The biopharma industry is experiencing a notable surge in layoffs this year, with job cuts in 2025 already surpassing last year’s totals. By July, the industry had shed over 13,000 jobs, marking a significant 31% increase compared to the same period in 2024. This trend continued into August with major companies like Merck & Co., Bayer, Bristol Myers Squibb, and Moderna all announcing significant workforce reductions.
According to Ashley Finney, a senior vice president at Bench on Demand, these layoffs are driven by a mix of familiar challenges and new pressures. Companies are increasingly focused on streamlining operations and prioritizing core therapeutic areas. This often means cutting programs that do not fit into long-term strategies, especially those that fail to meet key clinical trial endpoints.
Key Drivers Behind the Cuts
Several factors are contributing to this wave of layoffs. Many companies are narrowing their focus and shelving programs that do not show strong potential. Finney notes that even promising assets can be cut if funding dries up or regulatory pathways become too uncertain. When advanced clinical programs fail to meet their goals, it often triggers workforce reductions. For example, PureTech’s startup, Vedanta Biosciences, laid off nearly a fifth of its staff after its ulcerative colitis treatment failed in a Phase 2 trial.
Major drugmakers are also preparing for the financial impact of losing patent protection on blockbuster drugs. Merck, for instance, is reorganizing to cushion the blow as its top-selling cancer drug, Keytruda, faces upcoming biosimilar competition. Additionally, new regulatory challenges and a decline in demand for certain products are playing a role. Moderna announced an 800-person layoff as it grapples with a decline in COVID-19 vaccine uptake and sluggish sales of its RSV vaccine. The company is also facing new, more stringent approval criteria for vaccines and a termination of federal funding for some mRNA programs.
The Differences Between Pharma and Biotech
While layoffs are affecting companies of all sizes, the underlying reasons vary between large pharmaceutical companies and smaller biotechs. Finney explains that large pharma companies are typically driven by pipeline prioritization and the need for greater operational efficiency. Their cuts are often part of a strategic realignment to focus on high-potential assets.
In contrast, layoffs at biotech companies are more often linked to funding shortfalls and a stalled IPO market. Without a steady flow of financing, the “lifeblood of biotech” as Finney puts it, these companies are forced to restructure to extend their cash runway. This was the case for Generation Bio, which cut 90% of its workforce despite positive preclinical results, and Fate Therapeutics, which trimmed 12% of its staff. Finney predicts that if financing does not rebound, restructuring will likely continue across both sectors well into next year.
Source: PharmaVoice | August 18, 2025
