Proposed Budget Cuts Could Impact Biotech, IVD Vendors
ROCKVILLE, Md., March 21, 2017 /PRNewswire/ -- Kalorama Information says that cuts in the administration budget blueprint, particularly those aimed at NIH and "Cancer Moonshot" programs could have effects that will be noticed by IVD and biotech firms. The healthcare market research firm covers the biotechnology and in vitro diagnostic industry with monthly reports on various market segments. Likely there would be some immediate effect from instrument providers and reagent suppliers used for research, but there could be a long-term effect if research progress slows transformation of research into clinical practice. Next-generation sequencing, for instance, is an area Kalorama says has been a promising growth area, but one dependent on some amount of government funding, according to the firm. Kalorama Information estimates that 50% of all NGS end users are academic and government facilities, according to its report, Next-Generation Sequencing Markets.
The 21st Century Cures Act was broadly supported in the U.S. Congress for its various provisions, including increased funding for cancer research and the revision of U.S. Food and Drug Administration (FDA) standards for review. The Act authorized $4.8 billion over the next 10 years for cancer research under the Moonshot Initiative, the Precision Medicine Initiative (PMI) and FDA regulatory reform. Appropriation of those funds may prove newly problematic in light of the White House administration's disclosed budget priorities. The initial budget proposal from the Trump administration includes a roughly 20% cut for the National Institutes of Health (NIH) budget, or $5.8 billion less. Overall, the U.S. Department of Health and Human Services (HHS) budget would be cut by approximately 18%. The brunt of the proposed cuts has yet to be assigned among NIH's various programs and institutes, but the impact of reduced public sector funding on life science and medical research would be unambiguously negative for several industries, including pharmaceuticals, diagnostics and biotechnology.
Cuts in federal discretionary spending on medical and life science research are felt widely in the client base for major life science vendors such as Thermo Fisher Scientific. Around 25% of Thermo Fisher's over $18 billion in revenue comes from academic and government clients. Capital equipment purchasing is the most sensitive to budget cuts as research labs forego upgrades and capacity expansion. Incremental reductions in consumables and services can also be expected with reduced project activity. Illumina, the world's largest next-generation sequencing instrument provider, and Roche, one of the large supply companies, and Qiagen are examples of healthcare companies that rely on researchers for revenue.
Next-generation sequencing (NGS) has powered basic and applied research that has in turn fed major advances in biopharmaceuticals and in vitro diagnostics (IVD). Sequencing capacity at government labs and among government-funded researchers is critical to the national life science industry. If substantial cuts are made to NIH grants, government-funded labs would be less inclined to invest in third-generation sequencers. Significant cuts to the NIH budget would slow national biomedical research and undermine concurrent White House efforts to expedite biopharmaceutical and medical device development and market introduction. While the FDA review period may be shortened, drug and device candidates could remain stalled or take long to progress through research and validation.
Kalorama Information's blog on the proposed budget cuts can be found here.
About Kalorama Information
Kalorama Information, a division of MarketResearch.com, supplies the latest in independent medical market research in diagnostics, biotech, pharmaceuticals, medical devices and healthcare; as well as a full range of custom research services. Reports can be purchased through Kalorama's website and are also available on www.marketresearch.com and www.profound.com.
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