A Warming of the Biotech Sector Winter, Chris Frew

Author(s): Scott Douglas Jacobsen

Publication (Outlet/Website): The Good Men Project

Publication Date (yyyy/mm/dd): 2024/11/14

Chris Frew is the Founder of BioBuzz Networks, a life sciences talent community and recruitment platform, and the CEO of Workforce Genetics, LLC (WGx), a leading biotech recruitment firm. He has spent the last 20 years supporting companies with recruiting, marketing, and community-building solutions. His background includes founding a national life sciences staffing division and has worked closely alongside state and regional leaders on ecosystem building and workforce development initiatives in life sciences. He is passionate about building stronger connections in the biotech workforce and fostering long-term, sustainable talent pipelines. Frew discusses the “biotech winter,” a downturn in the life sciences industry post-COVID, characterized by reduced investments and layoffs. The sector is showing signs of recovery, particularly in manufacturing and later-stage companies. Challenges remain in job matching and recruitment, emphasizing the need for better communication between job seekers and employers.

Scott Douglas Jacobsen: Today, we are here with Chris Frew of BioBuzz. We will discuss a particularly relevant topic, maybe not necessarily to blue-collar workers but those in high-skilled tech sectors. What is happening with the so-called “biotech winter”?

Chris Frew: Great question, and thank you for having me today. The term “biotech winter” has been used over the past two years. The life sciences and biotech industries have experienced a significant downturn since the post-COVID era. During the pandemic, there was an influx of capital into the industry. Still, the entire sector experienced a severe pullback afterward due to inflation and rising interest rates. As interest rates increased, investors began withdrawing from the sector. Thus, the industry transitioned from rapid growth during the COVID-19 years to a regressive downturn, resulting in over 20,000 layoffs and a significant drop of more than 40% in venture capital investment.

So, winter isn’t coming—it has already arrived for biotech. However, we are starting to see signs of recovery, or as we like to call it, the beginnings of spring. The industry is gradually returning to a more stable state. This raises questions about how the sector might rebound in terms of hiring. Which areas of this market are seeing job growth? And which sectors are not recovering?

Jacobsen: That’s an excellent question. Let me begin by discussing which sectors were most affected by the downturn. Many large pharmaceutical companies implemented layoffs. Some mergers and acquisitions resulted in job cuts, impacting everything from commercial departments to early research and development (R&D). Big pharma companies focused on their lead products and candidates, reducing their R&D efforts for new products. As a result, many scientists and engineers in these companies faced layoffs.

We also saw numerous biotech companies either leave the business or reduce their workforce to a skeleton crew due to a lack of investment. This downturn particularly affected highly educated white-collar workers, including PhD holders. The past two years have been challenging for many new PhD graduates who expected secure employment but needed a clear path to their first job outside academia.

However, as we emerge from this period, some funding is starting to return. Although early-stage R&D remains challenging due to the slow return of early-stage investment, there are signs of improvement.

Frew: We are seeing some developments in manufacturing skills. You mentioned blue-collar and white-collar workers and a highly educated workforce. There is a substantial blue-collar presence in biotech and life sciences. Manufacturing drugs and therapeutics might be considered a “gray collar” area—a blend of blue- and white-collar workforces. But we are starting to see this sector rebound.

We are witnessing job growth in certain areas as the industry recovers. Much of the recent funding has been directed toward later-stage companies, while early-stage companies face challenges. That’s why there may be some uneven progress. Apologies for the lights going off in the office; that’s why you noticed a change.

When considering individuals with PhDs or those involved in the gray-collar workforce, particularly on the manufacturing side, what are venture capitalists and investors looking for when evaluating opportunities in the biotech sector? What makes them more inclined to increase investment in biotech now, when previously they withdrew 40% of their investments?

Jacobsen: Interest rates play a significant role. A large amount of venture capital has been raised over the past 18 months, leaving many investment firms with “dry powder”—capital waiting to be deployed. With high interest rates, investors can earn good returns with lower risk by keeping their capital in funds. However, as rates decline and the market begins to shift, capital is more likely to be invested in higher-risk assets like life sciences.

