California’s Jobs Outlook: Life Sciences Sector Inching Toward Recovery?

Recent unemployment numbers and BioSpace survey findings underscore the challenges that California’s life sciences sector faces as biopharma professionals look for jobs.

• In June, California tied for the second-highest unemployment rate in the nation, at 5.2%, according to recently released U.S. Bureau of Labor Statistics data. That number represents a year-over-year increase—up from 4.6% in June 2023—and is more than 1% higher than the national unemployment rate of 4.1%.

• A BioSpace workforce planning survey featured in the company’s new job market trends report found that 25% of the 39 surveyed employers with offices in California anticipate making layoffs in the second half of the year. That said, 56% shared they’re actively recruiting, and 67% predicted their number of open roles will remain the same or increase.

Despite that, employment opportunities should improve soon, according to Mike Guerra, president and CEO of California Life Sciences, a state advocacy group. He told BioSpace that based on conversations with member and nonmember companies as well as venture capitalists, while he doesn’t see a rapid recovery for this year, he’s optimistic about 2024.

Guerra also shared that even though life sciences hiring in California has slowed compared to 2023, employment should hold steady for the remainder of 2024.

“I don’t have a crystal ball, but from everything I’m seeing, I don’t anticipate it getting worse the second half of the year,” he said. “I think we’ve kind of leveled out.”

Guerra noted that one reason California’s life sciences market has been tough is it’s been an incredibly challenging funding year, causing companies to experience slower growth, make layoffs, restructure and conserve cash.

“Even companies who have tens of millions of dollars in the bank are having to conserve cash more than they had certainly previously thought,” he said. “And the money that they thought was going to last for years is only lasting them a year or two with a lot of the other things that are going on.”

San Diego is one area where companies have struggled. The biotech hub has experienced a jobs downturn. For example:

• The San Diego regional area had 2.5% fewer life sciences jobs in 2023 than in 2022, according to a Biocom California report.
  
• The number of life sciences establishments in San Diego dropped from 2,215 in the first three quarters of 2022 to 2,153 for the same period of 2023, reflecting a decline in biotech R&D, according to a CLS report.

• The San Diego Union-Tribune recently reported Novartis has let go of 29 employees in the city and will eliminate about 100 more jobs as it winds down its development site there.

All of that said, Guerra shared that based on a meeting last week with members of Congress that some venture capitalists attended, VCs are cautiously optimistic. While they haven’t been investing as much lately, he noted, they have funding ready to go when the right deals are in place and they feel like the economic environment is turning around.

Guerra said CLS is working with some VCs to get as much funding as possible so it can move the unemployment rate back in the right direction and keep the industry going the right way.

As the second half of 2024 progresses, the policy climate in California could affect employment opportunities, according to Guerra. He cited the Inflation Reduction Act as an example. While the IRA is intended to reduce prescription medication costs, some industry professionals have criticized it in part because negotiations on small molecule drugs can start nine years after a drug is approved compared to 13 years for larger molecule biologics.

“Why that’s all important is because companies are literally now making decisions on which drugs they should keep in the pipeline, and some that aren’t in clinical trials, they abandon because they just can’t see a place—a way—to get to profitability,” Guerra said. “And so that adversely impacts jobs.”

Guerra said California life sciences companies need more consistent policies and to know what’s coming next. For example, he noted, the state’s R&D tax credits come and go, making it tough for businesses to know what the future holds and plan for it.

“We have some of our large companies in California who are really literally right now, based on the R&D tax credit, deciding do they stay in California? Do they expand in California?” Guerra said. “Or, when they do add more jobs, do they expand outside California, where other states have significantly better incentives?”

So, while Guerra said he and other members of the CLS board are cautiously optimistic about the future, he also noted that California’s life sciences sector needs help on the policy front.

“When I’m talking to elected officials, we talk about the innovation in California and that it’s one of the best places in the world for our sector to create cures and to create treatments, but that they need to help us continue to do that,” he said.

While the BioSpace survey showed that 56% of employers with offices in California are actively recruiting, Greg Clouse, recruitment manager at BioSpace, noted that it doesn’t mean these companies are hiring a lot of people. They also may be recruiting fewer jobs this year than last year, he noted.

Guerra said hiring in California has indeed slowed compared to 2023, and for those companies that are hiring, some are simply backfilling roles they eliminated in the past few years.

For some job seekers, the slowdown is leading them to consider opportunities in other states. Clouse said he’s talked to candidates in California who are willing to relocate to find work. He’s also seen a shift in people’s views on remote positions.

“People are a little bit more willing to get back into the office now because they know they can’t just go out and find a remote job someplace, so they’re more open to being on site than they have been in the past,” he said.

Clouse recommended that job seekers who want life sciences jobs in California should keep in mind that when companies hire, they want people with very specific skill sets.

“So, if you have that specific skill that they’re asking for, make sure that’s reflected in your resume,” he said. “I think because companies are being so much more specific in what they’re hiring, candidates have to be a lot more specific in answering to that.”

Guerra advised that job seekers have as extensive a skill set as possible to thrive and compete, especially given there are so many different types of roles in California.

“The nice thing is, depending on what you want to do, it’s still hard to find and, more importantly, retain the good talent,” he said. “So, if you’re a hard worker, and you’re willing to put in the time and be loyal to companies, companies are wanting to be loyal and keep people with them and give them the opportunity to grow.”

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