Despite Recent Layoffs, Biotechnology Industry Is Far From Dead

Assessing the biotechnology industry based on layoffs alone is misleading. While statistics related to layoffs make the headlines and certainly have serious consequences for the affected individuals, numerous other factors need to be considered in order to characterize what is happening within the industry. Overall, while 1994 represented an all-time high in the number of biotechnology companies, as well as in the number of employees, some indications point to a reversal of the upward trend. For example, many analysts predict consolidation within the biotechnology industry (see story on page 1). Some industry watchers predict that within five years, half as many companies will exist. A key question for scientists is: If this comes to pass, will having half the number of com- panies mean half the number of jobs? Or will the number of jobs remain the same or increase within a smaller number of companies? There are several factors to be considered before one can determine if there will be more or fewer jobs. It is important for scientists to recognize the great diversity of jobs in the biotechnology industry. Biotech companies employ professionals in business, law, accounting, and so forth, and technicians in a diverse array of applications. For 1994, the Biotechnology Industry Organization (BIO) estimated there were 103,000 individuals employed in the biotechnology industry. In the most current report available from the National Science Foundation, estimates of the numbers of "scientists and engineers" employed in biotechnology R&D programs in industry indicated that in 1985 there were approximately 7,400; in 1986, 8,300; and in 1987, 9,100. The fields represented by these scientists and engineers were (in rank order): biochemistry, molecular genetics, cell biology, immunology, microbiology, bioprocess engineering, chemical engineering, and all other disciplines. Thus, the number of scientists and engineers engaged in R&D in the biotechnology industry may be 15 percent of the total (16,000 out of 103,000) if one assumes that their numbers have continued to increase at about the same rate. Thus, if one is to track upsizing or downsizing in the biotechnology industry, it is important to remember the large percentage of personnel other than "scientists" in the industry. While the total number employed may say a great deal about the strength of the industry, it may say relatively little about the openings for, stability of, or opportunities for scientists. A number of industry watchers think that the downsizing in biotechnology has resulted in a top-heavy concentration of Ph.D.'s, but as the industry matures, this employment mix will change. In the commercialization or development stage, the need for those with bachelor's and master's degrees will increase, while the need for Ph.D.'s will decrease. However, new opportunities for research are likely to emerge, as well. BIO estimated that 1.2 percent of the 103,000 employees in the industry were caught in layoffs in 1994. (This compares with a 5.6 percent national unemployment rate for the fourth quarter of 1994, as reported by the Bureau of Labor Statistics.) However, we do not know how many of the 1.2 percent were scientists, or how long it took for those who were laid off to find work in another biotechnology company or other setting. What do the coming years portend? Like the supply question, estimating how many scientists are needed is difficult to answer. Predictions are difficult in any field, but particularly so in biotechnology. First, it should be remembered that there is a difference between need and demand; the difference being "money." Regardless of how many scientists, engineers, and related personnel may be needed in the biotechnology area to work on the infinite number of problems and new products, no one will be hired unless there are funds. Only when money is factored in does need turn into demand and are people hired. The infusion of money into biotech firms is slowing. After years of soaring profits that resulted in much investment in emerging biotechnology firms, pharmaceutical companies are experiencing slowdowns, and thus are putting less money into these ventures. Companies that are short of money and unable to raise new capital are prioritizing their research and cutting back on new proj-ects. Those conducting highly speculative work will find it more difficult to raise financial support. Overall, there appear to be too many biotechnology firms and too few pharmaceutical companies with money to invest. It seems every biotech firm is looking for a corporate (pharmaceutical) partner. In addition, 1994 was a dismal year for the stock market, and dampened venture capital's enthusiasm for start-up biotech companies. At a San Francisco life sciences conference sponsored by stockbrokers Hambrecht & Quist, held January 9-11, the message was repeated over and over: Although venture capitalists will continue to fund new companies, they will do it at a slower pace. Venture capital firms always have had some reluctance to get involved in biotechnology for several reasons. First, there are the long development cycles for products that must undergo rigorous testing and government approval before they are commercially viable. Although reviews were speeded considerably last year by the Food and Drug Administration, it still was not enough to satisfy the pharmaceutical industry. Median review time for 23 approved vaccines and biological products was 12.2 months, about half of what it was in 1993. But of the 23, only one was a new molecular entity. Median time for approval of 52 new drugs not in the vaccine-biological category was 19 months, down 21 percent from 24 months in 1993. Although the speed was good, fewer drugs were approved in 1994 than in previous years. However, only one new molecular-entity biologic drug was approved in 1994, compared with four in 1993. In addition, in biotechnology, there has supposedly been a proliferation of companies carrying out mediocre work. According to a Hambrecht & Quist analyst (as reported in Inside R&D, 24[5]:3, Feb. 1, 1995), there are too few companies that are excellent at what they do. As a result, venture capitalists may be likely to invest more in fewer companies and stay with them longer. The picture in biotechnology therefore is very complex--on both the supply and the demand side. Since there are so many different types of scientists employed, as well as other professionals, it is difficult to assess the supply and, as noted previously, forecasting the demand is even more complicated. However, despite this, there will always be a need for talented people in any industry, and this is true for biotechnology, a field in which the opportunities continue to develop. Eleanor L. Babco and Catherine D. Gaddy direct the Commission on Professionals in Science and Technology (CPST), a Washington, D.C.-based nonprofit organization of professional societies, corporations, academic representatives, and others interested in research on the education and employment of scientists and engineers. In addition to knowledge of the financial marketplace, a broad perspective on the technical opportunities is important in understanding how many and what types of jobs for scientists will be created. In a recent American Chemical Society (ACS) publication, "Current Trends in Chemical Technology, Business and Employment" --available from ACS Career Services, (800) 227-5558--biotechnology is described as being expected to accelerate in growth and spread to new applications and technologies. Examples of specific biotechnology growth areas cited by ACS are: combinatorial libraries (libraries of compounds made by coupling reactions using automated solid-state methods), genetic engineering, biocatalysts, biological pest controls, polymerase chain reaction technology, and biosensors. Diverse applications to health care, plants, foods, environmentally friendly chemical processes, and waste remediation are described. The ACS report goes on to describe the factors that influence when and how many of these opportunities will be created (such as changes in health care given our aging population potentially in need of more products and services but with limits to spending). It is noted further that whether pharmaceutical and biotechnology industries have the products, market demand, and financing to hire substantial numbers of new graduates or experienced scientists--including those caught in downsizing in the petrochemical and commodity chemical industries--remains to be seen. Certainly, there are numerous and diverse possibilities. And, as the industry experts have said, the biotech industry is far from dead; it will continue to make its impact on the American scene.

Despite Recent Layoffs, Biotechnology Industry Is Far From Dead

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