Managing uncertainty in life sciences as NIH cuts mount

In recent months, the National Institutes of Health (NIH) has terminated over 2,100 grants to scientists nationwide, canceling nearly $4.7 billion in unspent research dollars as the agency aligns with priorities set by the Trump administration. The total value of the awards nixed exceeds $9.5 billion.

At top-tier research centers, such as Johns Hopkins University, Fred Hutchinson Cancer Center, and Harvard Medical School, the impact is already being felt: lost jobs, closed labs, and paused clinical trials. Experts caution that such disruptions could slow the stream of early-stage discoveries feeding into pharma and biotech pipelines, with long-term impacts on innovation.

With foundational research funding under strain, life science companies need to rethink strategies to keep the pipeline of new therapies flowing. Early partnerships, wise investments, and agile thinking will be needed to continue delivering medical breakthroughs to patients. 

Which research institutions lost the most funding?

Hundreds of the nation’s top research centers are feeling the sting. Between February 28 and May 27, 2025, the Department of Government Efficiency terminated NIH-funded research grants across 370 institutions, interrupting projects and canceling billions in unspent funds.

The highest number of terminated grants occurred at Harvard Medical School, which lost 340 awards during this period. Columbia University Health Sciences (163), Harvard School of Public Health (158), and Harvard University (139) followed closely, highlighting a concentration of disruption within the Boston and New York academic corridors.

Organizations with the most NIH grant terminations

Fig. 1. Total number of NIH grants terminated per institution from February 28, 2025 through May 27, 2025. Note: Data shown for the 25 institutions with the highest number of grant terminations only. Source: Grant Watch

While the number of terminations is notable, the financial impact is clearer when looking at lost funding, that is, federal dollars awarded but never paid out due to the premature shutdown of these research efforts. Importantly, these terminations were not routine grant expirations but mid-course cancellations that cut short ongoing projects, many of which were years in the making.

Fred Hutchinson Cancer Center lost over $508 million in unspent grant funding, the largest financial loss of any single institution. Harvard organizations together lost more than $945 million, with the School of Public Health, Medical School, and the university collectively hit. Other major losses occurred at Duke University ($364.8 million), Columbia University Health Sciences ($291.8 million), and Family Health International ($251.0 million).

Organizations with the greatest loss of unspent NIH grant funding

Fig. 2. Total of unused NIH grant funding lost by organization due to terminated grants from February 28, 2025 through May 27, 2025. Amounts reflect unspent amounts. Note: Data shown for the 25 institutions with the most lost funding only. Source: Grant Watch

 Based on the location of recipient organizations, Massachusetts tops the list with over $1.1 billion in lost funding due to NIH grant terminations. North Carolina and Washington follow with $712.7 million and $636.9 million, respectively. These amounts highlight not only individual institutional setbacks but also a broader regional impact on research ecosystems that depend on federal support. Notably, the top 10 states affected by NIH grant terminations span all five major geographic regions of the U.S.

 The financial impact of terminated NIH grants on U.S. states

Fig. 3. Total amount of unspent or lost federal NIH grant funding, aggregated by the state in which the recipient organizations are located. Note: No terminated grants have been reported in West Virginia as of May 27, 2025. Source: Grant Watch

Brain drain could sap the next generation of U.S. scientists 

These funding cuts are hitting early-career scientists hardest. Graduate schools are shrinking class sizes, and many labs can’t promise postdoctoral positions. Where researchers once moved from grant to grant to build careers, there may be fewer opportunities for some young scientists.

When these young researchers look at a career in science and don’t see a clear path forward, many may consider other options, taking jobs in industry or abroad, or leaving the field altogether. In a recent Nature poll, 75% of U.S. scientists who responded said they’re looking for jobs abroad, mostly in Canada and Europe.

And even if funding eventually improves or new sources appear, those scientists who leave might be unlikely to return. Without a steady pipeline of investigators, the flow of new ideas dries up. This means fundamental research — the kind that fuels tomorrow’s breakthroughs — could slow down in the U.S.

