Galapagos Shuts Down Cell Therapy Business, Industry Sees Continued Layoffs

Galapagos, a Belgian biotech company, has announced plans to wind down its cell therapy business after failing to find a suitable buyer. This move marks a significant shift for the company, which earlier this year had planned to split into two entities with one focused on cell therapies. The decision will result in approximately 365 job cuts across Europe, the United States, and China, as well as the closure of multiple research sites.

Cell Therapy Exits and Industry-Wide Layoffs

Galapagos is not alone in its retreat from cell therapy. Earlier this month, both Novo Nordisk and Takeda announced they would no longer invest in the modality, with Novo Nordisk cutting around 250 jobs and Takeda laying off 137 employees as a result.

The pharmaceutical industry continues to see widespread layoffs as companies restructure and refocus their strategies:

• Merck projects it could let go of about 6,000 employees, or around 8% of its global workforce, as part of a multiyear cost-cutting initiative aimed at saving $3 billion through 2027.

• Moderna announced a 10% reduction in its global workforce, bringing headcount to under 5,000 in what CEO Stéphane Bancel called "a difficult moment for the company."

• Bristol Myers Squibb continues its cost-cutting measures, laying off 68 employees in Lawrenceville, New Jersey, bringing the total number of job cuts at that location to 1,223 since April 2024.

• CSL, an Australian multinational biotech, is consolidating its research and development team, with more details expected to be shared at the company's annual earnings call in August.

Strategic Shifts and Pipeline Prioritization

As companies reevaluate their strategies, many are choosing to focus resources on specific areas of research or late-stage development:

• 4D Molecular Therapeutics is downsizing by 25% to better align its resources and drive late-stage execution, particularly for its wet age-related macular degeneration therapy 4D-150.

• Adicet Bio is reducing its workforce by 30% as part of a pipeline prioritization initiative, focusing on programs with "the highest potential for transformational value."

• Century Therapeutics is laying off 51% of its employees to focus on three antibody-drug conjugate programs and its research and development collaborations.

These strategic shifts reflect the challenging funding environment and the need for biotechs to carefully manage their cash runways while advancing promising candidates through clinical development.

Financial Implications and Future Outlook

The industry-wide restructuring efforts are expected to generate significant cost savings for companies, but also come with substantial one-time expenses:

• Galapagos anticipates one-time expenses of €150 million to €200 million ($174 million to $232 million) related to its cell therapy exit, plus €100 million to €125 million ($116 million to $145 million) in operating costs through 2026.

• Merck aims to generate $1.25 billion in annualized savings through 2026 with its cost-cutting initiative.

• Bristol Myers Squibb's strategic reorganization is aimed at saving $3.5 billion through 2027.

As the pharmaceutical industry continues to evolve, companies are increasingly focused on operational efficiency and strategic resource allocation. The coming months will likely see further restructuring efforts as businesses adapt to changing market dynamics and seek to maximize their potential for developing innovative therapies.