Massachusetts’ biopharmaceutical industry added fewer than 3,000 jobs last year, its smallest increase in total employment in seven years, according to a report Tuesday by the Massachusetts Biotechnology Council.

Despite economic headwinds and widely reported layoffs, the sector still added 2,943 jobs, said the annual “industry snapshot” by the trade group. The 2.6 percent increase raised the total number of biopharma employees to 116,937.

It was the smallest expansion since 2017, when the sector added 2,895 jobs, a 4.3 percent increase over the previous year’s total of 67,046 jobs.

Ben Bradford, MassBio’s head of external affairs, attributed the modest expansion to the makeup of the state’s biopharma sector.

While 18 of the world’s 20 largest drugmakers have a presence in Massachusetts — including such pharmaceutical giants as Pfizer, Novartis, and Eli Lilly & Co. — the sector is “hugely comprised” of small, growing startups that aren’t making money yet and rely on venture capital to operate, he said.

Venture capital funding of startups in the state fell to $7.67 billion in 2023 from $8.72 billion in 2022, according to the report. In the first half of 2024, venture capital totaled $3.26 billion, down from $3.73 billion for the same period last year.

Still, biotechnology remains a driving force for the Massachusetts economy. The industry accounted for nearly 17 percent of job growth in the state, even though biopharma comprises only 3.7 percent of the workforce.

In some ways, the sector has raised unrealistic expectations, given how it exploded in the early years of the pandemic. The state’s biopharmaceutical workforce grew by a staggering 22,383 employees from 2020 to 2021, or by nearly 27 percent, to 106,679 workers.

Likewise, venture funding skyrocketed early in the pandemic. In 2021, Massachusetts startups received an astonishing $13.66 billion in venture funding as exuberant investors disregarded the high failure rate in drug development and bet on buzzy technologies such as gene editing and messenger RNA vaccines.

Bradford said those years were outliers; the sector attracted many “generalist” investors who were enticed by the success of firms such as Moderna, the Cambridge-based maker of a leading COVID-19 vaccine. Moderna went from being unknown by most of the public to “being in global headlines on a daily basis,” he said.

Moderna, which was founded in 2010, now has 4,400 employees, making it the largest homegrown biopharma employer in Massachusetts and the second biggest overall, according to the report. The biggest employer is the Japanese drugmaker Takeda, which has 6,214 employees in Massachusetts, home to its US headquarters.

Although it remains a pillar of Massachusetts’ economy, the state’s biopharmaceutical sector has laid off thousands of workers in the past three years in what experts describe as one of the industry’s biggest shakeouts in decades.

Takeda in May said it planned to lay off 641 employees in the state between July and next March.

Just last Friday, Tome Biosciences, a Watertown-based gene-editing startup, told state officials that it planned to lay off 131 employees — virtually its entire staff — after scaling back operations. The layoffs were a startling reversal for Tome, which spun out of MIT in 2021 and raised $213 million in venture capital in December.

Jonathan Saltzman can be reached at jonathan.saltzman@globe.com.