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Biocartis to Slash 25% of Workforce
Declining sales of COVID-19 tests is creating a domino effect for the companies that make them. Unfortunately for a lot of medtech professionals, that means layoffs.
June 21, 2023
3 Min Read
Image credit: Peter Cade / Stone via Getty Images
Diagnostics took center stage during the pandemic, but now that demand for COVID-19 tests has plummeted, companies that enjoyed the pandemic spotlight are now having to pivot. Unfortunately for many medtech professionals, that means layoffs.
Mechelen, Belgium-based Biocartis is the latest diagnostics company to announce a drastic workforce reduction to reorganize and cut costs. The company said it will eliminate 140 positions, which is about 25% of its global workforce. As part of the reorganization, Piet Houwen, the company's chief operating officer, will resign effective September 1.
Biocartis said it has begun talks with key creditors and plans to engage an international investment bank to help the company develop a recapitalization strategy.
If all goes as planned, the company will reduce its annual operating expenses by €18 million.
This reorganization enables a shift towards profitability through an increased focus on partner funded test menu expansion and a more targeted U.S. commercial strategy to increase oncology test utilization, Biocartis noted.
“This reorganization is the first step necessary to create a clear path to financial independence by focusing on near-term growth from our existing business and delivering on our strategic partnership agreements that provide long-term value," said Biocartis CEO Roger Moody. "I am confident that the streamlined organization will be able to continue to build on the strengths of our fully automated molecular platform with its unmatched ease-of-use, turn-around-time, and sample versatility in oncology. We are fortunate to have, and we fully support, our trusted partnerships that include objectives to expand the number of tests that deliver fast and accurate results to cancer patients with currently unmet needs. Turning to our next steps, I look forward to working with our investors to secure the funds needed to achieve break-even EBITDA and recapitalize the balance sheet to clear the way for meaningful shareholder value creation.”
Citing uncertainty related to the reorganization, Biocartis withdrew its 2023 financial guidance. The company previously said it anticipated revenues of €55 million to €60 million for the year, which would have represented a year-over-year growth of 25% to 35%, excluding sales of COVID-19 tests.
Other industry layoffs related to declining sales of COVID-19 tests
About a month ago, reports surfaced that Abbott had laid off 199 workers at its manufacturing facility in Westbrook, ME after previously cutting 219 positions from the same facility in March.
“Now that COVID has transitioned to a more endemic, seasonal type of respiratory virus we’re continuing to adjust our workforce to align with market conditions," Scott Stoffel, a spokesperson at Abbott told MD+DI in May. "We appreciate the contributions of all of our workers at this site during a time when the country desperately needed COVID testing.”
Also in May, Thermo Fisher Scientific told MD+DI it had decided to discontinue sales and operations at three of its San Diego, CA-area sites as the company does not expect customer demand for COVID-19 tests to return to previous levels. According to three Worker Adjustment and Retraining Notification (WARN) notices, this decision resulted in 230 jobs being cut.
"As COVID moves from pandemic to endemic, we must make adjustments to meet current market demands," a spokesperson for the company said.
Cue Health, another diagnostics company that benefited from the demand of COVID-19 tests during the height of the pandemic, has gone through two rounds of layoffs in 2023. In April the company disclosed a workforce reduction of about 30%, or 326 positions, after previously cutting 388 positions earlier this year.
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