08-03-2026
The U.S. biotechnology industry is a vital strategic asset. It generates trillions in annual economic output, creates millions of high-wage jobs, and extends the length and quality of life across the globe. From cancer treatments and vaccines to rare-disease medications, the world’s indispensable therapies emanate disproportionately from American labs.
This didn’t happen by accident. It arose from a distinctly American mix of publicly funded basic research, private risk-taking, unrivaled academic institutions, and enforceable intellectual property rights. Layer onto that an oversight regime that, despite its flaws, has become the de facto global standard, and the result is the planet’s foremost biomedical ecosystem. For generations, if you wanted to advance the frontiers of medicine, you came here.
The demand for ingenuity persists. Researchers have identified more than 10,000 rare diseases; it’s estimated that fewer than 10 percent have approved treatments. Over two-thirds of American adults suffer from chronic illness; cancer touches roughly 2 in 5 Americans over their lifetime; more than 7 million Americans have Alzheimer’s.
Policy is undermining the engine of discovery
Faced with this reality, a prudent government would take care not to damage the engine of progress. Instead, Washington has spent the past several years distorting prices, limiting the upside of success and obstructing innovation.
On one hand, policymakers express concern about dependence on foreign supply chains and the strategic importance of biotech. On the other, they dampen investment incentives through price controls, FDA volatility, NIH cuts, tariff shocks and antitrust hostility.
One example: the drug-pricing provisions in the Inflation Reduction Act (IRA) ignore the economics of the biotech industry, which depends on speculative capital. Investors fund large portfolios of early-stage ventures knowing that most will fail. A few outsized successes pay not only for themselves but for the long trail of failures behind them. Policies that truncate the upside of those successes, or increase uncertainty around eventual returns, constrict the entire pipeline. Unsurprisingly, the IRA has already begun to reshape capital allocation decisions in ways that disfavor high-risk, long-horizon innovation.
China is seizing the opportunity
In the meantime, Beijing has been busy building its infrastructure. The “Made in China 2025” plan designated biotechnology as a strategic sector. State-backed funds, science parks, talent-recruitment programs and regulatory reforms have been woven into a coordinated system designed to attract capital, scientists and clinical development.
The results of this one-two punch are sobering. In the early 2000s, China was a rounding error in commercial biotech. By 2025, it represented around a quarter of the world’s innovative drug pipeline. According to Chinese reports, drugmakers there signed 157 out-licensing deals with foreign entities in 2025, worth a record $136 billion, roughly 10 times the $13.9 billion amount in 2021.
China has evolved beyond manufacturing to become a major source of the intellectual property that Western companies now pay handsomely to acquire. Lower operating costs and faster clinical trials have transformed China into a magnet for R&D that once would have defaulted to Boston or San Diego.
That is what makes the present moment so consequential. If we don’t alter course soon, our global leadership will migrate elsewhere, a historic consequence of negligence.
Restoring America's competitive edge
The remedy does not require a command economy, a national champion strategy, or a huge government cash outlay. China is not succeeding because it is better at this or has more resources. It is succeeding because we hobble ourselves. What American biotechnology needs most from Washington is restraint — less micromanagement and more humility. Stop the self-harm and restore the conditions that drive American leadership: secure property rights, transparent regulation, open capital markets, scientific freedom and the prospect of returns commensurate with the risk.
If the U.S. ceases to be welcoming to capital, scientists and entrepreneurs, they will migrate to jurisdictions that value them more. If we continue down this path, we shouldn’t feign surprise when the next generation of cures, and the prosperity and security they bring, are discovered, developed and owned elsewhere.
I explore these themes more fully in my latest Commentary essay, “Why Are We Making It Harder to Make Medications That Save Lives?”
Michael Woronoff, a Los Angeles-based attorney, is a Business Fellow at the Daniels School of Business. A former partner of Kirkland & Ellis, he writes frequently on capitalism and classical liberalism, with a focus on public policies that shape markets, economic freedom, and personal liberty.
