Feature
Article
Author(s):
Justin Kozak discusses how the impact on medical breakthroughs and startups.
Justin Kozak
Executive VP
Founder Shield
The White House’s plans to make significant cuts to funding from NIH is expected to have significant impact on the pharma industry for years to come. Justin Kozak, an executive VP at Founder Shield, spoke with Pharmaceutical Executive about the specific issues the industry might see as a result of these cuts.
What impact will cuts to funding from NIH have on pharma?
Pharmaceutical Executive: What impact will NIH cuts have for major medical breakthroughs and biotech progress?
Justin Kozak:The short answer is that the NIH cuts will significantly impede major medical breakthroughs and biotech progress. Billions less for early-stage research and clinical trials mean project delays or outright shutdowns for many biotech startups. This creates a "brain drain" as talented scientists seek opportunities abroad, and it will slow the pipeline of new therapies and diagnostics. Ultimately, this reduces the foundational research that fuels commercial innovation, impacting both patient access to new treatments and the U.S.'s global leadership in biomedical science.
PE: What risks are biotech startups facing due to these cuts?
Kozak:As mentioned earlier, these cuts pose substantial risks for biotech startups, especially those in early-stage development. First, there's a significant funding gap. Many rely on non-dilutive NIH grants for initial research and proof-of-concept, and without these, securing private investment becomes much harder. Investors are inherently risk-averse, (especially nowadays!) and a lack of early validation from NIH funding increases that perceived risk.
Secondly, project delays or shutdowns are a direct consequence. This not only pushes back potential breakthroughs but can lead to a loss of talent, as scientists seek more stable research environments. Finally, it limits their ability to de-risk scientific milestones, which is crucial for attracting follow-on funding and ultimately bringing new therapies to patients.
PE: What steps can founders take to mitigate the damage from these cuts?
Kozak:Founders can take several proactive steps to mitigate the impact of these cuts. First, it's crucial to diversify funding sources. While NIH grants are fantastic, looking into non-dilutive options like other government programs (e.g., BARDA, NSF), venture philanthropy, and even equity crowdfunding can be vital.
Secondly, focusing on strategic partnerships with larger pharmaceutical or biotech companies can provide not just capital but also invaluable expertise and resources, potentially de-risking later-stage development. We’re seeing lots of M&A activity in the biotech industry right now, and we expect NIH funding cuts to motivate more of it.
Thirdly, a strong emphasis on intellectual property protection and clearly defined, de-risked scientific and business milestones will make the startup more attractive to private investors who are looking for clearer paths to commercialization. Lastly, lean operations and rigorous financial planning are more critical than ever to extend runway and navigate leaner times.
PE: What long term impact will the cuts have and can the course be corrected?
Kozak: Unfortunately, the long-term impact of significant NIH cuts is quite dire for the entire biomedical ecosystem. We'll likely see a slowing of foundational scientific discovery, as basic research, which often takes years to yield tangible results, is precisely what these cuts target. This means fewer novel drug targets, fewer understandings of disease mechanisms, and ultimately, fewer potential therapies down the line.
Furthermore, we’ve already touched on this, but there's a serious risk of a "brain drain." Talented scientists, both early-career and established, may seek more stable funding environments in other countries, eroding the U.S.'s global leadership in medical research. This also impacts the pipeline of new biotech companies, as university spin-offs and small startups often rely heavily on early-stage NIH funding to de-risk their initial ideas.
Can the course be corrected? Absolutely, but it requires a sustained political will to reinvest in scientific research. History shows that periods of increased NIH funding have directly correlated with significant medical breakthroughs. Advocating for increased federal appropriations for the NIH, highlighting the economic benefits of a robust biotech sector, and demonstrating the direct patient impact are crucial steps to reverse this concerning trend. It's an investment in our future health and economic competitiveness.
Lead with insight with the Pharmaceutical Executive newsletter, featuring strategic analysis, leadership trends, and market intelligence for biopharma decision-makers.
