The Pharma & Biotech Layoff Survival Guide

6 February 2024

Introduction

Layoffs are an almost-inevitable part of working in the pharmaceutical and biotech industry over the last two decades. While you’ll still see some old hands who have worked their whole career in one spot, it’s a lot more common these days for folks to cycle through several jobs over their careers. Sometimes willingly, sometimes less so.

Personal note from KH: I’ve been in the pharma & biotech industry for almost 22 years and am now on my fourth job. Of the three partings I’ve gone through, one was a relatively traumatic layoff and the other two were initiated by me for my own career advancement — although in both of those cases, as fate would have it, I narrowly dodged layoffs that followed within months of my departure. When I share that anecdote with people, I’m sometimes asked if I have a “Spidey Sense” about layoffs. Indeed, folks in my current workplace who hear this tale will half-jokingly ask me to give them a heads-up if I’m thinking about leaving. While I don’t believe in the Spidey Sense, I do believe that active career management is the way to go for your long term happiness — and the preparedness that goes into a planned move will also serve you well for the unfortunate unplanned moves too.

What follows is a guide based on personal experience with pharma industry layoffs — both actual and near misses and helping layoff victims find their next jobs. This will be divided into four sections: 1) understanding the modern relationship between employee and employer; 2) the mechanics of a layoff; 3) actions you can take before, during, and after a layoff to regain employment more quickly; and 4) self-care during a layoff. The aim of the guide is to make layoffs less opaque and scary to the reader and increase personal resilience.

This guide is based on employment in the pharmaceutical sector in the United States. Your mileage may vary greatly in other countries, particularly in Europe where labor laws afford many more protections to workers. We’re not here to judge what’s right or wrong about how the US does things, but simply to state it like it is.

Disclaimer: we have employers, and the opinions shared here are our personal opinions alone and not necessarily our employers’. We also discuss, anonymously, experiences with layoffs at previous employers. Not to disparage them, but to inform — because although these events were painful to those involved, everything the companies did was above board. None of what follows should be construed as legal or financial advice either — the discussion of federal labor laws in particular is based on our non-legal expert common understanding of the law. We’re just scientists sharing experiences and learnings, many of which were earned the hard way.

Modern Employment Relationships

In the United States, most employment is what’s characterized as “at will”. There is no contract between employee and employer guaranteeing employment for a specified period of time. Either party is free to terminate the working relationship at any time, and for (mostly) any reason other than some things protected by law (such as discrimination based on protected categories). Poor performance, of course, may lead to a “for cause” termination of employment and involves documentation by a human resources department for legal reasons. But what we’re focused on here is mass reductions in force (RIF), site closures, and the like, that are not done for cause.

Because at will employment is the norm, it’s important for you as an employee to continually look after your own well-being. No matter how much you like your company, its values, your pay and benefits, or the gobs of vacation time or other perks they give you, in the end every employee is a free agent.

This is where we can’t avoid talking about the business side of the business. Pharmaceutical and biotech companies exist for the same reason as any other company in a capitalist economy: to make a profit by providing something useful to society. Indeed, the officers of a public company have a legal responsibility (called “fiduciary duty”) to do what’s in the best interests of the company and its shareholders. If they think they can maximize profits by keeping you, or your group, or your site around, then they will. If they think they can maximize profits by feeding your work group to the pigs, then they’ll do that. (That’s hyperbole, but only a little.) A board of directors that doesn’t take its fiduciary duty seriously will find itself ousted by shareholders.

Layoffs are often triggered by changes in the company’s financial condition that a board of directors must respond to. For a big company, that could be a blockbuster drug coming off patent and going generic. They could lose billions in annual revenue overnight, and guess what? They’re not going to just altruistically give up their profit margin to keep folks employed; they’re going to cut costs, which often means cutting people. For a small biotech, it might actually be a successful event like a clinical candidate making it deeper into clinical trials. If the company was founded on a narrow technology with limited cash in the bank, it’s surprisingly common to lay off most or all research staff to reduce costs and conserve funding for the clinical trial. Or it could be nothing to do with the company at all, but macro conditions in the economy, such as rising interest rates, unfavorable legislation cutting into sales, increased regulatory standards, shifting exchange rates, or a dozen other things that can cut into the bottom line.