A 15% cap puts research infrastructure at risk

While the recent wave of grant terminations grabs headlines, there’s another policy change that could also hinder research, even for grants that remain funded. On February 7, the NIH announced a cap on “indirect” cost reimbursements at 15% of a grant’s value — a drop from the 27–28% average seen since 2009, and far below some institutions’ rates above 60%. 

Indirect costs cover essential expenses at research facilities, from shared lab equipment and cloud computing to hazardous waste disposal and basics like electricity, air conditioning, and heating. Without sufficient indirect funding, labs can’t run. But with legal challenges in play and the cost cap unsettled, the full impact is still coming into focus.

Proposed budget cuts compound funding challenges 

Adding to these challenges, the administration has proposed reducing NIH’s overall budget by roughly 40%, from $47.4 billion currently to about $27 billion in 2026. This would dramatically shrink the pool of available federal funding, compounding the impact of indirect cost caps.

NIH-funded research doesn’t just drive scientific discoveries, it fuels the economy. Last year, NIH grants supported 400,000 jobs and powered $94.6 billion in economic activity across the U.S., delivering a return on investment of $2.56 for every $1 spent.

How NIH cuts could impact the life sciences industry

The effects of these cuts don’t stop at individual labs or university scientists. They strike at the heart of the drug and device innovation pipeline. While pharma companies play a crucial role in drug development, they rarely invest heavily in the kind of fundamental research that agencies like the NIH support. Their priorities are tied to products with clearer commercial potential, not the curiosity-driven science that often sparks breakthrough discoveries.

Take GLP-1 drugs like Ozempic, now transforming diabetes and weight-loss treatment. Their origin traces back to a hormone found in the saliva of the Gila monster. In the early ’90s, a scientist working with the Department of Veterans Affairs isolated this hormone, which mimics a human gut hormone called GLP-1 that regulates blood sugar. His work built on decades of NIH-funded research into metabolic biology and paved the way for a multibillion-dollar class of drugs now transforming patient care.

And Ozempic isn’t the only example. Between 2010 and 2019, the FDA approved 356 drugs, and 354 of them had origins in NIH-funded research, underscoring the agency’s near-universal impact on new drug development.  

That’s the model: NIH dollars fund risky early-stage research that validates new drug targets and builds the evidence the industry needs to invest. For decades, this approach helped de-risk bold ideas long before a business case existed, making NIH a key driver behind American medical breakthroughs. Now, it seems, significant challenges lie ahead, but companies and researchers are moving to mitigate as much as they can.  

Court decisions may shape the fate of NIH projects

It bears mentioning that while the immediate effects of NIH grant terminations are here, the long-term impact remains uncertain. Multiple lawsuits are challenging the legality of the cuts, with several institutions pushing for injunctions or reinstatements. The court rulings could determine whether halted projects get a second chance or stay shuttered for good.

But even if some grants are reinstated, experts warn that restarting paused research won’t be simple. Many studies depend on delicate biological materials, like cell lines, that need constant care. Once lost, the research can’t just pick up where it left off. When a cell line dies, so does that entire line of inquiry.

What companies and researchers can do now

While the NIH reductions are significant, this moment gives research institutions and life science companies a chance to rethink their strategies and build new models for medical innovation. To keep the pipeline flowing, companies and researchers will need to find ways to partner earlier, invest more strategically, and adapt quickly to a landscape where foundational research support is no longer guaranteed. Here’s what organizations can do right now:

Rebalance risk in early R&D

With the NIH footing less of the bill, the industry will need to step in earlier in the innovation cycle. This means funding foundational or precompetitive research, especially in areas with high public health needs. Yes, it’s riskier. But the upsides? Earlier access to IP, greater control over direction, and a seat at the discovery table. Shared investment now can keep innovation alive later. 

