Massachusetts, long celebrated as a global powerhouse in biotechnology, is facing a crossroads. For decades, the state’s laboratories and startups have churned out breakthrough medicines for diseases ranging from multiple sclerosis to cancer and cystic fibrosis. But as summer 2025 winds down, a new report from MassBio—the region’s influential biotech trade group—paints a sobering picture: job cuts, dwindling investment, and a growing sense that the U.S. might be ceding its innovation edge to foreign competitors.
The warning signs are everywhere. According to the MassBio annual "Industry Snapshot" released Tuesday, the state lost more than 1,000 research and development jobs in 2024—the first such drop in the report’s history. The decline isn’t isolated to Massachusetts; industry leaders suggest it’s part of a national trend, with layoffs expected to continue through 2025. Ben Bradford, MassBio’s spokesperson, told WBUR, "The industry is certainly going through a more challenging time than we've seen in a long time." That’s no exaggeration: Massachusetts now makes up 23% of the country’s biopharma R&D workforce, but even this titan is feeling the crunch.
What’s driving the downturn? The MassBio report points to a cocktail of economic headwinds and policy shifts. Venture capital (VC) investment—essential for shepherding new drugs from the lab to the clinic—plunged 17% in the first half of 2025 compared to the same period last year. The $2.75 billion invested represents the lowest level since 2017, a dramatic comedown from the record highs seen during the COVID-19 pandemic. As Bradford explained, "I also think there's a question on the ability to make a return on this investment." The IPO market has stalled, mergers and acquisitions have dried up, and investors are increasingly wary of backing early-stage companies that may not deliver a quick payoff.
Part of the pullback, industry insiders say, is a "natural reset" after pandemic-era exuberance. But there’s more to the story. High interest rates have made risky biotech bets less attractive, while federal policy shifts have added new layers of uncertainty. Steven Dickman, a Cambridge-based consultant, was blunt in his assessment: "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." He added, "China is the primary beneficiary of this shift." According to Dickman, the Hong Kong stock market is "currently white-hot" for Chinese biotech companies, with about 34 filing for IPOs in the first half of 2025—far outpacing U.S. exchanges.
Federal funding for early-stage research, typically provided by the National Institutes of Health (NIH), declined 1.4% in 2024—before President Trump’s administration initiated further cuts. The University of Massachusetts Donahue Institute recently warned that terminating NIH grant funding could cost the state thousands of jobs and millions in tax revenue. In fact, federal research and development dollars currently support over 81,000 jobs and generate more than $16 billion in economic activity in Massachusetts alone.
Industry leaders are sounding alarms about the impact of these changes. Michael Gilman, CEO of Arrakis Therapeutics in Waltham, told The Boston Globe, "The numbers speak for themselves." He cited two existential threats: high interest rates deterring investment, and federal policies that reduce support for university research and create uncertainty around drug pricing. "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," Gilman warned. Still, he expressed hope that investor enthusiasm would eventually return, as the industry has weathered similar cycles before.
The shifting sands have forced some startups into "hibernation." Ananya Zutshi, former CEO of cell therapy startup Guardian Bio, described the tough decision to pause product development and focus on licensing patents instead. "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," Zutshi told The Boston Globe. She noted that Massachusetts still boasts "strong fundamentals and everything it needs to bounce back," but warned that other states are aggressively building their own biotech hubs, luring talent with grants and incentives. The high cost of living in Massachusetts, she added, makes it harder to retain top scientists and entrepreneurs.
Remote work trends have also reshaped the landscape. John Maraganore, founder of Alnylam Therapeutics and now head of City Therapeutics, raised $135 million for his new Cambridge-based startup in 2024. He observed, "Employees can work in Costa Rica, [and] companies are being formed virtually, so why bother with the Boston weather and commute?" Nonetheless, City Therapeutics maintains a strict in-office policy: "No hybrid allowed," Maraganore said, expressing pride in the company’s commitment to face-to-face collaboration.
Despite the gloom, some see opportunity in adversity. Bradford believes the state is "primed" for a turnaround, thanks to a deep bench of talent "sitting on the sidelines." When investment rebounds, Massachusetts could once again lead the charge in biotech innovation. But the competition is fierce. AI companies are "sucking up a lot of capital," according to Juan Enriquez of Excel Venture Management, as investors chase quicker returns. Biotech firms, Enriquez argues, must get "better, faster and cheaper" to compete for dollars and attention.
For now, the state’s leaders are urging action. Maraganore likened the current situation to the space race, calling it a "Sputnik moment" for U.S. biotech. "We need to consider extraordinary measures to save our industry, and prevent biotech going the way of the semiconductor industry," he said. The warning resonates: just last week, the U.S. government purchased a 10% stake in chipmaker Intel to "help secure America’s technological edge," as Commerce Secretary Howard Lutnick put it. The implication is clear—without decisive steps, biotech could follow semiconductors in becoming an industry dominated by overseas players.
Federal staffing cuts at the Food and Drug Administration have only added to the uncertainty, slowing clinical trials and increasing the rate at which companies burn through their capital. As Bradford explained to WBUR, "If companies are having trouble getting through clinical trials or the pace of clinical trials is slower, they're going to continue to burn their capital." The lack of exits for investors—whether through IPOs or acquisitions—means less money is recycled back into early-stage ventures, compounding the funding crunch.
Massachusetts still holds a commanding position in U.S. biotech, but the cracks are showing. The coming months will test the state’s resilience, and perhaps, its willingness to take bold steps to secure its future. For now, the message from industry veterans is unmistakable: the next chapter in American biotech will be written by those who adapt—and act—before it’s too late.
