Biotech Layoffs Mount, Consumers Lower Inflation Expectations, Business Startups Grow
Biotech Layoffs Mount
Life science remains a strong U.S. generator of new real estate projects and leasings, but the industry is not immune to a wave of layoffs hitting multiple industries this year, especially technology.
Various sources including a March 10 tracking report by industry news and jobs site BioSpace point to announced nationwide biotech layoffs so far in 2023 that are expected to chop more than 4,000 jobs, as the industry responds to reduced venture funding and drop-offs in activity geared to areas such as COVID-19 vaccines and treatments.
Affected regions include some of the nation’s largest life science hubs, such as San Francisco and San Diego. Over the past two weeks, for example, Bay Area companies Graphite Bio and Coherus BioSciences announced layoffs totaling 100, with a state of California filing by Coherus citing “a significant downturn in business.”
During the past month, Thermo Fisher Scientific notified the state in two filings, the most recent last week, indicating it plans to lay off a total of 384 workers in San Diego, and Pfizer said it is laying off more than 100 in that city.
Some of the cuts are being offset by new projects and hiring elsewhere, with several developments still moving forward in California and other states.
Genentech announced last month it is expanding its manufacturing facilities in the San Diego suburb of Oceanside, California, with a $450 million investment expected to create 150 new jobs. Rival Ionis Pharmaceuticals is planning a similar expansion in Oceanside expected to add 200 workers, with more expected to be employed in nearby Carlsbad as Ionis expands its research and development headquarters.
All of this comes after venture capital flows to U.S. biotech companies remained high by historical standards at $36 billion in 2022, though the figure was down 28% from 2021, according to a February report from brokerage Cushman & Wakefield. The funding drop has been felt hardest in the three largest biotech hubs — Boston, San Francisco and San Diego — which accounted for 66% of total U.S. venture funding in life sciences during 2022, with San Francisco garnering about 35%.
Consumers Lower Inflation Expectations
Consumers have sharply reduced their short-term expectations for inflation, a potential sign of rising confidence in the latest monthly survey by the Federal Reserve Bank of New York.
Researchers at the regional Fed said Monday that consumers surveyed nationwide during February expect inflation to be at a median of 4.2% within a year, down nearly a full perentage point from their prediction in the month-earlier survey. January’s actual annual inflation rate was 6.4%, and the government is expected to announced February’s rate later this week.
The one-year-ahead expectation is 0.8% lower than what consumers forecast in January, though the survey showed respondents holding to their January predictions of 2.7% three years from now and slightly higher for five years ahead at 2.6%. Policy setters at the Federal Reserve have indicated that they plan to continue hiking a key lending rate until inflation is brought closer to 2%.
There were other signs that consumers are anticipating a further let-up in historically high prices for everyday goods and services. “Expectations about year-ahead price increases for gas, food, cost of rent, college education and medical care all declined,” New York Fed researchers said in a statement.
The regional Fed said consumers also showed improved expectations for the overall labor market, including declines for unemployment rates and perceived risks of job loss with heightened prospects for finding new jobs. “Households’ perceptions and expectations for current and future financial situations both improved,” researchers said.
Business Startups Grow
Nationwide startups based on business applications rose 1.9% in February over the prior month, the Commerce Department reported March 10. Government data showed nearly 430,000 applications in February for an employer identification number.
The number has been rising for the past decade and spiked starting in 2020 as workers left larger companies to work on their own. Figures from the department’s Census Bureau showed February’s new business applications most pronounced in industries including healthcare and social assistance, professional services and wholesale trade.
Data also showed that applications for “high-propensity” businesses, those expected to generate larger payrolls with related tax liabilities, totaled nearly 145,000 in February, up 4.8% from the prior month.
Western states in total showed the highest rise among regions for total business applications, increasing 8%, with the number of high-propensity applications rising 10.5%. The Census Bureau projected that U.S. business formations would rise another 3.7% over the next four quarters and 4.2% over the next eight quarters.
Lou Hirsh, CoStar News
- March 14, 2023