Lean By Design
Lean by Design explores how organizations can fix what’s predictably broken in their operations — starting with the systems, decisions, and behaviors that shape how work gets done. Hosts Oscar Gonzalez and Lawrence Wong speak with leaders from biopharma and beyond, drawing lessons from industries that share the same pursuit of clarity, efficiency, and sustainable execution. Each episode breaks down real challenges into practical insights that help teams align better, think smarter, and move faster. Produced by Sigma Lab Consulting, Lean by Design helps organizations design for what works—and eliminate what doesn’t. Listen on Spotify, Apple Podcasts, or wherever you get your podcasts.
Lean By Design
0209. Efficiency Is Not Just Cutting Costs
In this episode, we discuss the 2025 MassBio Industry Snapshot — an annual report tracking employment trends, investment, real estate, and pipeline activity across the life sciences ecosystem.
With talent displacement, funding cuts, and lab vacancies reshaping the landscape, the conversation zeroes in on how biopharma companies should rethink efficiency. Instead of defaulting to layoffs and budget slashing, Lawrence and Oscar explore how operational clarity, thoughtful prioritization, and workflow discipline can unlock more resilient organizations.
Key topics include:
- What efficiency actually means in a biopharma context (hint: it’s not just spending less)
- How real estate patterns reveal deeper shifts in R&D priorities
- The ripple effects of NIH cuts and disappearing IPOs on the innovation pipeline
- Why “free agent” scientists might drive the next wave of value creation
- Strategic considerations for biopharma teams navigating funding volatility
Whether you’re an operator, executive, or early-career scientist, this episode offers a grounded yet hopeful take on where the industry is headed — and how to adapt.
🔗 Listen now to learn why the next generation of leaders will need more than scientific chops — they’ll need systems thinking.
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So I I I think most people know what Mass Bio does. I I thought they were for profit, but they're nonprofit, and they charge like a subscription and they have these events and conferences. So they do a lot of reports around stuff that's happening in the industry. And so this one was specifically around employment, investment, the drug development pipeline, real estate, and regional metrics. So we're in New England, which is a hub, and then you have San Francisco and then San Diego. And I think Raleigh down south is another hub. The research triangle. Yeah. Research triangle. And I think even to a lesser extent, the Chicago area is also a place. And so I I think they try to paint a really uh at least from what I read, I don't know what you thought of it. It seemed like they were very uh pessimistic about some things, but also optimistic about other things. There was a lot of it pointing to funding, a lot of buildings being empty, and then there's all this uncertainty over the workforce. We've seen how many layoffs like every week. There's always some headline. The numbers are way different than a couple years ago when people started getting laid off in this post-COVID era.
SPEAKER_00:So we are talking about the 2025 industry snapshot released by Mass Bio. This was released um just earlier this summer, and it really takes a look at what 2024 has done. And in some of these uh areas also takes a look at what has transpired in the first half of 2025 uh in a few of these categories. And I think what you are highlighting here is that sometimes there is a lag, especially with relation to the federal funding and those sort of cuts that have been happening. This is addressed by the CEO and president Kendall O'Connell, where it looks to be that things are holding steady. However, we have not yet really felt the full impact of what the reduction in federal funding that has happened earlier this year as a result of uh changing federal administration policies. We haven't quite fully captured how big of an issue this is going to be. You know, there's a lot of estimates. There's uh some people have some companies have preemptively laid off large amounts of staff for either reasons specific to, hey, we're jumping into AI and we're cutting out this whole arm, or other groups that have completely shifted uh their research. And then you have a number that just don't have the pipeline to maintain their current employee status, their level of employee engagement, when they're expecting federal funding to disappear. I mean, that's really what's happening. They they happen so quickly. I'm I have friends that have been caught in this from early doge cuts to tantrist with various organizations and academic sites that have really contributed to this. And there's lack of funding when we stop looking at the federal government, we start looking at VC funding. There's even been a lack of that kind of funding. There's not a lot of VCs, IPOs shrank last year. So that's usually a sign of how healthy the pipeline is of new companies, new research, new investments. Um, we've talked about this before. There was at one point a huge boom related to selling gene therapy, and then it's too expensive, it's too complicated, it's too hard, we don't have the right the right resources. There's not enough of it. So people start shedding those things out and renting out those facilities. I think there's a lot of to take in here. And like you said, it this snapshot tackles industry employment, industry investment, drug development pipeline, and in the real estate. Low points are not understated. Uh, you know, the the job growth is virtually non existent. Increases in vacancies in laboratories and facilities across the state, across the region, but but that also gives people hope that when it does bounce back, and there have been some recent acquisitions and recent mergers, which I don't know, we'll see how that affects the workforce. Um, it's a really important snapshot that we're lucky that we were able to acquire this. This is something that they do provide as part of their contribution to science. It is a nonprofit. So you can look this up and download a copy of it yourself. Why don't we go through some of this industry uh employment here?