“Surely my loyalty for all these years will save me.” No, it won’t. One of us once worked at a large pharma that was privately held, and many long-term employees felt that the lack of buffeting in the stock market would enable the company to weather the ups and downs without layoffs. 25-30 year employees reeled when the small molecule research unit for the entire site was closed down one day, and they had no plan for what came next. The social compact that historically may have existed between employees and employers is long gone.

“Surely my good performance will save me.” No, it won’t. If you’re in the wrong place at the wrong time, you’re getting cut. One of us was once laid off along with a highly productive group that discovered three marketed oncology drugs for the company. We were cut in favor of a less productive group at another site because we were smaller and “lacked critical mass” — not joking, those are the words that were used.

Do not allow your love for or loyalty to the company, your dedication to its mission, your track record of performance, your boss’ professed awe at your talent, or anything else get in the way of your career management. The company’s provision of benefits to you is not because they love you back — although individuals within the company may. No, the company gives you those things because they believe it will enable them to retain you so that you can create value on their behalf. The moment that calculus changes and it becomes more economically advantageous for them to cut you rather than keep you, they will do so. This is also why it’s worthwhile to leverage the benefits your company provides to the fullest: they may be gone tomorrow. So if they’re offering you many weeks of vacation, take every day. Maximize the company match on your 401(k) because it’s free extra money. If they’ll pay for you to go back to school for another degree, take the money and go back to school.

This section was first as a bit of a shock-and-awe because it’s folks not understanding how the employee-employer relationship works that leads to complacency and inertia ruling the day. Once it clicks for you that you could lose your employment at any time — today, tomorrow, or whenever — that’s the moment you start taking charge of your career. It should instill you with an urgency to be prepared for the worst. But ironically, doing that doomsday prepper work will ultimately lead to a greater sense of day-to-day ease. Because if the worst happens, at least you’ll walk out the door knowing you’re prepared for what comes next, rather than being on the back foot. That’s a big anxiety reducer.

Layoff Mechanics

One thing you’ll often hear talked about at the beginning of a layoff is the WARN Act. This is a federal labor law dating back to 1988. Basically, for an employer with >100 employees, if they’re either closing a site or laying off >500 employees (or >⅓ of the workforce if 100-500 employees), they must provide 60 days’ notice to employees before actually triggering the layoff. Some US states also have their own WARN Act-style laws that are more stringent. Notably, California reduces the employee count threshold for notification, and New York increases the warning period to 90 days. Note though that if you work at a startup with <100 employees, or less employees are being cut than the WARN notification threshold, they can toss you out on your ear the same day with no notice.

Companies vary widely in how layoffs are announced and executed. If there are deep cuts but it’s not an entire site being impacted, employees may be notified individually in short meetings with human resources, often with a manager present. If it’s an entire site closure, you may get called to a hastily scheduled “all hands” or “town hall” meeting where a senior manager with support from human resources will deliver the news to everyone at once.

No matter how you slice it, and how much you might have sensed it coming due to the company’s financial condition, that initial notification is incredibly traumatic. The longer you’ve worked there, and the better your performance has been, the harder it hits. It’s hard not to feel angry, sad, and a host of other emotions all at once. “How could they do this to me? I’ve been a good employee!” Some folks are shocked into silence. Others will sob uncontrollably. People coming down the hallway tearing at their clothes and hair is not unheard of.

Paperwork may be shoved your way, and quickly. Under US federal law, companies are not obligated to provide you with severance pay, but in practice most larger companies do. Startups may be out of cash and have no money left to pay anyone severance; they’re closing up shop. This is an important consideration when taking a job in the first place. You’re taking significantly more financial risk with a small company, which could toss you out the same day with no WARN Act notice and no severance, and you’d be completely on your own financially that day.

In the event severance pay is offered, strings may be attached, such as asking you to sign away your right to take legal action against the company, to commit to dispute resolution in binding arbitration, or to not work for a competitor for a period of time (a “non-compete agreement”). Taking severance may also impact your ability to collect unemployment insurance down the road. There’s no one right thing to do here because everyone’s circumstances, financial and otherwise, are different. In practice, most people will take the severance pay and sign whatever they have to sign to get it. The company will have employment attorneys at their disposal to keep things above board, and to our knowledge, few pharma layoff actions have been successfully challenged in court.

