The life sciences sector is experiencing a fundamental reshaping of its innovation geography as funding pressures, policy shifts, and geopolitical tensions redraw the competitive landscape across continents. While research funding constraints in the United States create headwinds for established hubs, the European Union and Asia-Pacific markets are seizing the moment with aggressive strategies to capture market share in the global race for biomedical leadership.
United States: Federal Research Funding Under Pressure
Throughout 2025, the Trump administration implemented significant changes to federal science funding that are altering the research ecosystem for life sciences companies. The National Institutes of Health scaled back new grant awards by approximately $2.3 billion in the first nine months of the year—a roughly 28% contraction—with the biggest shortfalls hitting infectious disease research, cardiovascular and pulmonary studies, and basic biological research.
Beyond direct funding cuts, the administration introduced a 15% cap on indirect costs for NIH grants, a dramatic reduction from the negotiated rates of 30-45% that research institutions typically receive to cover facilities, administration, and infrastructure expenses. While federal courts have temporarily blocked some aspects of these policies, the volatile funding climate has created widespread uncertainty across academic institutions and their commercial partners.
The ripple effects extend directly into the biotech sector’s innovation pipeline. Venture investors warn that cutting federal support for basic science threatens the foundation of drug development, as early academic discoveries typically provide the basis for startup formation. Enrollments in PhD programs for life and biomedical sciences have flatlined, and early-career grant awards fell to their lowest levels since 2016—a trend that will constrain the scientific workforce for years to come.
Europe: Strategic Response With Coordinated Investment
As the United States contends with funding uncertainty, Europe has launched an ambitious counteroffensive. In July 2025, the European Commission released its Strategy for European Life Sciences, backed by more than €10 billion annually, aiming to position Europe as the world’s most attractive place for life sciences by 2030. The strategy acknowledges that Europe has been losing ground to other global players in turning research into real-world solutions due to challenges such as fragmented funding and innovation systems, regulatory complexities, and slow market uptake.
The EU strategy includes coordinated actions across the entire value chain. The Commission will develop an EU investment plan to facilitate funding for multi-country clinical trials and strengthen European clinical research infrastructures, while mobilizing up to €100 million to develop and deploy microbiome-based solutions and €250 million for cross-sectoral life sciences technologies. A forthcoming Biotech Act promises to harmonize regulations across Member States and accelerate approval timelines.
Capitalizing on U.S. disruptions, the European Commission pledged €500 million in funding as part of the Choose Europe for Science initiative to attract U.S. researchers, with President Ursula von der Leyen stating the funding would make Europe a “magnet” for the “best and brightest researchers and scientists from around the world”.
Asia-Pacific: Accelerating Innovation Hub Development
While Europe deploys defensive strategies, Asia-Pacific markets are experiencing explosive growth. Markets in Asia-Pacific are rapidly gaining ground as credible innovation hubs amid the reshaping of global biotech strategies, driven by geopolitical tensions and significant U.S. research funding cuts, according to research from Bain & Company and partner organizations.
China’s biotech sector is experiencing explosive growth across R&D, manufacturing, and clinical development roles, fueled by strong state support and record venture funding, with the government investing over CNY 20 billion in public biotech R&D funding. In 2024, one-third of all biotech assets licensed by Big Pharma originated from China, a sharp increase from less than 10 percent in 2017, signaling China’s transition from a follower to an innovation leader.
Singapore, backed by political neutrality, strong intellectual property protection, legal transparency, and regulatory alignment, is rising in appeal to major pharmaceutical companies and top-tier scientific talent. The government’s S$28 billion Research, Innovation, and Enterprise 2025 plan has created a thriving ecosystem, with the forthcoming RIE2030 strategy sustaining momentum through 2030.
India’s bioeconomy is also surging, with the country now hosting over 10,075 biotech startups—a tenfold increase in nine years—and annual funding rising from $193 million in 2020 to $269 million in 2024, according to government statistics.
Precision Medicine and Digital Transformation Continue Momentum
Against this backdrop of shifting funding landscapes, several technology-driven trends are accelerating across all regions. Precision and personalized medicine continues its expansion, with companion diagnostics and genomics programs becoming essential components of drug development strategies. The integration of artificial intelligence in drug discovery is particularly pronounced in Asia-Pacific markets, where platforms are streamlining early-stage research.
Decentralized clinical trials and digital trial methodologies are gaining traction globally, driven by regulatory acceptance and the need for faster, more diverse patient recruitment. Multi-country clinical trials in Europe are receiving particular attention under the new EU strategy, with dedicated funding mechanisms to reduce national regulatory fragmentation.