Unlocking that capital will require a culture shift toward more fluid collaboration across academia, industry, and private equity. Models like co-developing preclinical programs or co-funding shared research cores can reduce dependence on single funding sources and speed up translational research.

Additionally, financial instruments like venture philanthropy, milestone-based funding, or innovation funds can align incentives and distribute risk more effectively. Embracing these approaches will foster a more resilient ecosystem where early-stage research can thrive. 

Plan for every possible scenario 

Recognizing how these changes can impact the industry, life sciences companies need to be more prepared than ever. Companies are scenario-planning everything from launch dates to manufacturing commitments. Identify your biggest risks, know your exposure, and build solid contingencies. 

Commercial launches rely on early, often irreversible decisions, like where to manufacture launch stock, because FDA regulations and costs make last-minute changes nearly impossible. But with PDUFA dates shifting and timelines up in the air, companies must plan for every possible scenario. Measure five times, cut once.

Build a broader funding web

Don’t wait for federal funds to return to previous levels. Now is the time to diversify your funding inputs and think beyond traditional grants. Foundations, philanthropies, and global health agencies are all stepping in to fill some gaps and create new opportunities for support. Organizations with experience in multi-source grant writing or who can forge relationships with nontraditional funders will be best positioned to weather cuts and build stability. 

Universities, often benefiting from strong credit ratings, can also leverage alternative financing tools with favorable loan terms, like Harvard, which issued bonds to bolster research funding when federal support dropped. Alongside endowments, these resources offer another lifeline. 

Ultimately, a broader, more diverse funding network can strengthen research resilience and create new pathways for innovation in uncertain times.

Become more entrepreneurial 

Universities need to rethink how they work with industry, getting more entrepreneurial, more creative, and more strategic about tech transfer strategies. This includes out-licensing early-stage technologies, something many haven’t done in recent years, to attract strategic pharma or VC partners. 

It will be a buyer’s market, and not all institutions are equally prepared for this shift. But the institutions most active in this space have shown what’s possible: dozens of spinoffs, millions in IP revenue, and marquee success stories like Juno Therapeutics — a $9 billion acquisition that began as a partnership between Fred Hutchinson, Memorial Sloan Kettering, and Seattle Children’s. Those who become entrepreneurial will be best positioned to keep talent and maintain momentum. 

Retain and reskill scientific talent 

Protecting the next generation of scientists can safeguard scientific progress. Institutions can invest in bridge funding, short-term fellowships, or industry-rotation programs that help early-career researchers stay active in the field, even if temporarily outside the NIH orbit. 

In April, the American Association for Cancer Research announced a new grant program for early-stage and mid-career investigators facing funding gaps. Similarly, the American Society of Hematology has expanded eligibility for its bridge grants, offering support to scientists at risk of losing momentum due to stalled reviews or reduced funding. 

Flexible research roles, mentorship matching, and career mobility initiatives can also prevent permanent loss of talent.

Make your voice heard

While partnerships and private investment are valuable, they can’t fully replicate the foundational role of the NIH as the largest public funder of biomedical research in the world. This presents an opportunity for companies to double down on advocacy and policy engagement. Whether it’s joining coalitions or partnering more closely with federal agencies, these efforts will help get the next generation of therapies out to market.  

By focusing on what can be controlled and building adaptive infrastructure now, organizations can weather today’s headwinds without losing sight of their long-term mission.

The bottom line

For now, expect the life sciences industry to receive fewer public dollars and experience more risk and less certainty. Thriving in this new world means rethinking how drugs are funded, developed, and brought to market — combining scientific rigor with business grit and striking the right partnerships to weather short-term volatility and build toward long-term impact. But in science, that’s often where the real breakthroughs happen. 

To stay ahead in this new reality, you need healthcare data you can count on. Definitive Healthcare gives you the clarity to see what’s coming, the insight to act fast, and the confidence to plan for the long haul. Start your free trial today.