There is no “standard” severance, but what’s commonly offered is two weeks’ pay for every year of service, with a minimum of 6-8 weeks’ pay. Some companies that are feeling generous may also, partially or in full, accelerate the vesting on any unvested stock or stock options you may be entitled to. Overall, severance usually provides substantially more benefit to long-serving employees. If you’ve been at your company for 25 years, this would result in almost a full year of pay as severance, plus possibly vested stock/options. The assumption perhaps being that such workers will need longer to find another position. Severance takes a lot of the immediate pressure off to find a new job tomorrow.

In most cases, however, the day you’re notified of your layoff is not the day severance is issued. Remember, the WARN Act requires in most cases that your employer give you 60 days’ notice before letting you go. You’ll remain on the company payroll and continue to receive your regular salary and benefits, including health insurance, until the 60 days is up, and then your employment will terminate and severance is paid.

How companies treat you during the WARN Act notification period varies greatly. In their own ways, however, none of the options are good options. Experience has revealed two general flavors:

1. On one extreme, the company demands that you continue working until the very last day of your notification period. At one place where one of us dodged a layoff, compatriots were subjected to this indignity and actually had to do the work to decommission their own labs and offload all the equipment as surplus. And it’s a death march of work that nobody is motivated to do because there’s nothing for them on the other side of 60 days. As a tradeoff for this indignity, though, you’ll often retain access to resources inside the company, like your computer where you may have important personal files stored. (nb - Don’t do this - more on that in a sec.) Compassionate companies may even offer to help you with placement services during this time.

2. On the other extreme, the company decides to “rip the band-aid off” and get it over with. They’ll ask you to pack up your personal belongings and go home the very day of your notification. The upside of this is that you don’t have to work for the next 60 days but you continue to get paid, and can dedicate that time to finding a new job. The downside is that you lose access to all resources inside the company immediately. At another place where one of us barely dodged a layoff, this path was taken. By the time the town hall where notice was given was over, when employees got back to their desks they had already been locked out of their computers. Folks were given one hour to box up their stuff and leave the site. Security guards were posted at every exit and nobody was allowed to re-enter the building after they left. That’s a whole different kind of indignity.

Or it could be something in between those two extremes. Like that old saying goes though, no matter which way you slice a turd, it’s still a turd.

As time passes in your notification period, you may find that your feelings about the situation change. Once the initial shock wears off and you have some time to reflect, you may find yourself rationalizing how this is the best thing that could have happened to you. And maybe it is; maybe your career needed a kick in the pants, and this is just the thing to force a change. Equally though you may find yourself feeling depressed and despondent as those 60 days tick by and you’re terrified by what’s on the other side of it. If you’re one of those people whose identity is too tied up in their professional life, you can feel like part of you has died and question your own self-worth. This is a good time to take stock of that ever-elusive work-life balance, and hopefully realize you’re more than your work. Seek out a counselor and/or psychiatric support though if you find yourself going to darker places with thoughts of self-harm. It happens, and seeking help is nothing to be ashamed of. You’ve been through a lot. (More on self-care in the final section below.)

Close-knit groups of affected employees will socialize and commiserate outside of work. They’ll form LinkedIn groups for support, and to provide a space to vent. Take advantage of these things, because you’re rarely going through it alone. You may find your fellow soon-to-be-ex-employees understand what you’re going through better than your own spouse, significant other, or other family members, if you have those at home. Tensions can simmer at home too, especially if you are the sole or primary breadwinner in your family, or would in any way sink your home situation with the upcoming loss of income.

At the end of the WARN Act notification period, your salary and benefits and employment are officially terminated. Any severance you’re owed is paid, most often as a lump sum. As your final financial lifeline, after payment of severance, you can apply for unemployment benefits. The rules and benefit rates are determined by individual states and vary considerably. Whether or not severance pay is disqualifying also varies by state, but usually you can get unemployment benefits some time after severance payments have ceased. Unemployment benefits will replace some, but usually not all, of your income for a period up to 26 weeks (half a year) — during which time you usually have to demonstrate that you’re actively looking for work.

If you think it’s going to be a long haul to get to the next job, it’s a good idea to take a look at your expenses and proactively cut out all of the optional stuff immediately to stretch out your severance and unemployment benefits as much as you can. This is probably not the time to renew your Disney+ streaming service for another year, or be dining out on the regular or loading up on DoorDash. Shop cheap at the grocery store and learn how to cook if you don’t already know how!