SPEAKER_01:Yeah, so there are a couple of different areas that we can talk about. Let's talk about talent and sustainability. We'll we'll mix up the order of the topics that then MassBio's view is that the state of Massachusetts is obviously the the hub of the majority of the talent in the industry. Um, you know, there are just a ton of companies out here, a lot of universities, a lot of hospitals, and for a long time the state has just been known for that, right? One of the things as I was reading through the report is is the state set up in a way that it will continuously retain the talent that exists in this area? Do people live here and work at these companies because the companies reside here? And if that's not the case, if the companies start to drift out of the state, or is the talent pool going to start to diminish or are people going to move out? We have an extremely high cost of living in this area. I don't think it's to anybody's surprise that Massachusetts is one of the most expensive states to live in. When we think about even people in in our generation, millennials, a lot of us struggled to buy a home. Um, a lot of us are still renting, you know, there's a lot of student debt out there. Then you have the the generation below us that's struggling through this as well. Tuition has only gone up, the cost of living has gone up. And so the the question is, what is the trajectory of the state as it as it relates to talent when when we consider all of these factors, right? So do you think that the talents follow the company or is it the other way around? And and how do you see this high cost of living really impacting the long-term sustainability of the state? Because it's not making it any easier for people to live here, I think, is is what I have felt.
SPEAKER_00:I think there's a couple perspectives to answer that question. I think right now, Massachusetts, based on this report, basically controls 23% of the RD workforce in the U.S. It's huge. 23% of the people that work in RD biopharma are working within Massachusetts. Now, we've seen some of these return to office policies. There have been some empty laboratories, empty office buildings. Um, I've been to some of those with the clients that we have, uh, where you go in there and maybe experience, you know, 30 to 40% of the workforce actually being in office. And so you're starting to see some of these mandates come in, some with new rules with how far you live away, et cetera. But I think what what was interesting to me was to examine the real estate related to regions within Massachusetts. So there are, they have identified rating system developed to determine uh a municipality's readiness to host biotechnology facilities based on the community's zoning practices and infrastructure capacity. So when you start to look at that, the amount of areas, the amount of towns that have been identified as different metals, platinum, gold, silver, bronze, they are expansive far beyond Boston, Cambridge, maybe Burlington. I mean, we're talking areas, even out here toward Devons. I live close to Devons, where uh there's Bristol Meyer Squib and a couple of other folks out there, that is continuing to expand. There is sort of this availability that seems to be expanding outside of the greater Boston area. You do bring a very good point that the cost of living, and not even just the cost of living, but the cost of maintaining a business over there in the city of Boston or the city of Cambridge is far more expensive than any of the surrounding regions. But you can even see as you look into some of the largest leases for 2024, out there's Boston doesn't show up. Cambridge shows up a few times. Then you talk Waltham, Lexington, Somerville, Watertown. These are areas that are now starting to bleed outside of the Boston area. So perhaps we may see more companies start sprouting in various areas of the state, there's at least some opportunity there that allows you to live in the suburbs like I do and still be able to have a uh a decent commute that doesn't take you two hours to get to your job or to get to a client. So although academic research uh funding, uh federal funding has um in some ways completely stopped, I don't believe that that is enough to halt academic research. I think we'll see a big dip in the workforce that comes from academic research, which could be bad right now. There are, you know, when are the days going to be coming where we see uh PhDs in biopharma artificial intelligence, for example, or what's the next technology that Harvard, MIT, Boston University, uh uh University of Massachusetts, like all of these, how how many universities are in that Boston area? It's like 20, 23, 24, something like that. All of these universities are our source of the academic research that ultimately businesses end up pulling into more lucrative and and more innovative RD programs and projects. So um I think people are gonna continue to come here. I think the availability for where you can live, I think is gonna start to open up. I think the challenge that we're having is seeing the, and I don't have the data to show it, but the types of workforce that has been eliminated. If you go for cell and gene therapy, now your options are very limited. If you are working on anything, unfortunately, even if you're working with chain transgenic mice, apparently, funding has disappeared for that, even though it has no nothing to do with the LGBTQ community. You know, there are things that just have shaken the industry. And there's a lot of people out there that have moved into consulting and are trying to use their experience to turn directly into a consultant. But as you and I know from our three years of doing this, it takes more than just you being an expert in your field. So I think there is a lot more opportunity that could be coming into this region. I know that there's also been grants being made available by the likes of the UK to allow for visas for scientists to go across the water. That may be a source for academic research for the next couple of years. However, recognizing the pressure that the current administration is putting on the cost of drugs within the UK, which has their own set of regulations, has their own set of caps for how much medicines can cost, is actually not the best business move for these larger organizations to have sites out there. That's going to be really interesting to see what that really turns out to.
