There is no doubt that the Life Science industry has been enjoying growth year on year for at least the last five years. This money has come from both public investments and private investors, both of whom have been keen to promote the continued surge in innovative technologies and products that are designed to support a better quality of life and economy.
However, there is little doubt that the increased spending for the COVID-19 crisis and the impact of the Russia-Ukraine war will result in a monetary crisis for the United States. With this concern growing across the industry, we looked at the impact of this downturn and what may happen as a result.
When the Omicron variation hit, America braced itself for an economic downturn, but the reality is that the impact is less than originally assumed. For example, unemployment rates have already returned to full employment rates and there has even been an upturn in the labor force, with people now returning to work after leaving before.
In terms of Life Sciences, this impact has not been as promising, with the Great Retirement and the Great Resignation hitting companies hard. However, there are signs of slight improvement, especially where firms have pivoted their traditional recruitment programs and changed them to appeal to wider audiences.
Reduce Funds for Research
As spending is curbed to conserve funds for a potential recession, there is a natural impact on current research, with some Life Science firms opting to delay or slow projects they are currently working on, whereas others are being forced to reduce their output as the price for research space continues to climb.
This reduction has a knock-on effect on other areas of the Life Science industry and has left many people worried that work rates won’t’ pick up again. However, there is an early indication that investments in equipment and software will continue to grow, as the cost of capital is set to remain low, allowing Life Science businesses to pay for what they need and provide their teams with the latest tech to advance their research.
Is the Future Bright?
Working out what may happen is a difficult equation. However, 81% of Americans believe that there will be a recession in 2022 and that this economic downturn will impact consumer spending, business outcomes, and reduced rates of growth. The biotech industry is down significantly from peak valuations and with less susceptibility to consumer spending trends, if Fed rate increases begin to taper off later this year and M&A ensues, valuations might improve significantly.
If you are in the Life Science industry and need help to retain and grow your employee base as you navigate the financial downturn, then GeneCoda® is here to help. Contact one of our executives today – we are ready to help.