The effects of the new Trump administration on biotech

In January 2025 Donald Trump was sworn as the next US President for the 2nd time. We are looking closely to check how it will affect the U.S. biotech market as it could experience both opportunities and challenges, influenced by his administration’s policies and priorities.  

Our analysis provides a balanced perspective on potential scenarios that are based on our knowledge of his policy during his first term in office. 

1. Continued Support for Israel 

* Strong US-Israel Relations: Trump has been a strong advocate for Israel, and a second term would likely continue this trend. The U.S. government might offer increased support for Israel’s biotech sector, especially through R&D collaborations, funding, or government-backed initiatives. 

2. Regulatory Environment  

* Reduced Regulations: Trump’s administration has been known for deregulation, which may positively affect biotech companies by easing approval processes for new drugs, treatments, and technologies. A second term could encourage similar regulatory relaxations that may benefit biotech companies in Israel, especially those looking to market their products in the U.S. 

* Drug Pricing Pressure: However, Trump previously expressed support for lowering drug prices, which could create uncertainty for biotech firms reliant on high margins from innovative therapies. Policies targeting drug price transparency or Medicare reforms could pressure profits.  

3. Trade and Global Collaborations  

* China Relations: Trump’s tough stance on China might further impact biotech partnerships, supply chains, and R&D collaborations, given the strong ties between U.S. biotech firms and Chinese investors or manufacturing.  

* “America First” Policies: Increased incentives for domestic biotech manufacturing and innovation could benefit U.S.-based firms but might strain global biotech integration.  

4. Government Investment and Public Health  

* Pandemic Aftermath: The biotech industry saw a surge in funding and innovation during the COVID-19 pandemic. If Trump’s administration prioritizes pandemic preparedness or biomedical innovation as part of a broader health policy, this could mean sustained investment in key areas like vaccines, gene therapies, and precision medicine.  

* NIH and R&D Funding: Federal funding levels for research institutions like the NIH may depend on budgetary priorities. Trump’s historical focus on defense and tax cuts might limit these investments, but targeted programs like Operation Warp Speed demonstrate potential exceptions.  

5. Investor Confidence and Market Dynamics  

* Volatility: Political uncertainty or sudden policy shifts during a second term could create market volatility, affecting investor confidence in the biotech sector.  

* M&A Activity: Deregulatory policies could stimulate mergers and acquisitions within the biotech space, as larger players look to acquire innovative startups.  

* Private Investment: Trump’s administration has emphasized private sector-led growth. Israeli biotech firms might see more venture capital inflows from American investors who may be more comfortable under Trump’s policies compared to a more regulated environment. This could lead to increased investments in Israeli biotech firms, particularly those focusing on cutting-edge treatments, medical devices, or AI-related biotech. 

* Pharmaceutical and Biotech Collaborations: Israeli biotech companies might benefit from greater partnerships with U.S.-based pharmaceutical giants, particularly if Trump fosters environments favorable to industry collaboration. Israel’s reputation as a hub for innovation in fields like personalized medicine, cancer research, and digital health could make it an attractive partner for major U.S. pharmaceutical companies. 

6. Diplomatic and Security Considerations 

* Middle East Peace Initiatives: Trump’s peace initiatives, like the Abraham Accords, could indirectly benefit Israeli biotech companies by fostering regional stability. This might open up new opportunities for Israeli biotech collaborations with countries in the Middle East and North Africa. 

* Geopolitical Stability: A Trump presidency might emphasize security in the Middle East, which could positively impact the Israeli tech ecosystem by promoting a stable environment for innovation and foreign investments. 

Our overall outlook of the post-election biotech market under Trump’s second term could be a mixed bag. Deregulatory policies and domestic incentives might provide growth opportunities, but pressures on drug pricing and geopolitical tensions could dampen enthusiasm. For investors, the focus might shift toward companies with diversified portfolios, strong pipelines, and the ability to adapt to pricing and regulatory shifts. 

About: The California Israel Chamber of Commerce (CICC) is a nonprofit, industry-supported organization dedicated to promoting and strengthening the technology and trade relations between business communities, curating educational programs, and providing opportunities for industry stakeholders to network with like-minded. 

For 25 years, our activities have benefited the Israeli and Californian business communities and influenced thousands of founders, investors, researchers, and individuals. For more market insights and support, please contact info@ci-cc.org