Investors are most interested in later-stage companies, particularly those with Phase 2 or 3 trials. We’ve seen positive investment flows back into these areas. There’s also a growing focus on AI and big data applications in life sciences, especially drug discovery and clinical trials. These areas have generated considerable interest, and investments are being made there.

There is also continued interest in novel cell and gene therapies, though these are not hotter than they once were. Some of these areas, however, are still attracting significant investment. We’ve also observed a resurgence in traditional biologics, particularly antibody-based therapeutics, as new technologies emerge in that domain. While the investment landscape has yet to rebound completely, we see signs that investors are willing to reallocate their capital into life sciences.

Jacobsen: What would you consider some of the most promising areas of life sciences research where more risk-tolerant investors might be willing to invest moderate to substantial amounts of capital to advance these fields?

Frew: In life sciences, investing moderate amounts of capital is challenging because of the high costs associated with research and development. However, some investors are still willing to take on these risks to push forward innovative research areas.

Frew: Yes, life sciences can be quite capital-intensive. For example, suppose someone is willing to invest $1,000,000 in a seed round. In that case, it’s important to understand that many life science companies require hundreds of millions of dollars to reach the market. So, it’s primarily large investment firms that drive this market forward. However, there is much excitement around certain areas, such as the application of AI in the MedTech space, including predictive tools for diagnostics in healthcare and patient care.

While there are risks, investing in this space can be more appealing because bringing a product to market requires less time. You can demonstrate data and real-world applications more quickly. The MedTech space is witnessing interesting new applications where AI, biotech, and engineering converge to create significant impact, which can happen faster than with, say, a new cell therapy or a biologics-based vaccine that might take ten years or more to reach the market. This area is attracting more investment interest.

Jacobsen: Do you find that companies, larger investors, or individual benefactors are the primary sources of substantial investments, like the hundreds of millions of dollars required in this sector?

Frew: It’s largely investment firms that lead the industry from a funding perspective. One aspect that is particularly important to us is the role of ecosystems. In life sciences and biotech, geography is a key factor. These technologies often emerge from universities or are closely tied to research facilities. Unlike a tech company, which can have developers working remotely from anywhere, life sciences often require a team directly connected to a lab or facility, especially in production. As a result, life science hubs are critical.

For instance, I’m based in Baltimore, Maryland, a life science hub. The DMV region (DC, Maryland, Virginia) ranks as the number three biotech hub in the country. We also do much work in Philadelphia, a leading hub for cell and gene therapy, and North Carolina, which is known for being a top manufacturing and research hub for biotech. What’s interesting is the emergence of regional investors in these areas.

For example, in Baltimore, Blackbird Laboratories and Blackbird Ventures is an investment firm focused on supporting local companies, helping them launch from local universities, and providing the venture funding needed to scale. In North Carolina, a new investor called Cape Fear Bio focuses on supporting companies within the state and building a local ecosystem around them. This approach involves engaging other local investors in seed funding and early-stage capital, allowing them to support growth directly in their region.

In Maryland, we have a group called TEDCO, one of the leading venture firms in the area, playing a vital role in this regional investment model. These regional investors don’t just provide capital—they also bring their networks, resources, and expertise to help companies grow. We see a new and evolving model taking shape in these markets.

Jacobsen: What do you think facilitates recruitment into the life sciences industry?

Frew: Recruitment into the industry is critical, especially considering the highly skilled workforce, including individuals with Ph. Ds.

Frew: They have the appropriate skill set, yet many need a clear pathway to employment. Even if opportunities weren’t evident during their doctoral work, they often struggle to see them on the horizon. This is why awareness is so important, and storytelling plays a crucial role. Storytelling helps ensure that Ph. D.s understand the opportunities that exist in the industry.

That’s a significant issue. Networking and regional engagement between industry and academia to create those experiences are essential. You see much of that happening, and BioBuzz plays a significant role in facilitating these connections in our regional markets. We host events, showcase companies, and offer programming to support biotech companies. But it’s not just about PhDs.

Storytelling and awareness are also critical for underrepresented groups who might enter the more blue-collar areas of biotech as a starting point. Once someone gets their foot in the door in biotech, companies often support further education and career growth. There’s a solid workforce and economic development pathway in life sciences, and awareness is one of the biggest barriers. Many people think of biotech and assume they need a PhD, but that’s untrue.