SPEAKER_01:I'll just make this last point about the talent pool before we move on to infrastructure and commercial real estate. So I think a lot of it is really tied to housing. And then obviously, I think as companies open up positions in certain areas, we all know that there's a massive pool of people that are on the sidelines that are, you know, if there's an opportunity somewhere, they're they're going to apply for it, they're going to be working there. And then this idea that people are going to leave the state, I think, is probably not as likely because when you consider the alternatives, okay, are they going to move to the other hubs? Right? Probably not, because that's a really big commitment to move down south to the West Coast. And it's it's more of a fact that it's the hub is expanding and maybe not so much condensed in the greater area of Boston and and also Cambridge, right? And then let's move on to uh infrastructure and real estate. So I think one of the uh findings that uh they reported is that there's an additional 1.1 million square feet of lab and GMP space that came online since the the last snapshot report, which brings the total to about 63 million square feet. And the vacancy rate is around 27.8% as at the time of this uh report being put out. And so, you know, the the way that I look at it is, you know, do companies needs need this much space, or were developers overcompensating for what their projections were and basically purchasing large plots of land, creating these spaces where um companies could lease it out or or even perhaps purchase the property. And for for the companies that are in their spaces now, are they less likely to move because their lease contracts are more favorable than the the newer ones that are out? So maybe that's a reason why people are moving into these updated spaces. There's some tie-in to the funding piece, right? Because as companies are laying off, technically you need less space. So that explains some of the vacancy. But it's cheaper rent. It's it's really hard to figure out if the vacancy is a result of the developers building too much, or is it really that the capacity of the area is decreasing, right? Because you can you can have greater vacancy if you just build more, but you can also have greater vacancy because you don't need as much space. And so it's it's it's a very tricky thing to look at. So when we think about companies moving into a space or e even working in their own space, how how much of it has to do with whatever they're researching or whatever they're manufacturing? But are they looking at other opportunities again outside of the city to move out and and and maybe that explains some of the vacancy that you're seeing? Right. So how do you see the the real estate piece of of this snapshot as it relates to the industry?
