2025 was a year of ups and downs for the U.S. biopharma industry. Federal policies dominated headlines soon after the commencement of the second Trump administration. The investment markets, which had swooned early due to uncertainty over revamped FDA procedures and possible tariffs, turned sharply upward in the second half of the year. Meanwhile, layoffs continued, driven by cutbacks in the gene and cell therapy space, the upcoming “patent cliff” for several major drugs, and the post-COVID recalibration among vaccine producers. On the market side, the big story remains obesity drugs and other metabolic meds, while producers continue to pursue new opportunities in antibody-drug conjugates (ADCs) and radiopharmaceuticals, among other promising avenues.

Finally, and perhaps most notably, many of the industry’s major players announced massive capital expenditure commitments with the administration tied to Most Favored Nation pricing and tariff exemptions. During this entire period BLS & Company was busily engaged in behind-the-scenes work evaluating markets and qualifying sites on behalf of clients such as Lilly, Roche/Genentech and Johnson & Johnson, among other notable companies in the sector.  

Federal Policies

Biopharma producers experienced policy and regulatory whiplash in 2025 which had not fully abated as we entered 2026. President Trump’s threat of tariffs specifically targeting the pharmaceutical industry had its intended shock effect, bringing the industry to the negotiating table to address pricing concessions.  Although this process will be ongoing, the drama appears to have eased as large drug producers entered into pricing agreements with the new administration.  

As per agreements with the Trump administration, these negotiations have been followed by widely announced, huge capital projects in key markets across the United States (discussed in more detail below). Some impactful announcements preceded the negotiations and agreements with the intended effect of softening the ground and warding off more severe threats.  

Generic drugs, which comprise the bulk of public prescriptions, have largely been excluded from the administration’s tariffs given their supply chain complexity and unlikelihood of reshoring production in the US for the short- and medium-term.  

Last year also saw a large-scale makeover across the FDA leadership, with most new officials and many on the Advisory Committee on Immunization Practices (ACIP) more closely aligned with HHS Secretary Kennedy's vaccine skepticism.  

The second Trump administration also has forced cutbacks in certain basic research, leading many scientists and hundreds of U.S. biotech CEOs to warn that the country is at risk of losing its innovation edge to persistent and well-funded rivals such as China. Clinical trials for HIV and some infectious diseases appear to be disproportionately affected.  

Finally, efforts by the Trump administration to expedite drug development and manufacturing timelines attracted significant interest in 2025. The most notable changes are underway within pilot programs such as the FDA’s Pre Check. This program is intended to expedite the FDA’s approval process for new medicines by enabling early information exchange and dialogue between companies and industry regulators. Another program, National Priority Vouchers, will prioritize the development and commercialization of drugs with national security implications. These may be tied to ongoing drug-pricing agreements.

Investment Activity and Workforce Realignment

Caution marked the first half of 2025 as the industry struggled to gain comfort with the new approach of the Trump administration. Investors and companies also continued to pull back from the excess capital chasing pre-revenue gene and cell therapies which continue to face extended development timelines and safety concerns, and which have yet to fully deliver on their promise.  

However, after mid-year a number of multi-billion-dollar deals, including J&J’s acquisition of Intra-Cellular Therapies, and Novartis’ purchase of Avidity Biosciences, were announced as the industry became more comfortable with many of the policy and regulatory initiatives of the Trump administration.  Drug makers also continued to pursue acquisitions and licensing deals that may help rebuild their pipelines before $300 billion of revenues are lost to patent expirations by 2030.  

Despite the renewed influx of capital, layoffs continued across the industry in 2025, driven largely by cost-cutting and the aforementioned pullback in gene and cell therapies.  The third quarter of 2025 alone saw workforce reductions totaling more than 15,000 positions at Merck, GSK, Pfizer, Novo Nordisk, and others. Further reductions are anticipated as major drugs such as Entyvio (Takeda), Xarelto (Bayer), and Keytruda (Merck) approach patent exclusivity loss. Workforce reductions also extended to federal agencies, with furloughs at HHS, the FDA, and NIH estimated to exceed 20,000 over the past year.

Market Trends

Despite well-known challenges confronting the developers of gene and cell therapies, obesity drugs and other metabolic medicines have buoyed significant growth in the sector. These meds are projected to constitute a $150 billion market by the next decade. Having lost its early mover advantage, Novo Nordisk is now trailing Eli Lilly for dominance of this key segment. At the same time, Pfizer, Roche, Amgen, and others have broadcast their intentions to compete in this arena.  

Radiopharmaceuticals, which deliver cancer treatment by targeting cancer cells with radioactive drugs, are considered among the most promising new therapeutic frontiers, though few such treatments have been approved to date. In 2025, Novartis announced plans to build a 35,000-square-foot radiopharma facility in Winter Park, Florida, and another in Texas.

Industry observers also are paying attention to the continued rise of biosimilars – generic biologic drugs, as patent protection expires over the next few years. Teva and Sandoz have been particularly active in this market segment.  

CapEx Commitments and Project Activity

As we noted earlier, 2025 was a banner year for biomanufacturing announcements. Recent project pledges exceeded hundreds of billions of dollars for U.S. manufacturing and R&D spending over the next decade.  Lilly made perhaps the biggest splash, announcing 6 projects totaling approximately $26 billion and creating almost 3,500 new jobs in Texas, Virginia, Alabama, Indiana, Wisconsin, and Pennsylvania. Novartis committed to investing $23 billion to build or expand ten U.S. sites through 2030. Amgen, AstraZeneca, FujiFilm Diosynth, Merck, GSK, Johnson & Johnson, Regeneron, and Roche/Genentech were other major players who had announced new sites or expansions in the U.S. in 2025.

Much of this new investment landed in established biomanufacturing clusters, particularly around Raleigh-Durham, North Carolina; central Indiana, and eastern Pennsylvania. However, several new markets have emerged as viable biomanufacturing destinations, most notably Virginia, which secured major announcements by Eli Lilly, Merck, and AstraZeneca; Central Ohio - which earlier had attracted a large Amgen project then followed that with the announcement of a $900 million expansion; and Texas as evidenced by Lilly’s selection of a site in Houston for a $6.5 billion project.  

The Outlook for 2026 and Beyond

It's difficult to imagine that 2026 can sustain the same level of M&A activity, announced project investment and new jobs that we experienced last year. However, industry observers do anticipate continued activity in the remaining 10 months of 2026, due in part to the need to rebuild drug pipelines.  These deals and announcements are expected to be in highly specific therapeutic areas such as obesity, rare diseases, oncology, and biologics.  

The potential impact of artificial intelligence remains speculative, though it has demonstrated significant early promise accelerating drug discovery and contributing to efforts to redesign the entire drug development workflow. We will continue to hear more about the importance of AI to the pharmaceutical and human health sector over the coming year.  

Perhaps the last major trend to watch is the accelerating rivalry between the U.S. and Chinese biopharma industries. Trump administration cutbacks for basic research have raised fears that the United States is losing its innovation edge to China. Over one-third of all new deals now originate in China, while the U.S. is struggling to counter the speed and lower costs at which clinical trials are conducted there.  

In a market as dynamic as biopharma, site selectors and economic development organizations face a constant mix of opportunity, complexity, and uncertainty.  The success of any project will depend on the experience, insight, and strategic perspective of the entire site selection team, and their ability to navigate shifting market conditions, evaluate risk, and align real estate decisions with long-term growth objectives.

Should you have any questions regarding site selection for the life sciences industry, please do not hesitate to contact any of the senior practitioners at Biggins Lacy Shapiro & Company.  We would be happy to share our insights and experiences with you.