Biotech investment has taken a considerable downward turn over the past 18 months, impacted by the global macroeconomic situation and a return to lower levels of funding post-pandemic. Whilst 2023 is showing signs of recovery, with a notable increase in VC investments into early-stage biotech, low follow-on financing rounds and a lack of IPOs are suppressing the sector’s bounce back, as highlighted by the BIA’s most recent finance report.
We have observed this cautious behaviour of investors being mirrored in candidates who are in employment, whilst those in uncertain circumstances are more open-minded to a career change. Work/life balance and compensation packages continue to remain in the spotlight. In this article, we outline these considerations and the potential actions that can be taken to navigate differing candidate attitudes, ensuring that employers continue to engage the best talent.
Post Covid: Work/Life Balance
Since the Covid lockdowns, biotech employees have become acutely aware of their ability to more effectively balance their personal life with their work commitments. Remote and hybrid working are “here to stay” for the life sciences industry and are “important to today’s entrants into industry positions”. One expert has noted that “companies with flexible policies are attracting top talent from competitors that are viewed as less accommodating”.
Post Boom: Salary Expectations
The ‘war for talent’ and increased recruitment activity of the past two years resulted in companies generally reacting to supply and demand conditions by paying higher salaries. However, the market is correcting. We have seen inflated pay in the tech industry over the last two years contribute to mass layoffs. The impact may be similar, if less severe, within biotech where, for many, wage growth has already slowed.
Employees who accepted higher salaries in the past two years are now, understandably, reluctant to take a salary decrease, especially considering recent inflation and global cost-of-living increases. Their average earnings can skew benchmarking data.
Employment Risk: Two Candidate Streams
The challenging financial situation for biotech companies has impacted negatively on the employment market. The US has seen an 87% increase in layoffs in the first quarter of 2023 compared to the same period of 2022. biotech employees lost their jobs between 1st January 2023 and the beginning of April, indicating that “the industry hasn’t recovered from 2022’s market downturn”. European firms tend not to scale at the rate of US companies and so can expect lesser, although still evident, downsizing.
During this period, we have observed two different, almost conflicting, streams of candidates entering the market:
Stream 1: Unemployed or Potential of Redundancy
A pool of often highly skilled candidates who are available at short notice. They are opportunistic in considering any position which is potentially relevant for their level and skillset. They may accept a like-for-like remuneration package or even a decrease in salary. They may also consider companies at any stage of funding, public or private, and are more willing to relocate. This is in contrast to the general trend of prioritising work/life balance post-Covid and the desire for high salaries.
Stream 2: Comfortable in Continuity
Gainfully employed candidates in well-financed companies are cautious and, much like investors, perform thorough due diligence on the trident of: science; executive management; funding, before considering applying for a position at a company. Such candidates commonly seek high levels of compensation and a personalised remuneration package to outweigh the perceived ‘risk’ of a career move.
Key Implications for Biotech Executive Hiring
This dual stream of candidates always exists, but the polarisation is more pronounced in times of uncertainty. To take advantage, employers must be able to act opportunistically and decisively to secure redundant talent, whilst going to extra lengths to attract executives from their competitors who are weathering the financial markets well.
Contact us for a more detailed analysis of the market and our recommendation on how to approach hiring exceptional leadership talent as we move into 2024. Email: info@precisionbiosearch.com
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Posted on : 2nd Oct 2023