SPEAKER_00:So that's a good question. You know, one one of the one of the challenges of this report is that many of the numbers are either in relation to uh what are they seeing potentially trending in 2025 based on the things that have happened in 2024. So a lot of the facts and figures that you're finding in this report are looking at the earliest 2023, 2024, 2025. Now, when we look at the real estate component of it, they're showing graphs that go all the way far back as 2015. So when you look and understand the vacancy rate, part of the questions that I had for this was understanding during this time, what did the rate of IPOs look like? What did the rate of new uh funding look like? You know, we're pretty steady um over the last uh two years. And and I say pretty steady, I mean if you're talking about shifts, you may realize that we're talking about shifts of like a percent, uh maybe a percent or two or a percent and a half, something like that. Um, but depending on what value you're talking about, that could be a couple thousand in the workforce or you know, five new vacancies, for example. Um, but what I noticed here is uh there was there was a dip, right? There was a vacancy dip around COVID and just after COVID. And then that vacancy just continued to climb. So what is there's gonna be a factor of that? Well, clearly working from home is gonna change that. Probably not for the RD space. I mean, this is specific to GMP inventory. Uh, the shift from the uh cell and gene therapy, the shift from other manufacturing intensive drugs. Uh, you know, these are these are systems that are built out, and if they work out, they work out great. If they don't work out, you shut it down and you try to rent out the space. You know, I think from my experience of living in this area since 2013, there has been this steady increase of companies that split and develop other entities, new mergers, new acquisitions. It was a little bit of a spike, but roughly from 2015 all the way through the end of 2022, this region did not experience more than 5% vacancy. And then it shot up to right now where it is at almost a 30% vacancy. There's a couple things that could have happened in there working from home, eliminating therapeutics from a pipeline that they are now not using, not leveraging. As you mentioned before, sort of uh these real estates. Um, what is the average term we're talking about? Um, you know, three, maybe five years. So where were those businesses? You know, when did those businesses start? Um were there a lot of 2017, 2018, boom, they got into places and it didn't really work out after five years, so it just sort of became vacant. Um, there's a lot of new laboratory spaces that have started to sprout outside of the Boston area. Waltham, Watertown, Lexington, and some of those, to your point, from developers are still yet to be filled. There are available spaces, and I think people are battling with the desire to be in the thick of it. Why? Because there are events that happen, there are communities that happen within Kendall Square, within areas of Cambridge, you know, things like that where you don't really experience if you have a lab in Newton. You're by yourself. Lexington's starting to have a little bit of a hub. Worcester is starting to grow, especially through uh the MBI, the the mess um biotech initiatives that are supporting early budding. It's an incubator space supporting those uh those businesses. We see the inventory has also gone up in that time frame. Looks like here around 60%, and the vacancy rate has gone up like 80.
SPEAKER_01:You brought up another point. As companies are changing their pipelines, the space requirements are gonna change too, right? So if you're developing a space specific for, say, cell engine therapy, would be clean rooms and other support areas are set up in that way versus if you're doing something related to biologics or or small molecule, those spaces are gonna change. And we have like newer platforms coming out. So perhaps the vacancy is attributed to these spaces not being designed for these things that are coming out, or maybe a shift in where the industry is going. And so people are looking at these spaces and going, well, I don't need this space because it doesn't meet the needs of what my portfolio is moving towards. So that's another explanation for why we're seeing this. Portfolios are changing. This is obviously directly tied to funding, right? So you brought up in in the beginning about the NIH cuts and and so this funding versus productivity thing. I think MassBio's view, and it sounds like your view too, is that when we have less funding, there's less innovation. I have a different viewpoint. Obviously, funding is good for the ecosystem because it allows us to uh attach dollars to certain initiatives and projects, and so people can continue doing their research and other things that indirectly or directly contribute to the progress of the industry. But how, you know, I think my question here is how do we measure productivity, not just in the funding of dollars, but when we look at drug approvals, we look at rejections, we look at how many companies are receiving citations or inspections from the FDA and they find something. That isn't so much measured in dollars, but if you're doing research and the the ultimate goal is to get something to market, right? And so how do we look at that from the lens of funding? Because funding could be it requires people to be more disciplined about the spending itself. And so you're able to narrow the focus on your priorities, right? Because when you give people lots of money, they're not gonna be spending it correctly.