The Consolidated Omnibus Budget Reconciliation Act of 1985 (known as COBRA) is a federal law that generally entitles you (with some exceptions) to continue your existing health insurance for up to 18 months after your employment is terminated. COBRA is a double-edged sword though. It provides continuity of coverage for people who need it, but it also usually shifts the entire burden of paying the insurance premium onto you, unless your employer is being generous (which is extremely rare). Since pharma companies typically pick up 80-90% of insurance premiums on behalf of their employees (which they get a tax write-off for), it can be a big sticker shock when you have to start paying the entire premium yourself. In practice, only a small percentage of folks choose to pay the premiums, which leaves the majority uninsured or forced to convert to a cheaper (and less benefit-rich) public option plan via Obamacare. If you have a spouse or partner who works, it’s worth exploring whether or not you can be added to their health insurance plan. The loss of a spouse/partner’s job (and therefore health insurance) is a qualifying event for changing your enrollment options outside of normal open enrollment windows.

And with that, the final cord between you and your now-previous employer is cut. And you’re staring into the abyss in front of you.

Next we’ll talk about how to manage the transition to a new employer and make that abyss less scary.

Landing Your Next Job: Before, During, and After a Layoff

Layoff preparedness is like preparedness for a hurricane or other natural disaster: you’re repeatedly warned about being ready ahead of time, having an emergency kit in your home, etc. — but in practice, few people do this and most are caught on the back foot when disaster strikes.

Here are some general strategies and tips to manage your career during a layoff. It’s worth noting that nearly all of these actions are part of active career management, and can and should ideally be regularly practiced even outside of a layoff situation. Staying on top of these things at all times will dramatically reduce your stress and anxiety if a layoff ever comes — because you’ll be prepared when the axe falls, instead of scrambling to react.

• Make sure you maintain copies of important personal files (CV, job talk, etc.) that are separate from your employer’s IT infrastructure. It’s very easy to fall into a pattern of “work is work, home is home” and drift into keeping your CV and other important personal information on your company’s IT assets. Simply: don’t do this. In a layoff situation, you may lose access to the company IT infrastructure with no warning. That’s not the time you want to find out all those personal files you’ll need to get your next job aren’t living anywhere else.

• Keep your CV up to date at all times. Got promoted? Update your CV. Had a major milestone such as a clinical candidate nomination? Update your CV to reflect that accomplishment, anonymizing details as necessary. New degree or certification? Update your CV. Got a new patent or publication or presentation? Update your CV. Even if you don’t think there’s anything new, look at your CV several times a year to be absolutely sure. Your CV should never be stale by more than a month or two.

• Keep your job talk up to date at all times. This should be done on the same time scale as keeping current on your CV — every couple of months. Job talks should emphasize your work from the last job or two — recency matters. Nobody will care about your grad school work after 10 years in industry. If it’s not in a patent or publication or public presentation that someone outside the company could access, tread carefully in what you present — your responsibility to protect the company’s intellectual property survives your employment. It takes effort to appropriately anonymize the work for public consumption, so do the work now. Why? While you’re job hunting, you may find yourself in a situation where a prospective employer wants you to interview on a moment’s notice. You should be prepared, not begging for more time to get ready and risking missing opportunities.

• Try to maintain a track record of publication. This is often hard to do in industry, where the goal is to discover drugs, not to write papers. It’s worth some effort pushing to publish your work though, even if it has to be delayed by many years after the work was done. Those publications provide public source material that you can draw on for future job talks. At a minimum, chemists will often have patents to fall back on. While these aren’t peer-reviewed journal articles, they can still provide job talk material as they’re in the public domain.

• When you’re laid off, your main job every day is to find a new job. If you’re idled at home during an WARN Act period, treat this search like you would a job. Spend a big chunk of your day researching leads, leaning on your network, sending out applications, and doing phone and site interviews. Even a relatively fast hiring process can take months. It takes longer the more senior you are, because there are less of those positions available.

• The best job leads will come through your network: friends, friends of friends, headhunters, etc. Cold applications on a website come with a higher probability of failure unless you’re an absolute rock star. This is why it’s important to cultivate that network. Leverage social media for this to keep contacts current. Be honest on places like LinkedIn, post about the layoff, and set yourself as “open to work.” People in your extended network can’t come through for you if they don’t know what you’re going through. It’s also important to be attuned to what others are going through. You may get an opportunity to pay it forward in the future when you have a job lead and someone in your network is unemployed.

