Recent Job Cuts in FDA and other pharmaceutical companies, and the impact on the industry

The pharma industry faces downsizing in various areas, where a number of employees are fired or relieved of their duties. These job cuts are driven by a number of factors, such as financial pressures and the diversifying product portfolio 

The recent layoffs are not a result of a complete shutdown in the industry and lack of investor trust, but the industry's realignment in response to the adoption of new technology, development of latest drugs, and the replacement of traditional manufacturing practices with new innovative & intelligent procedures.

In addition to the manufacturing industry, the FDA also faces job and funding cuts. As with the manufacturing sector, these factors are related to finances and to restructure the entire agency. 

Like other regulatory bodies, the FDA does not generate its finances, and funding and has to rely on the government to cover different expenses. It is possible that the cuts in FDA could lead to slow decision-making and fewer drug approvals, in contrast to the previous practice.

A brief overview of each FDA and manufacturing industry job cut

FDA

In April this year, the federal government laid off approximately 3500 employees of the FDA. These layoffs are a part of 10,000 job cuts at the Department of Health and Human Services. The layoffs are for personnel working in departments that include vaccine, medical devices, and veterinary.

Types of layoffs that affect include

· Staff responsible for writing guidance documents

· Staff responsible for the information industry about their questions and application review status

· Test products for adulteration

· Staff responsible for issuing press releases, updating the FDA website, and informing consumers about health risks and new product approvals

Official Position

The US President Trump announced an executive order, "Implementing the President's 'Department of Government Efficiency' Workforce Optimization Initiative," for restructuring the Department of Health and Human Services. To comply with this order, among other

· Saving taxpayers $1.8 billion annually, by reducing the workforce to 10,000 full-time employees, resulting in a total reduction of about 62,000 full-time employees

· Currently, 28 divisions of HHS will be reduced to 15 new divisions.

· This restructuring will improve Americans' experience with the agency.

· It will prioritize HHS to end the chronic disease epidemic by focusing on safe, wholesome food, clean water, and eliminating environmental toxins.

Pharma Manufacturing Organizations

Pharmaceutical manufacturing is a stronger entity in the industry, and any change impacts the industry as a whole. Layoffs are also happening in pharma manufacturing, mainly due to economic uncertainties and new business strategies.

No specific type of pharma manufacturing organization is affected by the recent cuts. All types of industry, such as manufacturing, R&D, equipment, and CDM, O types have been affected.

Some significant reasons for downsizing include the following.

· Planning cost reduction due to uncertainties globally.

· Exploring business opportunities in fields other than the usual & traditional ones

· Failure to achieve targets for existing business or inability to reach the timeline previously set

· Restructuring the current management or board due to many reasons, such as to improve the current performance, or completion of tenure

Some details of layoffs and job cuts related to pharma manufacturing include the following.

· Unity Biotechnology plans to lay off all its human resources to pursue alternatives after the phase 2 trial results of UBX1325.

· Mammoth Biosciences also laid off about 24 employees in a move to improve its internal programs, improve partnerships, and explore new research in therapeutics.

· Pliant Therapeutics laid off 45% of its staff for safety reasons in its late-stage respiratory drug.

· Arvinas is planning to cut 33% of its staff after its partner and it are dropping two phase 3 trials.

· Entrade has laid off its workforce by 20% since the FDA lifted a long-term ban. However, it is now prioritizing its business requirements.

· Ono Pharma, an American wing of a Japan-based pharma firm, is laying off 83 staffers.

· Spruce Bioscience is laying off 55% of its workforce

· Caribou Biosciences is laying off for the second time, and about 32%

· Tempest Therapeutics plans to lay off 21 out of 26 of its staffers to battle against limited cash resources.

· Mural Oncology is laying off about 104 people after their nemvaleukin alfa, the IL-2 variant trial failed.

· Pfizer laid off around 56 employees after selling its five-building campus.

· Opthea laid off 65% of its staff after its eye disease asset failed multiple times.