Biomanufacturing and Supply Chain Considerations
Biomanufacturing scaling and supply-chain resilience have emerged as critical priorities across all markets. Geopolitical tensions are prompting companies to adopt “geographic diversification” strategies, splitting operations and intellectual property across jurisdictions to manage international risk. Chinese biopharmaceutical companies are increasingly looking to Southeast Asia to diversify investment risks and re-establish supply chains, with Singapore emerging as a favored manufacturing base under a “Made in Singapore” policy.
Value-based contracting pressure continues to reshape commercialization strategies, with payers across markets demanding outcomes-based pricing models. This trend is particularly pronounced in European markets, where health technology assessment bodies are implementing stricter evaluation frameworks.
Regulatory Evolution for AI and Advanced Therapies
Regulatory frameworks are evolving to address AI algorithms in medical devices and diagnostics across all major markets. The EU’s forthcoming AI in Science Strategy, combined with regulatory sandboxes and AI-powered advisory tools, aims to support startups and small-to-medium enterprises navigating this complex landscape. Advanced therapy medicinal products (ATMPs) are receiving dedicated support, with the European Commission planning to create a network of Centres of Excellence to coordinate development.
Strategic Imperatives for Life Sciences Leaders
In this rapidly shifting environment, life sciences companies must take region-specific actions while developing comprehensive geographic diversification strategies. The following opportunities are tailored to organizations based on their current market position:
For US-Based Companies
US companies facing domestic funding uncertainty should prioritize international diversification to maintain innovation pipelines. Consider establishing dual-base R&D operations by opening European laboratories to access EU funding mechanisms for multi-country clinical trials and collaborative research programs. Evaluate strategic partnerships or facilities in Singapore or other Asia-Pacific hubs to tap into the region’s robust government support and growing clinical trial infrastructure.
Strengthen relationships with industry partners and private research organizations as traditional academic collaborations face funding constraints. Companies should also assess which early-stage research programs could benefit from relocation to jurisdictions with more stable funding environments, while maintaining US operations for clinical development and commercialization.
For European Companies
European organizations should aggressively position themselves to capitalize on the €10+ billion EU Life Sciences Strategy. Apply for funding under the new Clinical Research Investment Plan for multi-country trials and engage early with pilot programs for phased collaborative research funding. Monitor the forthcoming Biotech Act implementation to understand new regulatory pathways and take advantage of harmonized approval processes across Member States.
Actively recruit scientific talent from the United States by highlighting funding stability and the “Choose Europe for Science” initiative. European companies are uniquely positioned to offer researchers continuity that US institutions currently cannot guarantee. Additionally, leverage the EU’s Centres of Excellence network for advanced therapy medicinal products to accelerate ATMP development programs.
For Asia-Pacific Companies
Asia-Pacific organizations should leverage their momentum to establish credibility as global innovation partners rather than solely regional players. Form strategic licensing agreements and co-development partnerships with Western pharmaceutical companies seeking to diversify away from single-region dependency. Position your organization as a geopolitically neutral alternative for companies navigating US-China tensions.
Continue building on strong government support by participating in national biotech development programs and securing positions in emerging bioclusters. For companies in Singapore, India, and other non-China markets, emphasize IP protection, regulatory transparency, and political stability to attract multinational partnerships. Chinese companies should consider “NewCo” structures and regional manufacturing strategies (such as Singapore-based operations) to maintain access to Western markets and capital.
For Companies With Strong Cash Positions
Organizations with available capital face a unique window of opportunity. Identify acquisition targets among promising academic spinouts and early-stage biotechs affected by US funding disruptions, particularly those with validated platforms or technologies in clinical proof-of-concept stages. US academic institutions facing budget pressures may be more willing to license technologies on favorable terms.
Invest in building redundant infrastructure across multiple geographies to ensure operational resilience. This includes establishing parallel manufacturing capabilities in both established and emerging markets, and creating distributed R&D networks that can operate independently if one region faces disruption. Consider strategic investments in Asia-Pacific contract research and manufacturing organizations to secure capacity as the region scales.
Make selective investments in European biotech clusters and participate in EU public-private partnerships to gain early access to collaborative research programs. Well-capitalized companies can also provide bridge funding to promising researchers and institutions, positioning themselves as preferred partners when new therapies emerge from these collaborations.
Author Bio
Julie West, CPA
Julie West is the Practice Engagement and Growth Leader for the Tax Group and co‑leads the Life Science Industry Group, with more than 20 years of experience advising biotech, pharmaceutical, and medical device companies. A former BPM Board member for over six years, she helped shape the firm’s vision and strategy and was named to Forbes’ list of America’s Top CPAs in 2025. Julie began her career at a Big Four firm and holds an active CPA license in California.
