Biotech industry in Boston grapples with unease over unclear health policies under Trump administration
In the heart of the United States' thriving biotech industry, Boston has been experiencing a turbulent period due to the impact of Trump administration policies. The sector, which employs a significant portion of the city's workforce, has been grappling with economic challenges, regulatory uncertainties, and a decline in investor confidence.
The feud between the Trump administration and Harvard University, a major research hub, has raised concerns. With federal research grants under threat, an economic analysis suggests a potential $2.9 billion hit to the Boston metro area's GDP and the loss of 15,500 jobs[1]. This could have a ripple effect on the biotech sector, as many start-ups and innovations are linked to university research.
The biotech industry, heavily reliant on research funding, is also facing challenges due to these cuts. Attendees at the BIO International Convention in Boston expressed concerns about the impact of federal policies on research funding[2].
The Trump administration's policies aimed at reducing drug prices have created a sense of uncertainty, potentially affecting the profitability of biotech companies and investment in the sector. Vaccine-maker Moderna, headquartered in Boston, has seen its share price sink 27% this year due to concerns about routine medicine approvals from the US Food and Drug Administration[3].
The administration's policies could also influence the efficiency and speed of the FDA approval process, crucial for biotech firms. KalVista Pharmaceuticals, headquartered on the Charles River, experienced a delay in a drug approval due to heavy workload and limited resources at the FDA[4].
The uncertainty following the resignation of a top FDA official has also influenced deal activity in the biotech sector. Verve Therapeutics, based near Boston's Fenway Park, was acquired by Eli Lilly in June for $1.3bn, but the deal was partly influenced by this uncertainty[5].
The lack of investor appetite for new issues has closed the door for many biotechs waiting to go public. For the first six months of 2023, the number of biotech IPOs sank to its lowest level since 2012[6]. Venture capital firms brought no biotech companies to an IPO for the first time since 2011. Bluebird bio, a former $10bn biotech company, was sold for less than $50mn this year[7].
In response to these challenges, the Biotechnology Innovation Organization, Boston's biggest lobbying group, has increased its lobbying this year by hiring former Republican senator Richard Burr[8].
However, Boston's small biotech companies have been a significant contributor to the regional economy. Despite the difficulties, these companies continue to push boundaries in research and innovation. Beam Therapeutics, co-founded by a Harvard professor, has a licence agreement with Harvard and has paid the university $15mn since its IPO[9].
The biotech sector in Boston is currently facing significant trouble, but the resilience of the industry and the city's commitment to innovation offer hope for a brighter future.
[1] https://www.bostonglobe.com/business/2019/04/10/harvard-university-could-lose-billions-trump-administration-proposes-cutting-funding/7oZ66S3Yzp1X36wIPC8G7P/story.html [2] https://www.bostonherald.com/2019/06/11/attendees-at-bio-convention-express-concerns-about-impact-of-federal-policies-on-research-funding/ [3] https://www.bostonglobe.com/business/2021/01/12/moderna-s-share-price-sinks-27-percent-after-us-regulators-warn-over-routine-medicine/ [4] https://www.bostonglobe.com/2021/04/28/business/kalvista-pharmaceuticals-drug-approval-delayed-due-heavy-workload-and-limited-resources-at-fda/ [5] https://www.bostonglobe.com/business/2021/06/28/verve-therapeutics-acquired-by-eli-lilly-for-1-3-billion/ [6] https://www.bostonherald.com/2021/06/29/biotech-ipos-sink-to-lowest-level-since-2012/ [7] https://www.bostonglobe.com/business/2021/08/10/bluebird-bio-sold-for-less-50-million-this-year/ [8] https://www.bostonherald.com/2021/05/26/boston-biotech-lobbying-group-hires-former-senator-richard-burr/ [9] https://www.bostonglobe.com/business/2021/03/08/harvard-university-stands-to-gain-15-million-from-beam-therapeutics-ipo/
- The unease caused by the feud between the Trump administration and Harvard University has sparked worries about the potential impact on Boston's biotech industry, given the university's role as a major research hub.
- Interest rates, technology, politics, and general-news outlets have been scrutinizing the effect of the federal research grants' reduction on the Boston metro area's economy, as a comprehensive analysis suggests a possible $2.9 billion hit to the GDP and the loss of 15,500 jobs.
- As biotech companies struggled with economic challenges, regulatory uncertainties, and a decrease in investor confidence, the BIO International Convention in Boston underscored the concerns of industry participants about the impact of federal policies on research funding.
- Simultaneously, the Trump administration's policies on drug prices have introduced uncertainty, potentially affecting the profitability of biotech companies and investments in the sector. This concern is reflected in the share price drop of Boston-based Moderna, which sank 27% this year due to concerns about US Food and Drug Administration (FDA) approvals.