SPEAKER_00:Yeah. That's part of where I was gonna go with this, is that there's a couple different areas here in funding. They talk about, you know, some of the VC backed financing rounds. I mean, it looks like the at the highest of last year was uh 207 uh million C. Uh, and then there's a couple Series A's around 50 million. So the funding is happening. It's going to some new businesses. I don't see anything really, but from my engagement with some of these really complex businesses that have large portfolios, there is this rat race that still exists in various capacities across various therapeutics, where you're trying to build a big portfolio in the beginning and hopefully have the discipline to start to shave off some of these programs that are not in line with that end goal of being in a clinic, being an asset that you can sell or license or partner, uh, because that's ultimately where a lot of these businesses are looking to do. The big businesses, hey, if we can eliminate all that RD stuff that doesn't get us money and just buy one of these that's already, you know, 90% way through the development process, we're gonna choose to do that. So we're looking at small companies getting big funding. And unless you have the discipline to really stay focused on the one or two that can really drive, um, but that doesn't really happen. We want to hedge our bet. So what do we do? We start seven projects, eight projects, nine projects. What do you think happens to those budgets as they move along through the different phases of development? You rarely have enough to do the things that you need to do. So as you mentioned, these you know, FDA, these these issues that prevent companies from reaching that next stage, are those things due to not having good budget practices at the organization? Have you measured up against, well, we said we were gonna do 10 million and we spent 11.5? Or is it we said we're gonna spend 10 million and we added a year and another six million? And so what happens at the very end, your data is only as strong as the things that you've been able to actually do. And of course the science has to work out. But how often do you find that businesses are in projects deep into the into the phases of development, and you start shaving experiments because, well, we can't do that because that's too much, or the lead time's too long, and we have to get something by this time. So you scrape together what could be a package and hopefully get that through. But then you miss those critical points that you could have done, you know, before. I think sometimes we look at research and saying, what can we do with this with the money that we have? And it needs to be a little bit more of like what has to happen. If you have a focus and the things that have to happen to really give that the best shot of going into the clinic, of getting a partner, of getting a licensor, if your funding isn't there, are we taking too many risks by saying let's get started and then we'll find more funding for it? I've seen that fall through the cracks. Uh, I was just talking to a former colleague. I didn't even get my severance because the VC wanted their money back. So instead of moving through the pipeline and adding more funding, we had to liquidate and give them all of our money. That just happened.
SPEAKER_01:Yeah, and I'm I'm I'm torn in I could see what you mean by if if you're continuing down this road and and you need the funds to further the development of the research. I think the question that that comes to mind is when I look at the the private industry, right? We don't we would never tolerate here's a bunch of funding for certain projects, and the goal is to develop it and so that the idea is that it becomes to market, right? That is not the incentive for the academia side. Because they're they're not looking for a return on investment. What is the goal then of, you know, let's say you do get a grant from the NIH for researching a specific uh modality and whatever therapeutic, like what is the goal of the funding then?
SPEAKER_00:Well, it's usually going to depend on the series. So is it a seed fund where you have 50 million and you need that to build your workforce and to establish your processes and start to create some of that, some of those assets that you want to develop? Is it a series A B C that eventually you want to get that to land you into a clinical trial? Or the other question is, is that even in your in your remit as a company, as a business? Because once you enter clinical operations, your budget just explodes with the amount of resources needed to do that.
SPEAKER_01:So these people, hey, I'm not talking about the funding as it relates to a private company. I'm talking about when when a PI gets a grant from the NIH. What is the like goal of that, right? Because at a company level, we understand what that is. Like you're scaling, you're trying to grow the product, and you go into the clinic and then you become commercial and then you you make more product, right? For the patients out there. But I think it's a little bit more obscure, at least to me, from when you receive federal funding, like the academic institution receives it. You probably have a handful of very well-known PIs that take this money and then decide what areas they want to do the research in. And then perhaps there's a bridge between the university and the VC community that bridges the academic institution with the industry, right? So that you can actually bring it to market. And that that makes total sense. It's it in academia, when the government says, hey, here's a bunch of money to spend on this thing, what is the goal of that PI? It's not building, it's not building a product. It's not building a product.
