Will Biotech Employment Continue To Rise As The Industry Evolves?

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

A report from the Bureau of Labor Statistics found that nationwide employment in “pharmaceutical and medicine manufacturing” sunk from 291,795 in 2003 to 277,113 in 2013, The Philadelphia Inquirer reported recently. In the face of shrinking pipelines, the patent cliff, rabid M&A, and pharma’s growing appetite for outsourcing, companies have undergone periods of layoffs, and, naturally, their payrolls have taken some hits. Even the top 10 pharma companies recorded roughly 30,000 fewer employees by the end of 2013 compared to the end of 2012, research found. But it’s not the same story for biotech R&D: employment hit 142,475 in 2013 — up from 135,424 in 2007.

Will biotechs keep growing? Given the success of some of biotech’s drugs, it certainly seems so. Prescriptions developed by biotechs held a majority of the top 10 slots on the list of the biggest global prescription drug earners in 2014.  According to GlobalData pharma revenue figures, Sovaldi/Harvoni (Gilead), Remicade (Janssen), Enbrel (Amgen), and MabThera/Rituxan, Herceptin, and Avastin (all from Genentech) were top earners. Similarly, research from Evaluate Pharma shows that biotech drug sales are forecasted to account for 27 percent of global sales by 2020 — up from 23 percent last year, The Wall Street Journal blog reported last week. It’s only natural to expect that, as these heavy-hitters bring in high revenue, there would be a rise in biotech employment.

But at the same time, it is hard to ignore trends that could have a larger impact on the breadth of the biotech space in the future. Perhaps one of the most obvious trends is the fact that pharma’s appetite to bolster its pipelines is being fulfilled by the number of biotechs out there. According to Bloomberg, pharma has already spent $40 billion on biotech acquisitions in 2015, and it sounds like Big Pharma is fixating on a few high-profile biotech players in the cancer space that could be ripe for the taking.

Though it seems new biotechs crop up every day — take for instance GSK’s latest $30 million investment in the launch of 3 new biotechs — there’s the emergence of the “virtual biotech” to keep in mind as well. Just like Big Pharma, a number of biotechs have begun outsourcing drug development to curb costs. As a result, The Boston Globe says, “companies keep a tight lid on hiring.” I’m curious as to what effect this would have on the trajectory of the biotech into the future — not only in terms of hiring, but also in terms of a successful business model.

The Motley Fool proffers the argument that a company needs to be able to do three things well in order to embody the best biotech business model. A company needs to be able to grow organically by developing products inside company walls, it must be willing to collaborate, and it must go after certain acquisitions that will help boost a pipeline (but not be the pipeline’s only source of growth). However, the emergence of the virtual biotech seems to suggest that this business model could be on the brink of changing. Will the virtual biotech flourish in an increasingly cash-strapped industry, making outsourcing the best biotech business model?