Ginkgo Bioworks is headquartered in Boston's Seaport. In 2024, Ginkgo canceled its planned move into a new 250,000-square-foot building and announced plans to cut about 450 jobs by mid-2025. (Courtesy of Ginko Bioworks)
The first microchip was invented in Texas in the 1950s, but many of today's most advanced chips are made in Taiwan and South Korea. Last week, the U.S. government purchased a 10% stake in the California chipmaker Intel, "to help secure America's technological edge," according to Commerce Secretary Howard Lutnick.
The first biotech companies were created in Cambridge and San Francisco in the 1970s, and now some in that industry are worried our ability to invent and manufacture cutting-edge medicines could be slipping away.
Massachusetts has grown into a global leader in the biotech industry over nearly a half-century, developing new medicines for diseases such as multiple sclerosis, cancer, cystic fibrosis and many others. But now industry veterans are worried about both the future of that ranking and overall U.S. competitiveness.
A new report out Tuesday from MassBio, a trade association that represents biotech and pharma companies, as well as hospitals and academic institutions, finds shrinking employment in both manufacturing and research and development jobs -- and that data doesn't yet include 2025 layoffs in the industry.
The report also finds that total venture capital (VC) money invested in Massachusetts companies in the first six months of 2025 dropped 17% compared to the same period last year. VC funding, which companies rely on to develop drugs and shepherd them through the clinical trials process, has declined significantly. It has slid back down to 2017 levels, impacting the path toward eventual approval from the Food and Drug Administration.
The report also finds that federal funding from the National Institutes of Health, which typically supports early-stage research, declined 1.4% in 2024 -- even before President Trump took office and began slashing the NIH budget.
To gain insight into these trends, I've been sharing this data with a half-dozen investors, CEOs, and consultants to get their reactions.
"The numbers speak for themselves," said Michael Gilman, chief executive of Arrakis Therapeutics, a Waltham-based company developing new drugs for neuromuscular and cardiovascular diseases.
It's hard for trade associations or elected officials to have much of an impact on two significant issues the industry is dealing with, he said. The first is high interest rates, which make investors less eager to invest their money in risky biotech companies that may need a decade or more to get their product into the market. The second is the policies of the current administration, which Gilman said are reducing support for university research and creating uncertainty about how drugs will be priced in the future.
"What to do about it is not obvious," he said. "The damage to the scientific infrastructure of this country and the screwing with the systems that actually deliver health care to patients are existential threats."
But Gilman noted that the biotech industry has been through up and down cycles in the past, and he expected there would at some point be investor enthusiasm again for putting money into early-stage and publicly traded biotech companies.
Budget cuts at the National Institutes of Health, along with tariffs, regulatory uncertainty and pronouncements from Trump about the need to bring drug prices down, "will lead to a long-term reversal in U.S. global leadership in biotech," said Steven Dickman of CBT Advisors, a Cambridge-based consultancy that works with biotech companies. "China is the primary beneficiary of this shift."
The stock market in Hong Kong "is currently white-hot" for Chinese companies -- with about 34 companies filing for initial public offerings in the first half of 2025, a far higher level of activity than on U.S. exchanges, he said. "The U.S. biotech industry in one to two years will look very different from the way it does today."
Juan Enriquez, a Boston-based managing partner at Excel Venture Management, said that one issue in recent years is that artificial intelligence companies have been "sucking up a lot of capital," with investors seeing them as a quicker way to get a return on their investment than biotech. Companies working on developing new medicines and treatments have to get "better, faster and cheaper," he added.
"As a first-time founder who had to put my company in hibernation because of the challenging environment, I've seen both the strengths and the cracks in our ecosystem right now," said Ananya Zutshi, who was the co-founder and CEO of a cell therapy startup, Guardian Bio. "Hibernation" typically refers to a period when a company is no longer working to develop its own products and technologies, but has pared back expenses and staffing, and is working to license its patents to another company.
"Massachusetts has strong fundamentals and everything it needs to bounce back," Zutshi said. "At the same time, we are also seeing other states competing to build their own biotech hubs, and the cost of living here can make it harder to keep talent. I've seen other founders relocate their companies because of grants and other incentives."
Another issue is companies' willingness to hire people anywhere in the world -- and their desire to rent as little office and lab space as they can, John Maraganore said.
"Employees can work in Costa Rica, [and] companies are being formed virtually, so why bother with the Boston weather and commute?" he said.
Maraganore was a founder of Alnylam Therapeutics, now a publicly traded biotech, and in 2024, he raised $135 million for a new startup, City Therapeutics, based in Cambridge. His company is "proud" to have a policy of being in the office five days per week: "No hybrid allowed," he said.
Declines in employment and funding that the new MassBio report highlights in Massachusetts are likely happening in other parts of the U.S., Maraganore said, adding the country needs to take seriously "the emergence of greater innovation from China" in the biotech sector.
Harkening back to the competition between the U.S. and Russia to develop space technologies in the 1950s and 1960s, Maraganore said that the current crisis in biotech "needs to be a Sputnik moment."
"We need to consider extraordinary measures to save our industry, and prevent biotech going the way of the semiconductor industry," he said.