Biotech Resilience – what will it take to bounce back?

by David Nolan

Resilience – the ability to withstand adversity and bounce back – is a word we hear a lot and it’s clear that it is something that will be key to not just surviving the coming months, but to also being in good shape when the upturn arrives – as it inevitably will.

Last year’s cutbacks caused by plummeting valuations and investors’ caution show no sign of slowing. According to the Fiercebiotech newsletter, nearly 80 life sciences companies have announced lay-offs and/or reductions in their R&D programmes so far this year. Coming on top of the more than 100 reported headcount reductions last year, this suggests that the much hoped-for reset of the industry is still some way off.

This is a stark contrast with the heady days of 2020-21. At the same time, companies and those funding them need to remember that we have been here before. Over-reacting to this challenging environment and rushing to cut jobs can backfire, even to the point of harming the sector as a whole.

Reflecting this climate, we’re being asked to source candidates for senior roles who have the ability to combine mental toughness and resilience with a focus on the game in hand, which is innovation. As an example, in the current market backers are looking for scientists who have done it before and built up a track-record of resilience.

These are people who know what it’s like to get an asset into the clinic, go through the clinical trial process, get it approved and see it make a difference to patients. Such “luminaries” have also created their own eco-systems of other scientists in drug development. These are likely to be the resilient survivors because they attract not just finance but other ambitious scientists too.

Retention builds resilience

But this is not just about senior leaders having relevant experience and keeping calm in the face of the storm. It also means ensuring that the company as a whole is in the best shape to withstand the challenges. This means directing resources to where there’s the greatest chance of success and ensuring that everyone is focused on getting the job done.

Retaining existing staff and keeping them motivated is essential. Gossip spreads fast so senior leadership need to have a clear sense of direction, whilst also reassuring people that the business will weather the storm. The best retention tool a company can have at a time like this is to demonstrate resilience by continuing to invest in its people. If lay-offs are required, it’s important that they are handled well and make sense. Across-the-board redundancies can start to look like panic and can further imperil the company. The slump in valuations means that as well as investors looking for bargains, established pharma companies will see chances to acquire assets on the cheap.

Capability rather than capital

Another approach to building resilience is to focus on optimising capability by taking on executive interims or working with consultants on a part-time basis. Similarly, appointing an experienced NED can help gain access to particular knowledge or leverage new opportunities. Partnering with a bigger group to help it get its product to market is another potential approach. We have seen an increase in all these tactics over the past year or so.

Conclusion

Even if companies are reducing the number of projects they are working on and becoming leaner and more efficient, it can still be helpful to bring in specialist expertise to strengthen resilience. We have worked with some very distressed companies that have lost more than 95% of their value, but they are still investing in key people in areas like finance or regulatory affairs to help optimise the chance of a decent valuation when the time is right.

Increasingly, Talentmark is helping companies seek more flexible and innovative recruitment solutions. The key is to have the strength of mind and sense of purpose to do what’s required to keep the company going, whilst not sacrificing the human capital and other resources that will be required to capitalise on the recovery when it eventually arrives.