While biopharma layoffs took an unexpected 16% jump in 2025, experts believe 2026 marks a shift toward a more stable and predictable market. Although the year opened with staff reductions at firms like Takeda and Sonoma Biotherapeutics, analysts from EY project that total industry layoffs will likely remain below 5% this year. The intense market turbulence caused by shifting trade policies and the initial pressures of the Inflation Reduction Act has begun to settle, allowing companies to focus on more traditional operational drivers.
A Return to Traditional Drivers
The post-pandemic “recalibration” phase is largely over. Job losses in 2026 are expected to stem from standard industry risks rather than broad economic shocks. These “surgical restructurings” typically follow specific events, such as the failure of an investigational drug in clinical trials or strategic decisions to outsource functions. For instance, companies like Vedanta Biosciences recently faced deep cuts after clinical misses, illustrating that while the overall industry stabilizes, individual biotech firms still face high-stakes “all or nothing” milestones.
The Looming Patent Cliff
A significant test for industry stability lies just over the horizon: the loss of exclusivity for several major branded drugs. As patents expire, the industry must prove that new drug portfolios can generate enough revenue to offset these losses. While biologics offer some protection because physicians are often hesitant to switch stable patients to biosimilars, the pressure is on for R&D pipelines to deliver high-performing replacements to maintain current profit levels.
Global Competition and the AI Factor
The landscape is also being reshaped by the rapid rise of China as a global contender in drug development. In 2025, over a third of industry deals originated in China, and the nation has become a primary hub for clinical trials. While it is too early to tell if this shift will directly lead to more U.S. headcount reductions, the competition for early-stage innovation is intensifying.
Meanwhile, Artificial Intelligence remains a “massive unknown.” While AI has not yet triggered mass layoffs due to the continued need for human supervision and the low current return on investment (only 9%), it is beginning to change how work is done. For now, executives view AI more as a tool for pipeline expansion rather than a replacement for high-level human expertise, though lower-complexity roles may face more immediate pressure.
Source: PharmaVoice | January 26, 2026
