US Health Authorities Budget Cuts... Cold Wind for Domestic Pharmaceutical and Bio Industry?

[Financial News] As the US government decides to cut the budgets of the National Institutes of Health (NIH) and the Food and Drug Administration (FDA), it is expected that domestic pharmaceutical and bio companies will also be negatively affected.
According to the pharmaceutical and bio industry on the 27th, the US Trump administration and the Republican Party plan to significantly cut the budgets of NIH and FDA in the 2026 budget proposal. NIH's budget will be reduced from $45.5 billion to $27.5 billion, and FDA's from $7.2 billion to $6.8 billion.
These budget cuts are not just administrative budget adjustments but are identified as significant variables that can shrink the global bio new drug development environment itself. In particular, there are concerns about negative ripple effects on domestic pharmaceutical and bio companies that have been promoting open innovation and technology transfer centered on the US bio ecosystem.
The US NIH is the world's largest public research institution that has supported the early discovery of new drug candidates through funding for research at the preclinical stage.
The Congressional Budget Office (CBO) warned in a report that “if the NIH budget is cut by 10%, the number of drug candidates entering Phase 1 clinical trials could decrease by more than 30 over 30 years,” indicating that the overall productivity of the new drug development ecosystem could decline. The FDA's budget cuts are also likely to lead to delays in new drug reviews. In fact, if the FDA's new drug approval period is extended by 9 months, the number of new drug approvals could decrease by up to 23 over the next 30 years.
These changes could also have direct and indirect impacts on the Korean pharmaceutical and bio industry.
The industry is concerned that the NIH's budget reduction could lead to a reduction in basic research, a decrease in new drug pipelines, and reduced opportunities for technology transfer. The delay in new drug reviews by the US FDA due to budget cuts also implies that the market entry of new drug pipelines that Korean companies are co-developing or have exported technology for could be delayed. As a result, the timing of profit realization may be delayed, and it could act as a variable in the companies' global expansion strategies.
A bio industry insider said, “Korean companies have been building co-development or technology export strategies based on the NIH research infrastructure and have also utilized this infrastructure for review communication with the FDA,” adding, “This cut could act as a risk that simultaneously lowers information, cooperation, and commercialization speed for Korean companies.”


vrdw88@fnnews.com Kang Jung-mo Reporter