SPEAKER_00:Unfortunately, unfortunately, I think I think that is the current mentality of government spending, that it should, although government's for the people, it's not supposed to be for-profit. Neither is public funding, neither is academic funding. Academic funding is usually a source to develop more insights, to develop an understanding of how this system actually function with a treatment that I'm developing. I was working on a project on HIV work, and there are uh two receptors where HIV actually uh can turn into a more aggressive form of HIV because it will specifically bind to a certain receptor and creates this explosion of disease that eventually turns into AIDS. There's nothing that is set in stone that says, oh, HIV gets worse when you try to treat it. And we were exploring like what is happening with why people's uh disease is converting to now really target this other receptor. It's a CCR5 receptor and a CXCR4 receptor. Some of the research has advanced since then. This was uh years ago when I was doing academic research. Um, but the work that I was doing was trying to pressure the virus to evolve on its own as a form of survival. So I would treat a specific virus that only targeted CXCR5, uh CCR5 receptor, and I would continue to treat it and I would treat it enough that I didn't kill it. And then what happened? We saw this switch for receptor preference. Much more research was needed after that, but it started to show there is a possibility that when you are treating, that you are not killing the virus, you are giving it the opportunity to evolve into a more aggressive form. So HIV is something that has uh better treatments now, um, which are usually a cocktail to prevent a couple of different things from happening. Um, but that's much of academic research, whether it's federally funded. Or coming from cancer organizations, men's health, women's health, et cetera, is on that level of discovery. And then where does Big Pharma pick it up? Big Pharma scrapes all the research that's available, figures out what's hot, what's not, what is potentially going to be coming down the pipeline, what's going to be a therapeutic area that people are sleeping on that has a lot of potential. And we found the research that really positions this project as a worthwhile endeavor for us to create a therapeutic, a drug, uh, you know, a medicine for it. Uh so when when you're looking at that academic research, it is more on the understanding rather than we're gonna produce an asset at the end of it. You may do that at some point, but you can definitely have figured out well, when we deactivate this ligand receptor complex, the cell dies, it does this, or it stops moving or something. And so there's a variety of things, but I I think a lot of it is is in discovery of these are we these grants are for foundational science that uh for things that we don't know, we don't have any clue. We need those foundations in order for the businesses to pull them into assets.
SPEAKER_01:Right. So there's there's definitely value in the information bridging that um the the research that these companies aren't able to do, and a lot of that basic science is developed at the university level. These they get funding from the from the government or or any of these organizations that are nonprofits that are funneling uh funds to these PIs that are doing very meaningful research that ends up um going into the industry at at some point if if if it's something that they can use. Maybe the incentive is really these um reproducible studies that have some sort of conclusion or maybe not a conclusion about whatever they they worked on. And then the question is for me, how much funding is enough? Because we say that, okay, the cuts are gonna really drastically impact the industry. So what is enough funding? Now the it's the bigger picture, right? Because it the NIH funding is is taxpayer money. You have this new administration, they have different priorities, you have different things you want to spend your money on. I think that's why Doge came in, because they're spending way too much money. We need to figure out where to cut things and and where to allocate the resources for other initiatives that is is on the agenda for the administration, right? That's such a hard question to answer, which is how much funding is is needed. And then the other thing is if there's more funding for this, then we have to sacrifice somewhere else. It's been all over the the news, the the national uh deficit. Yeah. We owe a lot of money and and it's growing. So we have to take these cuts. When these cuts happen, are we to be more disciplined about how we spend the money, or is there nothing that we can do? We gotta be very selective about the research that go that goes on because when we ask for money, it just takes away from other things, right? Yes, we're probably spending money on things that we shouldn't be spending money on from the federal level. The other point I'll make is is it transparent how the funding gets distributed from the NIH? Are they looking at all the different grants and they're going, okay, I think we need to focus more on this rather than these things? How is it at a portfolio level? Is that how it's managed, or is it not managed like that at all? And it's really just submitted application, and then there's a panel of scientists that figure out if this is feasible and then they give the grant. Like, how does that work?
SPEAKER_00:I don't have the exact answer for that, but I I can say that um the the way that the NIH is structured is that they are split based on the type of science. Is this a biologic, is this a medical device, is this for cancer, is this, you know, infectious diseases has a whole different group. So um it's possible that they come together and then they say, okay, infectious diseases, you get 10%. Whatever our full budget is, you get 10%, you get, you know, 6%, you get five, you get, you know, nine. Um, but there are different sec there there are different sections within the NIH that manage all the grants that are coming for that purpose and and and where the money is going. Um I think if I could just add one of the interesting points of this report is how they define the biopharma industry. Um, it's not just RD and manufacturing. There are um testing laboratories, there are RD and physical engineering, life sciences, biotechnology and nanotechnology, colleges and universities, medical laboratories, general medical and surgical hospitals, psychiatric and substance abuse hospitals, and other specialty hospitals as well. So the the range in which the funding is going out, there's a spray impact of what happened when this funding disappeared. It affected all of them, really, depending on if their research aligned with with the the current administration's perspective of what research should be done. Um what is that based on? Who knows? Gut, perhaps.
