In an earlier blog post, I collected predictions on what impacts Donald Trump’s second presidential term would have on the biotech and pharmaceutical industries. This is a follow-up to that post, two months into the new administration.
(Please note that this post does not address recent changes to funding of academic biomedical research. I plan to address this in a future post.)
According to Tristan Manalac’s article in BioSpace on March 4, some analysts were optimistic at the beginning of the year that a rebound for the industry was in the works, and that potential moves by the Trump administration, like repealing the Inflation Reduction Act and creating a more favorable regulatory environment with respect to deals and mergers would bolster struggling life science companies.
However, layoffs have continued this year (albeit more slowly than in 2024), there are over 16 million square feet of unleased lab space in the Boston metropolitan area, and the biotech index fund XBI closed 17% lower on Friday night than it did on Election Day.
RBC Capital Markets analyst Brian Abrahams told BioPharma Dive that investors are cautious about possible disruptions to drug review processes, while Kendalle Burlin O’Connell, the chief executive of the Massachusetts Biotechnology Council, described recent moves by the administration as resulting in “a lot of chaos and uncertainty” that was unlikely to bolster a market turnaround.
In other developments, the administration is pushing for large corporations to onshore their operations, and there exist bipartisan moves in Congress to create more robust supply chains.
Vaccine development
On February 20, the CDC postponed a meeting of the Advisory Committee on Immunization Practices (ACIP) which had been scheduled to start on February 26. ACIP is a panel of experts on public health, immunology, virology, and related fields that meets every year to develop national vaccine recommendations. The delay prompted an open letter from the Partnership to Fight Infectious Diseases, signed by dozens of medical associations and advocacy groups including the American Academy of Pediatrics and the American Medical Association, that called for the meeting to be rescheduled promptly. On March 20, a month after the meeting was postponed, the media reported that it would be rescheduled to start on April 15.
Avian flu vaccines
According to a February 27 article in Fierce Biotech, the Department of Health and Human Services (HHS), headed by Robert F. Kennedy, Jr., is re-evaluating BARDA’s $590 million Biden-era contract with Moderna to develop mRNA vaccines against several strains of H5N1, part of a broader pushback on mRNA vaccines by the new administration. BARDA, the Biomedical Advanced Research and Development Authority, is a department within the Administration for Strategic Preparedness and Response under the HHS umbrella. The contract was intended to facilitate Moderna’s Phase III trials of vaccine candidates against two strains of bird flu in addition to bringing four new flu vaccines into Phase I.
Of the three currently licensed vaccines against H5N1, two are manufactured in eggs, while the third is manufactured in cell culture. Although there are stockpiles of these vaccines, none are currently commercially available, nor are they matched to the strains that are currently infecting livestock. The egg-based vaccines in particular can require as much as nine months’ lead time to be updated against new strains, manufactured, and made available to the public.
Vaccines based on mRNA technology have the advantage of being much quicker to update and produce. With the Trump administration re-evaluating Moderna’s BARDA contract to develop and test mRNA vaccines against H5N1, this approach may be in jeopardy.
According to a March 4 article by Adam Bluestein for Fast Company, a source familiar with BARDA’s private sector drug-development partnerships is worried that without the BARDA funding Moderna may not pursue further development of these vaccines, and that the news would also be substantial cause for concern among other mRNA vaccine producers. Although Pfizer is also developing an mRNA vaccine against avian flu, that vaccine is only in Phase I studies.
Covid vaccines
According to a Fox Digital article published February 25, HHS issued a 90-day stop-work order to Bay Area vaccine developer Vaxart, Inc., pertaining to their contract to develop and test an oral COVID-19 vaccine. The order was given on February 21, three days before 10,000 participants were slated to begin a Phase II clinical trial on February 24, which is now paused for at least three months while Kennedy and other officials examine initial findings from earlier trials and decide whether to unfreeze the funds. Vaxart’s COVID vaccine work was initiated under the Biden-era Project NextGen.
International trade
Historically, pharmaceuticals have been excluded from international tariffs between the U.S., the European Union, Japan, and several other countries in accordance with the WTO’s 1994 Agreement on Trade in Pharmaceutical Products. The Trump administration’s introduction of tariffs has the potential to significantly impact drug companies, international trade, and patients.
