This article was originally published in The Washington Post
The U.S. life sciences industry entered 2026 with surprising momentum, following threats of tariffs and disrupted trade, NIH funding cuts, and a sluggish IPO market. Accounting for more than two-thirds of OECD pharmaceutical R&D, innovation headwinds in the United States would be felt much more widely. Thankfully, following a period of anxiety and uncertainty, the worst fears have so far failed to materialize and the sector’s innovation outlook remains strong. A series of deals with major pharma groups helped restore confidence, while the prolonged “biotech winter” seemed to have finally ended. Yet, the real story is not simply one of recovery. It is that a new wave of technological capability — spanning AI, data, diagnostics and more precise therapeutics — is beginning to align with the administration’s stronger emphasis on preventive health and chronic disease. The result is a new momentum in innovation, and a healthcare system oriented toward earlier action.
When we began our interviews for this feature at the end of 2025, some of the uncertainty related to Washington’s new policies was just beginning to clear. A series of deals involving major pharmaceutical groups helped ease the pressure and inspired a measure of optimism. Carl Gordon, Managing Partner at the global healthcare investment firm, OrbiMed Advisors, shared with us: “Some of the Trump administration’s measures have turned out to be more positive — or at least neutral — for the industry. Concerns around tariffs, for example, have largely not materialized.” There is also growing evidence that the long biotech winter has come to an end. “Deal activity is picking up and there’s a sense that things are opening up again. Capital markets are responding to policy signals, but overall, people are much more optimistic than they have been in years,” shared Debbie Hart, President and CEO of BioNJ, New Jersey’s life sciences association. Indeed, the XBI biotech ETF, a solid market signal, rose about 33 percent in 2025, even if the IPO market remained selective.
Still, significant questions, notably around NIH funding and long-term incentives for innovation, remain unsettled. “If you’re a venture capitalist and you see NIH funding threatened on one end and an inactive IPO market on the other, you’re likely to wait,” shared Tim Scott, the new President and CEO of Biocom California. Beyond biotechs reliant on venture capital, key research institutions have also suffered from NIH cuts. Dr. Larry Schlesinger, President and CEO of Texas Biomed, an important engine of infectious-disease innovation, tells us that despite his policy of reducing the organization’s dependence on federal funding, NIH is still the major funder of biomedical research. “One challenge is that NIH funding is reimbursement-based. You do the science, submit the bills, and then get reimbursed. That process has slowed, and if you are building an annual budget at a nonprofit research institute, that creates pressure, especially later in the fiscal year,” Schlesinger says.