Editor’s Note Preamble:

Happy long weekend!

Trying out these Saturday write-ups where we review the Big Three (hence the name) trends from the last week of biotech + pharma news.

Let me know what you think of these via email or on LinkedIn.

The Big Idea: Ideology Meets Reality

The Big Three trends we’re going to discuss here:

1) What feels like a systematic attack on health institutions in the USA by the current administration
2) Chinese biotech continuing their deal spree with foreign interests (and what it might mean for the USA)
3) America’s domestic manufacturing build-up doesn’t cover everything (yet)

Is America’s biotech innovation ecosystem under threat?

Anyone’s guess at this point.

1) Internal strife in the halls of the HHS

As has been the trend recently, we’re living through unprecedented times - more so than usual.

A stark example in our industry is what feels like the deliberate dismantling and undermining of America's public health infrastructure.

The biggest headline was CDC Director Susan Monarez’s “ousting” (in quotations since this, like much of what the Trump admin has tried, may get settled in court).

This whole fiasco is going down a month into her tenure, all stemming from butting heads with RFK Jr.

The message is pretty clear - scientific integrity is subordinate to political ideology.

The bad news continues, as at least 600 CDC employees were given termination notices, including about 100 staff in violence prevention. All this on the heels of the recent CDC shooting.

Are we done here yet? No, sorry - another $783M in NIH grant cuts were ok’d by the Supreme court, all tied to Trump's anti-DEI crackdown.

Last but not least, the HHS is no longer recognizing employee unions, stripping collective bargaining rights from thousands of workers.

Hundreds of HHS staffers have signed an open letter placing blame on Kennedy for creating the climate that led to the CDC shooting, arguing that his "dangerous and deceitful statements" have contributed to harassment and violence against public health workers.

From this vantage point, it looks pretty clear that the Trump admin views existing public health institutions and expertise as an obstacle to their agenda rather than credible, world-renowned institutions that can be leveraged.

Where does this leave the biopharma industry and evidence-based medicine?

2) China's Biotech Buying Bonanza and What It Might Mean for US Biotech

As the USA’s institution seem to falter, China’s biotech ecosystem continues it’s ascension - global pharmaceutical companies committed $48.5 billion to partnerships with Chinese biotechs in just the first half of 2025.

This is more than all of 2024 combined. We're talking about 61 deals, with 16 exceeding $1 billion each and five topping $3 billion - that’s a lot of biobucks.

These deals, beyond acknowledging the quality of research and work coming out of China, make sense when considering the colossal patent cliff facing big pharma.

Companies like Pfizer are dropping eye-watering figures - such as $1.25 billion upfront with $4.8 billion in milestones for 3SBio’s PD-1xVEGF bispecific antibody.

We also have AstraZeneca committing up to $5.3 billion and $4.7 billion with Chinese biotechs within months of each other (January and March 2025 respectively).

Is this the first signs of a waning US innovation engine? Former FDA Commissioner Scott Gottlieb would likely agree, warning in a JAMA editorial that "remarkably little attention is being paid to the risk that the US might surrender its strategic edge in biomedicine."

The geopolitical headlines are dominated by the US-China rivalry on rare earth metals, semiconductors, and military prowess - Gottlieb argues that falling being in biopharma is “every bit as damaging”.

While Chinese regulators streamline early-stage clinical trials, American biotechs are dealing with regulatory deadlines.

From our perspective, it feels like America is weakening the very institutions that made it the global biotech leader.

At the same time, China is systematically building its capabilities.

3) Manufacturing Nationalism Meets Economic Reality

The push for domestic pharmaceutical manufacturing in the US is making light of an interesting tension between political goals and economic practicalities.

Companies are responding to policy signals with big investments: Johnson & Johnson’s more than $2 billion North Carolina investment as part of a 10 year deal with Fujifilm (part of a much larger $55 billion J&J plans to invest in the US over four years), Genentech building a $700M North Carolina facility, and AstraZeneca and Eli Lilly having site plans for major new biomanufacturing facilities in Virgina.

On the other hand, the recently announced EU pharmaceutical tariff structure illustrates the constraints policymakers face - while branded drugs face the full 15% tariff, generic drugs get an “effectively zero or close to zero" Most Favored Nation rate.

This differentiation reflects economic reality. In the USA, generic drugs make up the vast majority of prescriptions and over half of APIs are sourced from India and the EU.

Complete pharmaceutical independence simply isn't feasible in the short term, regardless of political preferences.

What This All Might Mean Going Forward

These trends are creating significant challenges for US life sciences ecosystem.

The institutional changes at federal health agencies will likely slow regulatory processes and reduce the quality of scientific oversight in the short term. Companies are already adjusting by building longer timelines into their development plans and exploring alternative regulatory pathways where possible.

On the China front, American companies are making rational business decisions by partnering with Chinese biotechs for innovation where it makes strategic and economic sense. From the optimistic angle, innovation can come from anywhere and will, ideally, benefit patients at the end of the day. It doesn’t matter if these innovations from China or the USA or anywhere else.

From a more pessimistic reading, this could be the sign of a deteriorating American innovation landscape, and the rising of another global biotech superpower - but this might also be a hyperbolic take.

There is still plenty of time for either scenario to unfold or, more realistically, some sort of middle ground to become reality.

The manufacturing situation is perhaps the most complex. Companies are hedging political risk by investing domestically while maintaining global supply chains where economically necessary, while at the same time the current US admin is acknowledging that complete severance would be too damaging (as shown by “effectively zero” tariffs on generics).

How this all might shift in the longer run remains to be seen - if enough domestic manufacturing comes online and is economically feasible, we may indeed see reduced demand for foreign generics.

Though many events we’ve experienced are unprecedented, the biotech industry has weathered policy uncertainty before and adapted accordingly.

The current challenges are significant, but as of now the underlying strengths of American life sciences—world-class universities, sophisticated capital markets, and the largest pharmaceutical market—remain intact.

The question is whether policymakers recognize that institutional expertise and a balance of global integration and domestic manufacturing capacity (not wholly one or the other) are integral to American competitiveness.

Course corrections are possible, but they require acknowledging that ideology and economic reality don't always neatly align.