Examining the Latest Mergers and Acquisitions Trends Within the Clinical Operations Industry04 Jul, 20233 minutes
The past few months have been a turbulent period for the Life Sciences industry, particularl...
The past few months have been a turbulent period for the Life Sciences industry, particularly for fledgling Biotech companies. Following the post-Covid boom, there have been supply shortages, international political conflicts, and economic difficulties such as the collapse of Silicon VB. This combination of factors has resulted in hiring freezes and layoffs in the Pharma sector. In this piece, we will discuss the changes that the Clinical Operations industry has experienced in the past year, explore the outlook for the rest of 2023, and analyze its influence on industry recruitment.
Layoffs in the Clinical Operations Industry
Fierce Biotech states that there was a notable increase in layoffs at the beginning of 2023. In Q1 of 2023, 80% more companies laid people off compared to the same period last year. The year ended brutally, with 23 biotech companies laying people off in November 2022. However, the trend has continued in Q2 of 2023, with February witnessing a peak of 24 companies laying people off, followed by a more consistent number of layoffs, including 11 companies in May and 3 so far in June. Hopefully, the situation is gradually stabilizing and the market will improve soon.
Acquisitions by Pharma Companies and Venture Capitalists
One of the major trends indicating positive signs is the gradual increase in acquisitions by large Pharma companies and venture capitalists reinvesting in the trimmed Biotech market. The investment from VC, in particular, demonstrates their faith in these companies' ability to produce results and market products that benefit patients. Moreover, the acquisition of Biotech companies by large Pharma allows these cash-strapped teams to benefit from the economies of scale available in massive organizations such as Novartis and Pfizer.
In recent months, several notable acquisitions have taken place. The Novartis acquisition of Chinook on June 12th for a staggering price of $3.2 billion, a 67% premium, stands out. Other significant acquisitions include Astella's acquisition of Ironwood Pharma ($75 million in upfront and pre-commercial milestones) and Merck's acquisition of VectivBio ($1 billion). These buyouts are expected to enable Biotech companies to leverage the manpower, brainpower, and technology available in these large Pharma companies. Additionally, Pharma companies can integrate these acquired technology platforms into their existing operations and further advance their programs. While acquisitions may involve difficulties and restructuring that lead to short-term layoffs, these moves are anticipated to bring long-term prosperity and positively influence the market.
Venture Capital Activity
Regarding venture capital activity, some of the biggest Biotech deals of the year have been truly staggering. In May this year, within a 24-hour span there were two significant investments—the $300 million investment in ReNAgade Therapeutics followed by the $401 million investment in ElevateBio. These investments demonstrate the continued faith in the Biotech industry among investors. However, caution has been exercised in recent months when making investments. Additionally, ElevateBio has secured deals with major Pharma companies like Novo Nordisk, aiming to utilize ElevateBio's unique gene-editing platform.
The Changing Dynamics of Recruitment in the Clinical Research industry
From the perspective of client recruitment, the current situation differs somewhat from early last year, characterized by a notable scarcity of candidates. When financial resources are limited, hiring and talent acquisition often become vulnerable to downsizing measures. It becomes challenging to justify retaining a team of hiring professionals and recruitment experts on the payroll during an extended hiring freeze.
This is why it is important to make sure you have a trusted recruitment partner with ex-industry expertise that helps to complete the hiring process promptly. Inevitably, as the cycle turns (what goes down must come up!), there will be a sudden urgency to secure the finest talent for managing teams of Clinical professionals or leading Biostatistics departments, similar to the post-COVID period. Establishing and nurturing relationships with recruiters and industry professionals while keeping your talent acquisition team informed about potential forthcoming changes will prove crucial in proactively addressing your future hiring requirements.
It truly has been a rollercoaster few years in the Life Sciences industry. While Covid shook everyone’s world, the subsequent investment and huge growth in Biotech and Pharma led the industry on a rampant spree of hiring and rapid growth. This was inevitably always going to slow down, but it has definitely been a more difficult few months than many had predicted. Combining this lack of investment with some major Pharmaceutical restructures and calls for remote workers to return to the office (Biogen and Novo Nordisk, AstraZeneca), there has been a flood of “Open to Work” posts on LinkedIn. As mentioned previously, this must inevitably turn around for the better. As such, those who build upon their relationships and networks now will reap the rewards of a head start in a competitive market.