Major Players Implement Substantial Workforce Reductions

Several industry giants have announced significant job cuts in recent months. Novartis is reducing its U.S. workforce by 427 employees at its East Hanover, New Jersey headquarters, with layoffs scheduled from June to October 2025. This follows the company's December 2024 decision to let go of 330 employees as part of site closures in Germany and Boston.

Bristol Myers Squibb (BMS) continues its strategic reorganization, targeting an additional $2 billion in savings through 2027. The company has already laid off 223 employees in Lawrenceville, New Jersey, bringing the total cuts at that location to 290 this year. BMS aims to become a "leaner, more efficient company while investing behind growth brands and promising areas of science," according to its fourth-quarter earnings release.

Merck is also implementing significant cuts, with plans to lay off 163 employees at its Pennsylvania manufacturing site. The layoffs will occur in three rounds, starting May 16, 2025, and continuing into 2026. This move is part of Merck's broader cost-reduction strategy, which includes a $3 billion cut in spending across administrative, sales, and research and development roles.

Biotechs Face Tough Decisions Amid Funding Challenges

Smaller biotechnology companies are not immune to the industry-wide belt-tightening. Atara Biotherapeutics announced a 50% workforce reduction following the FDA's rejection of its T cell therapy for transplant-related blood cancer. The cuts, expected to be completed by June, could leave the company with around 80 employees.

Allakos, a year after slashing about half of its workforce, announced it will cut 75% of its employees and discontinue further development of its AK006 program following disappointing Phase I results. This move will leave the San Carlos, California-based biotech with about 15 employees as it explores strategic alternatives.

IGM Biosciences is cutting 73% of its workforce and stopping development of two autoimmune drug candidates. The layoffs will affect 100 employees effective March 10, leaving the business with 37 employees.

Industry-wide Trends and Strategic Shifts

The widespread layoffs reflect broader trends in the pharmaceutical industry. Many companies are reprioritizing their pipelines, focusing on high-potential programs while discontinuing others. For instance, Intellia Therapeutics is reducing its workforce by around 27% as part of a reorganization program to focus on high-value programs, specifically its investigational gene editors NTLA-2002 for hereditary angioedema and nexiguran ziclumeran for transthyretin amyloidosis.

Several companies are also citing challenging market conditions and the need to extend cash runways as reasons for workforce reductions. CytomX Therapeutics announced a 40% workforce reduction to direct capital resources to its clinical programs and create flexibility in its cost structure.

The industry is also seeing a shift towards outsourcing and partnerships. Galapagos announced plans to split into two entities by mid-2025 and cut 40% of its workforce, affecting about 300 employees across its European operations. The company will focus on cell therapies and innovative medicines, discontinuing its small molecules program.

As the pharmaceutical landscape continues to evolve, companies are being forced to make difficult decisions to remain competitive and financially viable. While these layoffs represent a challenging period for many in the industry, they also signal a strategic realignment that may position companies for future growth and innovation in an increasingly complex market.