Tariffs and supply chains
In response to the proposed tariffs, Pfizer said they are ready to shift manufacturing to the U.S., and will focus on products whose manufacturing can be more quickly relocated, including antibodies and sterile injectables. Eli Lilly plans to spend $27 billion over the next five years on U.S. manufacturing capabilities that will include four facilities and generate 3,000 jobs for science and engineering staff. Merck expects to invest $8 billion in U.S. manufacturing by 2028, and has already invested $12 billion since 2018.
According to Mari Eccles’ February 28 article in Politico, the United States makes up 33% of Europe’s pharma export market, and Ireland in particular is very vulnerable to new tariffs: in 2023, the country exported €54 billion worth of goods to the U.S., of which €36 billion was pharmaceuticals and chemicals. According to CNBC, about $190 billion in pharmaceutical products were imported to the U.S. from Ireland, Germany, and Switzerland combined in 2024.
According to the Politico article, tariffs of 25% or more would increase drug prices for U.S. patients and disrupt supply chains even as the U.S. and E.U. are trying to move away from drugs supplied by Indian and Chinese manufacturers.
If the E.U. retaliates, outcomes could be worse for European patients than American patients. Both rely on pharmaceutical imports from India and China, but according to health economist Diederick Stadig, Americans pay more for the same drugs and in the event of shortages are therefore more likely to continue to have access to them. Furthermore, fixed drug prices in Europe mean that tariffs against American imports could effectively remove certain drugs from the European market, even as the aging populations of European countries make the need for affordable medications more critical.
Relatedly, the U.S. Congress is taking steps to mitigate risks to medical supply chains for Americans. The Medical Supply Chain Resiliency Act, a bipartisan bill introduced on March 12, aims to diversify the sources of medical goods coming into the U.S. It gives the president more authority to directly adjust duties on drugs and medical devices. Sen. Thom Tillis, R-North Carolina, one of the senators who introduced the bill, described it as, “a critical step toward ensuring that America’s healthcare providers have reliable access to the essential supplies they need”.
In his March 4 address to Congress, Trump announced that his administration would impose reciprocal tariffs on Indian goods by April 2. Currently, India collects 10.9% tariffs on pharmaceuticals that it imports from the U.S. Under Trump’s plan, the U.S. would implement the same percentage on Indian imports. India currently exports $12.7 billion of drugs to the U.S. annually, compared to about half a billion dollars of drug exports in the other direction.
According to the BBC, about half of generic drugs taken in the U.S. are manufactured in India, and imported generics overall make up 90% of U.S. prescriptions. Without a trade deal, Trump’s tariffs could make some Indian generics unviable, and Indian companies could exit the U.S. market, making shortages worse. While large firms like Pfizer and Eli Lilly can onshore because they sell brand name and patented drugs, there is little economic incentive to onshore cheaper generic drugs.
U.S. – China business collaborations
In recent years, American companies have spent billions of dollars to license pharmaceutical intellectual property from China and bring those drugs to the global market – according to Angus Liu’s report for Fierce Pharma, 1 in 3 molecules licensed by American big pharma in 2024 were licensed from Chinese companies.
Trump’s America First Investment Policy restricts inbound and outbound investment between the U.S. and China in several industries. In particular, the inter-agency Committee on Foreign Investment in the United States has been called on to prevent Chinese entities from investing in “strategic sectors” of the U.S. economy, including healthcare, and to prevent American firms from investing in sectors of the Chinese economy “implicated by the PRC’s national Military-Civil Fusion strategy”, including biotechnology.
According to Liu, the America First Policy could disrupt American biopharma in three ways. Firstly, the broad wording of the policy might encompass in-licensing of drug candidates from China, which would take a bite out of the pool of potential medications that big pharma can develop and bring to market. Secondly, it may become much more difficult to build new U.S. startups off of Chinese intellectual property assets, since Chinese firms often retain an equity stake in the new company. Lastly, American startups could lose access to Chinese venture capital funds while states become unable to attract Chinese biopharma to establish new operations on U.S. soil.
Laurie Burlingame, a partner at the law firm Morgan Lewis, told Fierce Pharma: “My main concern is that [the America First Investment Policy] adds yet another layer of uncertainty to the life sciences sector, which has been depressed for the past three years…An uncertain economic environment coupled with legislative and regulatory uncertainly is unlikely to assist the life sciences industry in its recovery.”