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Lab Company Layoff Ledger: First Half of 2023

by | Aug 1, 2023

In the first half of this year, US companies have cut the second-highest total of jobs since 2009, according to a recent report.

US companies continue to cut jobs at an alarming pace. Employers announced 458,209 job reductions in the first six months of the year—244 percent more than the 133,211 cuts announced through June 2022, reports outplacement firm Challenger, Gray & Christmas, Inc. That’s the second highest first-half total since 2009, surpassed only by the 1,585,047 cuts announced in the first half of 2020 when the COVID-19 pandemic began. Why are these numbers so high? In its report on the wider economy, Challenger cites overall market/economic conditions as the top reason, accounting for 216,693 (or nearly 50 percent) of the job cuts in the first six months of 2023.1

This trend holds true in health care, too—and, of course, labs and diagnostics companies haven’t been immune. Although inflation, shrinking margins, labor shortages, and other macroeconomic challenges affect the entire industry, the rapid decline in demand for COVID-19 test products and services seems to be the primary driving force of layoffs by lab and diagnostics companies.

Thus, of the 32 companies listed on our Layoffs Scorecard (below), nine have developed COVID-19 tests cleared by the FDA. Several of the layoffs at these firms are the direct result of the shrinkage of the COVID-19 market. Three of the nation’s largest lab firms—Thermo Fisher Scientific, Abbott, and Cepheid, which is owned by Danaher—cut jobs as a result of closing COVID-19 test production facilities in the first half of the year. COVID-19 revenue losses also drove restructuring and workforce reduction at Illumina, Siemens Healthineers, Grifols, Cue Health, and others.

The Prospects for Future Layoffs

Will diagnostics company layoffs continue at the same pace in the second half of 2023? There’s some evidence to suggest that the wave has peaked, at least across the wider economy. Challenger reports that layoffs announced by US-based employers in June declined 49 percent on a month-to-month basis (40,709 versus 80,089 in May). However, year-over-year totals remain significantly higher, with 25 percent more layoffs announced than in June 2022.

Within the diagnostics sector, it seems unlikely that the trajectory will dip significantly over the rest of 2023. Many of this year’s layoffs were a continuation of multi-year restructuring plans initiated in 2022 or earlier. In addition, several key companies—including Illumina, Verily Life Sciences, LumiraDx, and Grifols—have embarked on new long-term restructuring plans, envisioning job cuts and other reductions through at least the end of the year. Other companies, like Epigenomics and SQI Diagnostics, appear to need to cut jobs simply to survive.

“Cautiously Optimistic”: The Healthcare Industry in 2023

Although life sciences employment hit a record high in early 2023, the pace of its growth has slowed.2 The industry added an average of 11,144 jobs per month from June 2020 to June 2022, but only 3,378 jobs per month from June 2022 to January 2023—and that growth is expected to slow even further over the rest of the year.

LinkedIn’s July 2023 State of the Labor Market report revealed that, in hospitals and health care, hiring in June 2023 was down 14.9 percent year-on-year, with the number of employees leaving positions after less than one year down 5.3 percent. These statistics indicate growing uncertainty in the labor market, with fewer job opportunities available and more life sciences and medicine professionals choosing to remain in their roles.3

Despite layoffs throughout the industry, though, unemployment rates in biological, biomedical, and medical sciences remain well below the national average.2 The life sciences have historically fared well during recessions, with no decline in the number of US life science researchers across over 20 years and three recessions—and similar stability is expected in 2023 despite economic downturn.4

