Trump administration’s NIH cuts put grant funding for biopharma at risk: GlobalData
The National Institutes of Health (NIH) is facing new financial constraints following a series of directives from President Donald Trump at the start of his second term, raising concerns about the future of federal grant funding for early-stage biopharma research, according to data and analytics firm GlobalData.
The NIH’s Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs, which have awarded over $1.4 billion in grants for innovator drugs since 2020, may see funding slowdowns as policy changes take effect, according to data from GlobalData’s Pharma Intelligence Center Grants Database.
“These actions could postpone NIH-funded clinical trials and create cash flow issues for biotech companies that rely on NIH grant funding, which may force them to scale back drug development,” according to GlobalData.
As the world’s largest public funder of biomedical research, the NIH plays a crucial role in supporting small biotech startups, particularly those in the early stages of drug development. These companies often rely on government grants to sustain research efforts before attracting private investment.
Between 2020 and 2024, SBIR and STTR grants for novel drug development increased by 37%, rising from $237 million in 2020 to $326 million in 2024. The majority — over 80% — of these funds were allocated to preclinical and discovery-stage projects, totaling more than $1.1 billion during that period. Infectious disease research received the largest share of preclinical and discovery-stage SBIR and STTR funding, securing $295 million between 2020 and 2024, followed by central nervous system therapies with $241 million.
However, with new funding restrictions in place, future grant availability may be at risk. On Feb. 8, 2025, the NIH announced a $4 billion reduction in overhead funding, lowering the indirect cost rate to 15%, a move that could significantly impact biomedical research.
Additional disruptions include sudden cancellations of NIH grant review panels, delaying funding decisions, and potentially stalling ongoing clinical trials. Similar financial restrictions have also affected international research, with a 90-day funding freeze and stop-work order imposed on USAID-backed clinical trials.
In response to the policy, 22 states have filed lawsuits against the NIH, arguing that the abrupt funding reduction endangers critical research and public health. A federal judge in Massachusetts has temporarily blocked the cuts, scheduling a hearing to assess their legality. The scientific community continues to advocate for sustained funding, highlighting the potential negative impact on ongoing clinical trials and future medical advancements if the policy is implemented.
These cuts could create financial instability for biotech firms that depend on such federal support, potentially forcing them to scale back drug development efforts.
“Trump’s recent federal funding cuts and freezes could have profound consequences for innovation in the biopharmaceutical industry by delaying or halting global R&D and drug approvals,” according to GlobalData.