutics launched with $193 million to solve the delivery challenge for gene therapies.
By the end of 2024, ReNAgade employees had faced multiple rounds of layoffs including through a corporate merger, Tome had abruptly gone from 130 employees to closure, and Aera had laid off a quarter of its staff. These are emblematic examples of the new landscape that the biotech workforce faces.
While working at biotech startups has always involved risk, the biotech industry has recently evolved into an especially volatile dynamic. The high costs and complexity of drug development are forcing investors to channel risks into more narrowly focused companies. Those companies rush to either meet their near-term milestones, hoping to get acquired by large pharma, or fail and judiciously return capital to shareholders. In either case, change and turnover are the new normal for biotech workers.
As the biopharma industry stratifies into a set of specialist companies — discovery platforms, transient early asset developers, and pharma marketers — biotech workers can build resilience into a career full of transitions by finding matching niches and evolving skills through diverse experiences.
In the past, biotech companies like Vertex, Genentech, and Alnylam built themselves to be enduring, vertically integrated drug developers and sellers. Most drugs today, however, are developed by collaborations between specialized and increasingly transient companies.
Take the example of mRNA Covid vaccines. Moderna, emulating the old guard, was fortuitously poised to design, test, and sell its first product without help from any of its peers. It had nearly a decade of expertise on mRNA therapies when a once-in-a-century need for rapid vaccine development emerged.
On the other hand, Pfizer’s mRNA vaccine represents the new norm. Two smaller biotech companies provided the expertise needed to encode the Covid-19 spike protein and package it for delivery. Pfizer put the pieces together and leapfrogged Moderna to gain the first Covid-19 vaccine approval.
This shift toward specialization started more than two decades ago, and I have witnessed its acceleration first hand. In the early 2010s, as a strategy consultant, I routinely worked with midsized biotech companies to build both fertile pipelines and robust sales forces. Now, as a business development professional, I see most companies getting leaner and more committed to match-making instead.
That is because the trail blazed by companies like Genentech is no longer available to most new biotechs. Although its first drug was commercialized by Lilly, Genentech didn't stop there. In just three more years, the company tested, secured approval, and marketed a second hormone drug by itself, charting a course to becoming an enduring drug company. Three years. Today, a typical drug takes 8-10 years to get to FDA approval. And it costs between $1.5 billion and $2.5 billion, more than six-fold the estimate from the 1980s.
In the face of such capital risk, public market investors, have soured toward the biotech industry, aside from the Covid-skewed blip in 2021. Preclinical companies rely heavily on either venture capital funding or pharma transactions as a preferred exit strategy. Both those routes are much more suitable for leaner, narrowly specialized companies.
Although VCs are backing some biotech startups with mega-rounds, those investments are distributed piecemeal, conditional on constant progress (aka tranched). That keeps companies focused on advancing a small number of assets through to critical clinical development milestones. In an interview in 2021, veteran biotech investor Francesco De Rubertis said he would now “solely invest in startups that only commit to develop one molecule.” Although that concentrates risk for any single company, VCs diversify such risk by making multiple such bets across their portfolio. When those companies succeed, pharma buyouts offer the most effective means of returning value to investors.
Those large pharma buyers now see more value in smaller “bolt-on” deals, building their portfolio incrementally. The recent spate of drug licensing from Chinese companies is adding pressure on U.S. firms to remain competitive by staying lean (and less expensive upon a buyout).
Hence, when single-asset biotech companies achieve a development milestone, they can no longer sustain the research staff that got them there. Workers tend to inevitably encounter corporate restructuring, regardless of the company's failure or success.
Biotech employees can prepare for this new roller coaster normal by picking a niche in this increasingly specialized industry and then fortifying their skill sets to support the milestones most relevant to companies in that niche.
Smaller companies focused on one or a few assets, despite their volatility, offer opportunities to develop important transferable skills. Employees can rapidly cultivate specialties in such fast-paced environments with tight-knit teams navigating critical drug development milestones. The resulting expertise in conducting preclinical animal studies, new drug submissions, or early clinical trials builds valuable resilience in a biotech career. The same applies to nonresearch parts of the business too. Regardless of how their employer fares at those milestones, employees continue to benefit from having experienced those events.
I gained an inordinate number of skills from my first industry job, even though it lasted only one year. When I joined Karyopharm’s commercial team in 2018, it was preparing for its primary drug’s approval and market launch. As one of the first dozen members of the group, my responsibilities ping-ponged every few weeks, helping me learn about the inner workings of sales, marketing, market access, and many other functions. At a large pharma company, I would have been much more insulated from such volatility, and also the growth that came with it.
The biggest challenge, though, arrived when the FDA determined that Karopharm’s drug would receive partial approval, for a small set of multiple myeloma patients. While it may have merited a broader-use label 20 years earlier, most patients in 2019 had newer options available. I benefited again, watching experienced colleagues stoically accept that professional setback, update their resumes with those newest experiences, and stride on to their next ventures.
For those less drawn to such ups and downs, two other categories of companies are thriving in the biotech industry’s division of labor.
First, contract research organizations (CROs) and contract development and manufacturing organizations (CDMOs) are a steadily growing segment. Helping jumpstart lean biotech companies across a wide range of services, CROs and CDMOs can be relatively stable workshops for their own employees.
Another is a new wave of “platform companies” focused on solving the early discovery challenge for asset-developers. They use automation, protein design, artificial intelligence, or other proprietary skills to identify sophisticated drug candidates. Employees at such companies typically contribute to one or both of two keys to their success: continuous platform refinement and driving the success of collaborating partners.
In hindsight, my stressful transition out of Karyopharm was serendipitous because it helped me identify my niche. In my next role, at Arbor, a biodiscovery platform, I licensed the company’s discoveries to other biotechs for their new drug programs. But there, I also saw how discovery focused platform companies come with their own existential risks.
Platforms often require a heavy initial expense, and companies risk running out of cash until those investments bear fruit. Often, companies evolve their strategy to develop their own lucrative assets. At Arbor, when such a change was implemented, I noticed several research colleagues who had been working on collaborations could now pivot to similar roles within Arbor’s programs.
A harder transition for platform companies and their employees comes from commoditization. If their proprietary technology becomes commonplace, they may be forced to either start looking like a CRO, or to fundamentally reinvent their niche. However, the likes of Adimab and Xencor show how sustainable platform companies can continue to thrive.
Identifying the right niche can help shape a biotech career, but it requires work on the transitions that themselves propel biotech companies. While constant change is uncomfortable, each failure is an opportunity for the biotech worker to deepen or expand their set of skills. Biotech investors can manage risk by spreading their bets both contemporaneously and over time, but industry workers don’t have the same luxury. Taking different bets and evolving portable skills over time are the only tools available to us.
In a 2024 podcast on women in leadership, Sharon Barr, executive vice president for biopharmaceuticals R&D at AstraZeneca, extolled the “scary, big decisions” that came with her transitions. “When I'm growing cells in the lab, in log phase growth they will double and double and double until they run out of new growth factors, new nutrients, and then they stop growing and just sort of sit there,” she said. “You have to put them in a bigger beaker and then they will grow and be in log phase growth again. So I think you should at various points in your career, ask yourself if you're in a big enough beaker.”