Diagnostics and Lab Company Layoffs Scorecard, January 1 to June 30, 2023

CompanyNumber of Employees Reason(s)/Narrative
*Cue Health388 (26 percent of workforce)Cost reduction plan implemented after 69 percent decline in Q3 2022 revenues and 170 job cuts in June 2022
*Biocept33 (35 percent of workforce)Restructuring plan to consider strategic alternatives and boost shareholder value
Verily Life Sciences (Alphabet subsidiary)200+ employees (15 percent of workforce)Restructuring plan designed to slim company down and exit medical device development
Personalis114 (30 percent of workforce)Save $17 million in 2023 operating costs and improve operating efficiency
PAVmed Inc. (and Lucid Diagnostics and Veris Health subsidiaries)~20 (20 percent of workforce)Reduce quarterly cash burn by 25 percent and pause device development
ImmunoviaUndisclosed number of R&D employeesSlim down Swedish home base to focus on US operations and commercialization of new IMMRay PanCan-d pancreatic cancer blood test
Guardant Health130 in account management, bioinformatics, and technology development departments (7 percent of workforce)Fiscal discipline, tough macroeconomic environment, and failure of blood-based colorectal cancer test ECLIPSE trial
Quantum Si~16 (12 percent of workforce)Restructuring program to cut costs and streamline operations
*Thermo Fisher Scientific230 jobs at three San Diego test-making plants acquired from Mesa Biotech in 2021 to boost COVID-19 manufacturing capacityYear-over-year decline in COVID-19 revenues from $9.23 billion to $3.11 billion in 2022, including only $37 million in Q4
EpigenomicsUnspecifiedMassive restructuring after recall of Epi proColon colorectal cancer test; company keeping only enough employees to maintain operations at San Diego and Berlin offices
*Grifols~2,300 US jobsOperational improvement plan to increase agility, preserve cash flow, and save approximately $428 million in 2023
*Thermo Fisher Scientific154 workers in San DiegoFull shutdown of Mesa Biotech plants, effective July
NateraUndisclosedLayoffs follow cuts in 2022 and are reportedly disclosed by LinkedIn posts from Natera employees
Genentech, Inc. (part of Roche)~265Closing of South San Francisco production facility
SQI Diagnostics24 (over 50 percent of workforce)Refocus business on point-of-care tests for respiratory health
Foundation Medicine (Roche subsidiary)135 (7 percent of workforce)Streamline organizational structure
*LumiraDx40 percent of workforceComprehensive restructuring after falling COVID-19 testing demand led to 40 percent decline in 2022 annual revenues
*Thermo Fisher Scientific113Shutdown of New Jersey test manufacturing facility
BiogenUnspecified number of jobs in multiple sclerosis (MS) unitMS drug unit struggles due to competition from generics to its drug, Tecfidera; latest downsizing comes after 100 jobs were cut in 2022
Oncocyte20 percent of workforceRestructuring plan under which firm also laid off 40 percent of its workforce and sold majority stake in developer of its DeterminaRx lung cancer test in December to cut costs and ensure cash flow through 2024
*IlluminaUnspecified number of future cutsReduce workforce via combination of streamlining and outsourcing operations as part of plan to cut more than $100 million from annual expenses over several years to deal with shrinking margins, falling profits, and regulatory challenges
*Cepheid (Danaher subsidiary)625 in California Bay AreaDecline in demand for rapid COVID-19 tests leads to further production cuts and downscaling after 925 Bay Area workers were laid off in November 2022
TakedaUp to 186 in MassachusettsDiscontinuation of research and discovery and preclinical efforts in rare hematology and AAV gene therapy
*NovavaxRoughly 500 (25 percent of workforce)Cut R&D and selling, general, and administrative expenses by 20–25 percent in 2023 and 40–50 percent in 2024
Takeda27 in San DiegoDiscontinuation of research and discovery and preclinical efforts in rare hematology and AAV gene therapy
*T2 BiosystemsNearly 30 percent of workforceRestructuring after 98 percent fall in COVID-19 test demand drives 71 percent decline in total 2023 Q1 revenues; company exploring mergers and other strategic options
*Abbott199 at Maine COVID-19 test production plantFalling COVID-19 demand forces firm to cut vast majority of plant’s temporary workforce hired to ramp up capacity during height of pandemic
GeneDx (previously Sema4)19 remote employeesPart of long-term staff reduction and lab closing plan
SQI Diagnostics18 (90 percent of workforce)CEO and CSO also laid off; shutdown looms after Canadian firm’s C$3.5 million ($2.6 million USD) net loss in Q1 and C$9.9 million ($7.5 million USD) working deficit
Akoya BiosciencesUndisclosedGeneral workforce reduction ahead of $44 million public offering
23andMe75 (9 percent of workforce)Cut annual payroll and benefits by $12.8 million after $311.7 million FY 2023 net loss
Biocartis140 (25 percent of workforce)Reorganization to cut annual operating expenses by €18 million ($19.7 million) with COO to resign in September
*Siemens Healthineers67 at Flanders, New Jersey test-making facilityShift manufacturing of Atellica Solution immunoassay tests to Ireland as part of company-wide plan to cut costs in diagnostics division
Federation BioUndisclosedWorkforce reduction after new biotech startup launches first Phase 1 trial
Twist Bioscience212 in CaliforniaPart of larger restructuring plan to reduce workforce by 25 percent
DermTech40 (roughly 15 percent of workforce) in sales, marketing, and general administrationRestructure to focus on flagship DermTech Melanoma Test
Listing is in chronological order.
*Companies that have invested heavily in COVID-19 diagnostics and related products.
Sources: G2 Intelligence, Laboratory Industry Report, “A Timeline of 2023 Lab Company Layoffs So Far” and “Lab Companies See Massive Layoffs and Restructuring,” company press releases, state Worker Adjustment and Retraining Notification (WARN) Act, and media reports.

References:

  1. https://www.challengergray.com/blog/job-cuts-drop-49-in-june-2023-lowest-total-since-october-2022-is-the-tech-purge-over/
  2. https://mktgdocs.cbre.com/2299/319d505b-6d9d-4558-99a5-e6ebb83ca369-362256098/2023_US_LifeSciences_Outlook.pdf
  3. https://economicgraph.linkedin.com/blog/job-seekers-search-intensity-is-surging-amid-cooling-labor-markets
  4. https://www.cbre.com/insights/books/us-life-sciences-research-talent-2023

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