Biopharma layoffs were expected to slow in 2025, but instead, they rose 16% above prior year levels. Now, just weeks into 2026, at least nine companies have already announced cuts, including Takeda Pharmaceuticals and Sonoma Biotherapeutics.
Despite the early onslaught, the overall landscape may be more favorable than last year, said EY Americas life sciences leader Arda Ural.
“I would speculate that we’re talking about a more predictable year in 2026 across all fronts,” he said.
Last year, substantial turbulence rocked the market stemming from tariff threats, most-favored-nation pricing proposals, and continuing cost pressures from the Inflation Reduction Act.
“A lot of the uncertainty surrounding those issues has abated to a degree,” Ural said. Overall, EY analysts project that the total percentage of layoffs in 2026 will likely stay below 5%, Ural said.
Still, individual companies face difficult odds and could cut their workforce due to unforeseen circumstances. For example, if a biotech fails to attain a significant milestone, it’s not unusual to lay off 80% of its staff, Ural said.
“Those are surgical restructurings versus broader trends,” he said.
Moving past COVID-19
The industry has moved beyond the necessary recalibration that followed heady investment during COVID. Ural predicts 2026 job losses will now derive from more traditional factors, such as investigational drug failures or strategic decisions such as scale adjustments and offshore or outsourced functions.
Last year, several companies made these types of cuts, including Merck & Co., which laid off 58 employees at its New Jersey site, a move that was part of a broader global workforce reduction.
Vedanta Biosciences, a microbiome drug startup, also laid off nearly a fifth of its workforce in August after its ulcerative colitis drug missed the mark in phase 2. Earlier this month, the Massachusetts company cut or furloughed half of its remaining staff as funds ran low.
Patent problems
While this year may see more predictable layoff patterns, the picture could change as looming issues come into focus over the next few years.
As companies weather patent expirations, the industry will soon learn whether new drug portfolios can successfully offset major losses, Ural said.
“We will need to see if the stability will sustain with the loss of exclusivity,” he said.
Some companies have a degree of profit protection on their branded drugs because doctors are often reticent to automatically switch patients, particularly those taking biologics, to unbranded alternatives if they’re responding well, Ural said. But new drugs will need to make up remaining revenue gaps.
Rising competition
Other uncertainties lie ahead, including the potential impact of China’s rapid ascension on the global stage.
“China is emerging as a contender [even if] their focus is more on the earlier stages and first-in-human [trials],” Ural said.
Regulatory reforms in China have accelerated pharma innovation, with large drugmakers increasingly turning to Chinese biotechs for new drug assets. About 35% of deals in 2025 originated there, and the nation is now a hub for clinical trials.
Jiangsu Hengrui Pharmaceuticals overtook AstraZeneca as the world’s top clinical trial sponsor in 2024. At this point, it’s hard to say what effect that will have on biotech jobs in the U.S.
“We’re not seeing yet how that investment in the earlier stages and headcount reductions in the U.S. correlate,” Ural said.
AI-related job losses
AI is another massive unknown, and the question on many minds is whether AI has started to erode human jobs.
“My speculation is that we haven’t seen AI leading to mass layoffs at this point, because [companies are] still trying to figure it out,” Ural said. “AI still needs a major level of human supervision for its confabulations.”
Only 9% of executives said they’ve seen a return on their AI investments so far, according to a recent Deloitte survey. That provides job security, at least for the moment, particularly for higher-level positions. However, the same may not be true for roles with lower complexity. Some C-suite executives surveyed recently said they don’t see AI displacing jobs as much as allowing for pipeline expansion.