SPEAKER_01:Like, how do we how do we look at how these different organizations are supposed to respond as as a result of these cuts, right? Do you step back and you start cutting programs? Like how do you as a a PI or an academic institution, how do you prioritize where you're putting your money, even at a company level, if there's less research being done in this area, does that mean the future of your pipeline is now at risk because you don't have that foundational science available for you to further develop your product, right? Like all of these things are interrelated in some way. There's there's gotta be, I would hope, that each one of these pieces in the in the value chain is looking at a way to prioritize how they're spending their money. And when there are cuts, they know when to dial back, and then when there's more funding, they know when to dial up. And it's not just this super fragmented system where people aren't really disciplined about how they're spending their money, I guess is my point here.
SPEAKER_00:Well, where would you expect to spend your money? Think about a personal think about you have all this money and all of a sudden your salary got cut or you got laid off and now you have a new job. And now you have a new job that doesn't pay as much. So what do you do? Well, the essential stuff. So what would you consider essential research? Probably the things that are further along. Why? Because they're the closest in the pathway to becoming an asset that generates revenue. Okay, if we just think about this from a business perspective. So you'll see that money and and what happens from the beginning, from an ideation, from an idea to run a project with an asset all the way through clinics, uh, it it is it is a ramp that continues to get steeper in terms of how much capital you need to get to that next stage. And that's sort of what you can expect with these different funding rounds. It's like, okay, well, we have, you know, one read in ideation, we have three that um are concepts, and we have two, one's getting close to an IND, and we're almost close to determining if this is a candidate for us. So you have to split the money amongst that. You can the bulk of your money is gonna go to the stuff that's downstream. But you still need a lot of money to get things off the ground. It's not you're not gonna do it. You're not gonna do it with a million dollars. You know, so the the reality is that you you'll need the additional funding. Do not like the way that the word efficiency has been thrown around because efficiency is not cutting it off. That's like saying, hey, I'm gonna be efficient with my home expenses and we're just gonna get rid of our uh air conditioning and heating units. That's not being efficient, that's cutting an arm off and saying, okay, well, now I'm just gonna take care of everything else. Like, well, you have foundational things that you have to have, where we are the industry of free lunches and cafeteria spending and and coffee, which can obviously send people into an uproar if you take their coffee. So this is not suggesting that. Um, but when you start to look around and you say, okay, well, what budget do you put for marketing? How many people are you sending to those conferences? Are those conferences really what's driving the brand recognition? You know, start to really examine where are you spending the money and why does that matter? Why, why is that important to the end goal? And you have to have alignment for that. It's not just determining what's taking the most money and cutting it.
SPEAKER_01:Yeah, I think to your point, yes, money is not the only thing that is related to efficiency. And this is the business that we're in, is how people work together. And I would think that there are a lot of workflows that need to be tightened up and they need to be simplified in a way that you can do more with less money and less time to drive some of those additional funding rounds and and and again being more disciplined about where you're putting your money. At a macro level, I think when those cuts come, and and they have come to different parts of our industries, to do nothing and to wait for more funding is the worst thing you can do. Right? You you have to start looking internally and going, okay, this just happened. We gotta strap ourselves in and just be very disciplined about how we're spending our money.
SPEAKER_00:What's your plan if this happens again before you get more funding? Yeah. Are you gonna change your research trajectory because it supports the direction of the administration and you might have an opportunity to get funding during this four-year timeframe? Or do you continue going based on your mission and vision for your business, for your company of what you guys stood for? You know, and then therein lies, are we dealing with shareholders or VC, or is this a publicly run company that now is dealing with more stuff? All of those have to be taken into consideration. When I go back and I look at this report, um, when it comes to the infrastructure to take in whenever the science boom happens, I think we have most of it there. When is that boom gonna happen? When we are almost 30% capacity, and I went back and I looked at the report. The funding from the NIH, the IPOs, all of these things spiked around 2019, 2020, 2021, which is when vacancies were at their lowest. IPOs over the last three years, including 2020, there have been one IPO in 2025 in the first half. Six all of 2024, two of 2023, eight in all of 2022. And in 2020 and 2021, there were 21 and 25 IPOs, respectively. So a sharp decrease right after this explosion, right when the vacancies were at their lowest. So perhaps we had different expectations of what was going to happen in the industry and COVID, research challenges, funding challenges. I don't think there's really a challenge in the workforce because it's there. There's programs out there that are training people. There's thousands of people in the Boston area that are positioned, that are intelligent, that have successful research, um, that may have been just caught in the crossfire. That's gonna take time to get the trade moving again.
