Dive Brief:
- Labcorp plans to lay off 239 workers in its biopharma laboratory services business in Somerset, New Jersey, according to a Worker Adjustment and Retraining Notification (WARN) notice provided by the state’s Department of Labor & Workforce Development.
- The workforce reduction will affect the early development side of the company’s biopharma lab services operation, a Labcorp spokesperson told MedTech Dive in an email. The job cuts come amid a funding downturn in biopharma that has hit smaller and emerging biotechnology companies especially hard.
- The early development segment has seen lower orders and a higher-than-normal level of cancellations as biotech funding has dried up, Labcorp CFO Glenn Eisenberg said on the company’s third-quarter conference call in October.
Dive Insight:
Financing challenges for early-stage biotech companies have persisted for a second straight year as investors in the life sciences have pulled back sharply following a boom that reached its peak in 2021.
Labcorp’s early development revenue rose nearly 6% in the third quarter, behind the 9% revenue growth pace of the company’s central labs business. CEO Adam Schechter said on the earnings call that Labcorp intends to move more of the segment’s work to midsize biotech and pharmaceutical firms to lessen the company’s reliance on emerging biotech.
That would entail a greater focus on specialty testing, international expansion and companion diagnostics, he said.
Two batches of layoffs are planned at the Somerset facility, according to the latest WARN update. Job reductions will occur between Feb. 2 and Feb. 23, 2024, with a second round planned between March 31 and April 14, 2025, the notification indicated.
The elimination of 78 jobs at the facility, disclosed by the state in August, is part of the 239 headcount that will be reduced in total. Those layoffs were scheduled to begin earlier this month and take place through Dec. 1, according to the state.
“This decision, while difficult, optimizes our operations and ensures we are able to meet the needs and expectations of our customers by utilizing our global capacity and scientific centers of excellence across the organization,” the Labcorp spokesperson said, noting that affected employees will be invited to consider alternative positions with the company or will be eligible for severance benefits.
The job reductions at Labcorp come as Siemens Healthineers prepares to lay off 300 workers in its diagnostics business at the company’s Flanders, New Jersey, location.