The biotech industry witnessed a solid uptrend amid the pandemic and continues to do well due to the inelastic demand for biotech products. However, many companies in this space are looking to reduce operational expenses and announced layoffs amid expanding macro headwinds. For example, Biotech giant Novartis AG (NVS) plans to cut 25% of its total workforce in Ireland.
Moreover, according to Fitch Ratings, consecutive Fed rate hikes are expected to drive the American economy into a 1990-style mild recession. Amid such widespread uncertainties, investor sentiment is degrading. Investor pessimism toward biotech stocks is evident from the SPDR S&P Biotech ETF's (XBI) 27.6% year-to-date decline.