SPEAKER_01:Right, recovering. When you were reading this report at the end of it, are you more optimistic or pessimistic? We have what, a couple more months to the end of the year, and then 2026 is around the corner. I know when I read the beginning of this report, I think I was skeptical in a sense because it it really paints a gloom picture, and and there's a little narrative around look, less funding, things are expensive, people are getting laid off. And it's it's not even just a report, it's we're bombarded with this on LinkedIn, like everywhere, right? You always see these headlines, and and then so-and-so is at a hearing, and they're not deciding to overturn this, or this is not getting funded anymore. And it can get really um a change in vaccine mandate?
SPEAKER_00:You don't think that's gonna change all these businesses that thrive on being able to produce vaccines for so many people in this country?
SPEAKER_01:To end the this this episode here, what are you most positive about as a result of you know, looking at the snapshot and and looking at the other things that are going on in the industry and the headlines and even your clients? Because I I want to leave on a positive note and just not you know paint this picture of, oh, everything is terrible. And and I'll go first and tell you that I think that yes, there's there's less funding, yeah, there are a lot of people getting laid off, yes, there's a lot of vacancies, but the story that isn't being told enough is that we have a lot of talent on the sidelines. I I think when people are put into a corner, they're they're gonna respond by creating things of their own. And I think there's gonna be a lot of value creation that comes from people that are in those positions now that maybe you are applying to jobs, maybe you're working in a smaller company now and it's a change. But it's the the fact that things are being changed and and the outlook isn't as as positive as it once was, is that it's forcing people to be reflective of what do I want to do with my career? What do I want to do with this idea that I have? Am I gonna build a business? Am I gonna sit on the sidelines? You can decide on what you want to do, and that's something that I think is gonna be really positive coming out of this, is that there's gonna be a swarm of new companies that are gonna be more disciplined, they're gonna be using AI-driven tools to grow their companies that are we're gonna need less funding than before to develop what we need to develop because of all these new tools that are out. And I think that is something that I'm very positive on, despite all of the negative headlines that you're seeing.
SPEAKER_00:What am I feeling positive on? I think um I think Massachusetts is gonna continue to be a major contender, uh, not just in the US, but globally. The infrastructure is here, the innovation is here. I agree with you in the sense that uh this gives the opportunity for people to start questioning things, start trying to find out what what what are what are you beyond the the science that you know? There's more to you as a person than the letters that come after your name, your thought process, your uh capability to understand you know large complex data sets. Like this is all beyond just having a specific skill set or knowledge base um, you know, type of science. Uh I think there's an opportunity to explore other funding mechanisms. Now, this would actually be somewhat difficult. What's happening now is that it's not so much that VCs are stopping funding because we've heard recently this year, I don't remember who it was exactly, but they're putting$400 million in opportunity fund, which basically funds all of these smaller starting companies to really start to generate things. And and when you start to see these things come out of one VC, you start to gradually see other other ones coming into playing in the same space. Now there might be more reliance on VC backed. And and the the danger of really cutting this federally funded research is that academic research does not give you money. Academic research does not provide something at the end. This is establishing, again, foundations for the additional research to go through for the multi-million dollar projects that and programs that the biopharma space typically tackles. The money's here. I do believe that it's gonna be a little bit of a rough road, but if there's anywhere that's gonna start back up the quickest, it's gonna be this region. Well, Lawrence, thank you. And uh thanks again um for sticking with us in this episode where we reviewed the uh MassBio, MassBio 2025 Industry Snapshot. Um they put together um pulling in input from their membership of companies. So um we're grateful that we have this perspective to help us on our end learn learn more about the industry. We will put this in the show notes also. We have some earlier episodes that discuss a product line that we are launching in early 2026. We also have a book that outlines our process and how we got there, the experiences that we've had over the last 15 years within this space that bridges laboratories, research, and business all into one space, pointing directly to how we become more efficient, how we become more responsible, how we can plan better and connect our systems with teams across the company. Thanks again for sticking with us, and uh we'll catch you next time.