· Organon is planning to revamp its business, and as a result, it is laying off 93 staffers.

· Vincerx Pharma plans to lay off employees after it failed two attempts to merge with other companies.

· Tango Therapeutics plans to lay off around 30 staff members after reducing spending on preclinical programs.

· Roche plans to lay off 108 workers at its molecular systems, which is responsible for R&D, reagent manufacturing, software, and business operations.

· Relay Therapeutics laid off about 70 employees, which has been the third time in a year.

· Oncodesign Precision laid off five employees after it failed to retain a partnership with Servier.

· Sail Biomedicines laid off 12 employees after organizational restructuring. 

· Carisma Therapeutics is laying off its full-time employees from 46 to just 6.

· Inspirna plans to shut down its operation, making its employees redundant.

· BioAtla is laying off over 30% of its staff in a bid to search for a partnership for its conditionally active biologic antibodies.

· Arbutus Biopharma is reducing its staff to the basic, necessary for overseeing mid-stage trials to cure hepatitis B

· ElevateBio laid off 17% of its staff for long-term planning and to effectively scale its business.

· Vaxart laid off 10% of its staff after it received an order from the US government to stop trials on the COVID-19 pill.

· Elevation Oncology suffered from failed phase 1 data of their sole clinical-stage asset, laying off 70% of their staff.

· Bit.bio plans to focus on biotech tools instead of therapeutics, and is planning to reduce 25% of its staff to focus on this.

Impact on the industry

Let's discuss the effects of FDA layoffs on the industry

Hindering Drug Safety Monitoring

One of the significant functions of regulatory bodies globally is monitoring the efficacy & safety of drug products, which is often performed by a dedicated staff or division within the body. Recent job cuts have reduced the FDA's capability of monitoring drugs' safety & efficacy.

For many consumers, such as doctors and pharmacists, a dedicated division or team is a contact point to share their drug concerns. Reducing the workforce has left these consumers in confusion about how to verify the drug safety for a specific case.

Reduced frequency of feedback

FDA is also responsible for giving feedback to industry professionals on various issues related to drug & device development, and recent layoffs have reduced the ability of the FDA to provide input early.

Some other impacts include

· Pilot or specialized programs under a user fee agreement have been converted to the standard program.

· Previously, the FDA had a practice of informing sponsors about any deficiency in the drug application to help them get approved in the first review cycle. Reducing the staff will impact the level of support to the applicants during the first round. 

· Less predictable approval dates for product applications. Job cuts will affect the FDA's ability to follow approval dates.

· Lesser updates about the product under review, which the project management department previously performed.

· The ability to regularly develop guidance documents for new, complex, and innovative products

Let's discuss the impact of job cuts on manufacturing industry

· The most common impact on pharma manufacturing is a decrease in productivity. They have less human resource to meet the production targets. Situation can become worse, in case of emergency.

· If layoffs include key personnel or roles who have developed expertise in tackling challenges during product manufacturing, it can increase cost spending on hiring new human resource.

· Layoffs will result in uncertainty for current employees, and they will chase any available opportunity. It will become hard to retain the existing workforce, and lead to the drainage of experts and skillful staff.

· Reduced staff will also impact the organization's research capabilities. Because, research studies are critical for the manufacturer to demonstrate clinical evidence, such as advantages over present or competitor products, to prove and generate finances for its regular & new products.

· A reduced workforce will impact a manufacturer's ability to fulfill regulatory compliance requirements. Regulators have the practice of updating their regulations in response to changing market situations and newer diseases. It is the responsibility of the pharma product manufacturer to keep updating itself and implement the changes it requires. In such a case, the manufacturer will be less able to follow the complexities of the regulatory requirements.

· A reduction in staff could also lead to the complete shutdown of a specific division or product. Because it takes some time to hire new expertise for a previous division or product, and till then, there could be several circumstances that would not favour the starting or earlier product, such as due to competitors' edge, unavailability of raw material, and cost disadvantage.