Trump’s NIH funding cuts & freezes raise concerns over US biotech drug development & innovation

New Delhi: The US President Donald Trump began his second term with a series of directives targeting the US National Institutes of Health (NIH), creating uncertainty around NIH grant funding for biopharmaceutical drug development.

With over $1.4 billion in NIH Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants involving innovator drugs awarded between 2020 and 2024, the funding cuts and freezes could hamper biopharmaceutical innovation and limit patient access to drugs, reveals GlobalData, a leading data and analytics company.

The US NIH is the largest funder of biomedical research globally, providing federal government funding to US-based early-stage small businesses through its SBIR and STTR programs to drive innovation with a focus on commercialization.

Alison Labya, Business Fundamentals Analyst at GlobalData, comments: “Biotech startups rely on government grants to fund early-stage biopharmaceutical research and development (R&D), where attracting venture capital is challenging unless a clear return on investment is evident.”

According to GlobalData’s Pharma Intelligence Center Grants Database, SBIR and STTR grants involving innovator drugs saw a 37% increase in total grant value from $237 million in 2020 to $326 million in 2024. Over 80% of SBIR and STTR grants were awarded for preclinical and discovery-stage drugs, amounting to over $1.1 billion between 2020 and 2024, reflecting the support NIH SBIR and STTR grant funding provides to early-stage R&D.

Labya continues: “Infectious disease was the top therapy area for preclinical and discovery-stage SBIR and grants with a total grant value of $295 million from 2020 to 2024, followed by central nervous system with $241 million. However, infectious disease drug development could see a downturn in NIH grant funding under the leadership of Robert F Kennedy Jr.—Trump’s newly appointed head of the US Department of Health and Human Services—who has previously commented plans to shift research away from infectious diseases.”

A notable NIH reform rolled out by Trump was a $4 billion cut to overhead funding for biomedical research by reducing “indirect” costs on grants to 15%. This follows other restrictions that were imposed on the NIH, including abrupt cancellations of grant review panels without reschedule, delaying access to grant funding.

Similarly, Trump issued a 90-day funding freeze and stop-work order for the United States Agency for International Development (USAID), disrupting USAID-funded clinical trials globally.

Labya concludes: “The Trump administration communicated its intent to review and redirect federal spending away from grant programs that do not align with Trump’s ideological agenda, signalling increased stringency in the allocation of NIH grant funding, with grant applications referencing diversity in preclinical and clinical drug development potentially facing challenges.

“Trump’s recent federal funding cuts and freezes could stifle innovation by creating cash flow challenges for biotech companies that rely on government grants, which could delay or halt global biopharmaceutical R&D and drug approvals, limiting patient access to essential treatments.”