• It’s good practice to interview for a job every few (~3) years, even if you have a job that you’re happy with. This is a great stress reducer because it gives you confirmation that you’re hireable in today’s ever-changing job market. There are few things worse than working somewhere for a decade or more, then losing your job and realizing you have no idea how to even interview anymore. Worst case, by doing periodic interview rounds, you discover nobody will make you an offer. You find skill gaps that you need to work on, and go back to your current employer to address those gaps as development. Best case, you find an amazing opportunity that you didn’t know existed, get an awesome job offer, and you bail. Both are okay outcomes, and far better than waiting until it’s crunch time and discovering a problem.

• Undertake annual career self-reflection. This can help to root out unhappiness at work and propel you toward a needed change of scenery without waiting for someone else to show you the exit. Years can slip by in the blink of an eye under the influence of inertia. Here are 14 questions to kick off a career self-reflection:

  • Am I happy — at work, at home, and in between? A high-level question that allows for further introspection into root cause.

  • How financially secure am I in my current role? Does it pay the bills, but also allow retirement & college savings, funding vacations, etc.?

  • How does my employer reward and recognize my contributions? How valued (or dispensable) do they make me feel?

  • How well do my job benefits meet my needs? Do I have good health/other insurance, enough paid time off from work, company-matched retirement savings, etc.?

  • How often do I feel like work is overrunning the rest of my life? How many times have I felt compelled to work more than a normal work week?

  • What's my envisioned career path? (Doesn’t have to be the next 30 years. A rough idea for the next 3-5 years helps though.)

  • How closely does my current role fit with my envisioned career path? Am I already living the dream, on a stepping stone to something else, or lost in the woods?

  • How likely is it that I’ll still be doing this job in a year? 3 years? That can be because it is/isn’t what you want to do, but also due to existential risks like layoffs and reorganizations.

  • If I was laid off and had to interview for a new job tomorrow, how confident am I that I would land a new position quickly, and why?

  • How geographically rooted am I? Do I have flexibility to move, or do other life concerns tie me to a place?

  • If I was forced to leave my job tomorrow, what would I be giving up that I would miss?

  • What opportunities does my job offer for me to grow and learn new portable skills for my envisioned career? How does my manager support my development?

  • How well do I get along with my peers (both in and out of my immediate work group), direct supervisor, and senior leadership?

  • How good a job does my employer do living their stated values? How aligned are those values with the things that matter to me?

Remember, all of these things can be done at any time — don’t wait for a layoff! Taking your hand off the wheel is just going to cause a lot of avoidable scrambling and stress. By doing these actions as preparedness before a layoff, you will have the peace of mind that comes from knowing your career house is in order. The actions to find another job after a layoff and to just find another job in general — the foundation of active career management — are the same. When people wonder why their career doesn’t seem to be going the way they’d like it to, the first question to ask is: am I practicing the principles of active career management?

Taking Care of Yourself During Unemployment

Although this part is somewhat underappreciated, a layoff can be incredibly stressful and disorienting for anyone. You could be the world’s best employee and a high performer and still get laid off due to circumstances entirely out of your control. It is important to have some practical strategies to maintain your mental health and productivity during an uncertain period of unemployment.

• As mentioned previously, if you are experiencing signs of depression, anxiety or self-harm seek counseling immediately. Being laid off can trigger feelings of imposter syndrome and inadequacy for even the best of us.

• One of the key strategies that can help is to create and maintain a routine during unemployment. This means creating a schedule that includes job search, reading about industry trends, exercise/hobbies, and networking.

• Do not suffer alone. If you have experienced a layoff, there are probably many people in your network that will empathize and respond positively to a request for help. Reach out to folks even if you haven’t spoken for a few years and explain your situation. Of course a few people might not be helpful or ghost you, but don’t be deterred by this response since it is common.

• Stay up to date on novel research and pharma news. Although this is not mandatory, employers love to hire well-rounded folks. If you can talk intelligently about technical details but also the field at large, this will make you a star candidate for a job

  

Conclusion

With these tools in your arsenal, you can now be resilient to the roller coaster ride that can be pharmaceutical and biotech macroeconomics. A key point to remember is that the folks that weather this storm best are those that maintain a robust personal brand alongside their identity associated with their primary employer. What this means is, they network and stay up to date on what is happening outside their company, even when they have a stable job. This allows them to bounce back quickly when a layoff comes around.