Pharmaceutical Industry Faces Widespread Layoffs Amid Strategic Shifts and Cost-Cutting Measures

The pharmaceutical and biotech sectors are experiencing a wave of workforce reductions as companies realign their strategies, prioritize key programs, and aim to extend cash runways in a challenging economic environment.

Major Players Implement Significant Staff Cuts

Pharmaceutical giant Merck announced plans to eliminate approximately 6,000 jobs globally, affecting around 8% of its workforce. The layoffs are part of a multiyear process aimed at generating $3 billion in cost savings by 2027. Merck CEO Rob Davis emphasized that these cuts are intended to reallocate resources to support the launch of up to 20 new products.

Similarly, Bristol Myers Squibb is continuing its strategic reorganization with an additional $2 billion in planned savings through 2027, on top of an ongoing program targeting $1.5 billion in cost reductions by the end of 2025. The company has already laid off over 1,000 employees in Lawrenceville, New Jersey, since April 2024.

Novartis is reducing its U.S. workforce by 427 employees at its headquarters in East Hanover, New Jersey. These cuts follow the closure of sites in Germany and Boston, which resulted in 330 job losses in December 2024. The company has been actively pursuing acquisitions while implementing these workforce reductions.

Biotech Firms Face Tough Decisions Amid Pipeline Setbacks

Smaller biotech companies are also making difficult choices in response to clinical trial failures and financial pressures. Atara Biotherapeutics announced it will cut about 50% of its workforce following the FDA's rejection of its T cell therapy for transplant-related blood cancer. The layoffs are expected to be completed by June.

Allakos revealed plans to cut 75% of its employees and discontinue development of its drug candidate AK006 after disappointing Phase I results in chronic spontaneous urticaria. This move will leave the company with about 15 employees as it explores strategic alternatives.

IGM Biosciences is cutting 73% of its workforce and halting development of two autoimmune drug candidates. The layoffs will affect 100 employees, leaving the company with just 37 staff members.

Strategic Shifts and Pipeline Prioritization

Many companies are using layoffs as part of broader strategic realignments. Intellia Therapeutics is reducing its workforce by around 27% as it focuses on high-value programs, specifically its gene editors NTLA-2002 for hereditary angioedema and nexiguran ziclumeran for transthyretin amyloidosis.

CytomX Therapeutics announced a 40% reduction in its workforce to direct capital resources to its clinical programs, particularly the development of CX-2051 for advanced metastatic colorectal cancer.

Galapagos unveiled 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 discontinue its small molecules program.

As the industry continues to navigate economic uncertainties and evolving research priorities, further workforce reductions and strategic realignments are likely in the coming months. These changes reflect the ongoing challenges and opportunities in the pharmaceutical and biotech sectors as companies strive to balance innovation with financial sustainability.