There are many opportunities for those with a high school diploma or associate’s degree to enter the field, earn a greatsalary, and build a fulfilling career in an impactful industry. Storytelling, targeted programming, and meeting people where they are to share these success stories are crucial for attracting more talent to the industry. At BioBuzz, we work closely with employers to ensure their stories reach the right audiences. We help them engage with potential hires, whether they are targeting PhDs or lab technicians from associate’s programs. BioBuzz excels at showcasing what employers are doing and highlighting available job opportunities in the market.

Jacobsen: I have two questions. First, we see different expectations across generations in the workforce. As we emerge from the “biotech winter,” the technological and scientific landscape is evolving. Additionally, COVID has changed how people approach work in certain ways.

We are witnessing a shift in the workforce’s dynamics in this context. Platforms like Monster, Indeed, and others help connect employers and employees. My questions are: what are the evolving workforce needs in the life sciences? And how can recruitment platforms like Monster and Indeed adapt to this new environment to better match employees with the right employers?

Frew: Great question—thank you for that layered inquiry.

The evolving needs of the life sciences workforce are similar to those in many other markets. In today’s environment, adaptability is crucial. This is a shift from the more traditional roles in life sciences, where someone might spend their time at the bench, conducting research, pipetting, and running gels. In the past, things moved slower than they do now.

Frew: There is more collaboration with external vendors and partners than ever before. Even at the scientific level, demonstrating flexibility and adaptability is a critical skill, especially in the industry. This is similar to the IT field or many other industries these days. We live in a world where technology and trends evolve rapidly, so adaptability is essential.

Another trend is the rise of shorter-term gigs, freelance work, and fractional life-science roles. Companies have learned, especially post-pandemic, that some roles don’t require full-time staff. For instance, as a biotech company, I might hire fractional consultants or a part-time executive until I secure the larger funding needed to expand and bring on full-time employees if I want to manage risks during growth. This trend is evident in startups and midsize and larger companies, where the roles of consultants and freelancers are becoming increasingly prominent. Historically, this was less common in life sciences, but it’s a growing trend.

That’s also why BioBuzz Networks has launched—and is in the process of expanding—its online community and talent marketplace. We’re building an AI-powered talent marketplace integrated into the community platform we’ve developed and refined over the past 15 years. This new marketplace aims to connect our community members with employers seeking freelancers and professionals for fractional roles. Unlike platforms like Monster or traditional job boards, which are very transactional, life sciences require a different approach.

Life sciences is not a transactional field; it takes time to bring products to market. At BioBuzz, our focus on community building and storytelling, layered on top of a talent marketplace, offers the best outcomes for candidates. It’s also beneficial for employers who want to ensure they are making the right hire—someone who fits their specific needs and company culture well.

Jacobsen: What are the main complaints from employers? And what are the main complaints from employees?

Jacobsen: And what about the reverse, more positive side of that question? You mentioned the main complaints—what are they?

Frew: Correct, yes. The main complaints from employees—or let’s call them job seekers—are mostly about a lack of responsiveness, especially in life sciences. A microbiologist at one company might not be a fit for a similar role at another company because many nuances are involved. It often depends on the type of technology the company is working with and various other factors.

Often, highly qualified candidates who have the potential to perform well may only get an interview if they come from a biologics company rather than a small molecule company. These nuances can prevent capable candidates from conversing about a role, leaving them feeling screened out before the process begins.

On the flip side, employers’ biggest complaint is that when they post a job on LinkedIn or Indeed, they receive hundreds of applications from people who need to be qualified. You can see the disconnect here—candidates think they are qualified, while employers think they are not. Even with screening questions, employers often mention that they are overwhelmed with unqualified applicants who seem to be applying to fulfill a requirement or check a box.

There is a clear gap between job seekers’ and employers’ experiences, and it’s a challenge to address. We are actively working on this area. We have some interesting ideas on solving this issue—ways to communicate a candidate’s value proposition better and ensure potential applicants understand job descriptions more clearly. You’ll see more from us on this in the coming year.

These complaints clearly illustrate a disconnect in the process.

Jacobsen: Chris, thank you very much for your time today. I appreciate it.

Frew: Thank you. I appreciate the conversation as well.

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