The state's biopharma industry has shed jobs and hit a new low in funding not seen since 2017, according to a new report released Tuesday by MassBio.
The trade group's annual "snapshot" report examines employment and investment in the industry, among other metrics.
After years of steady growth, jobs in research and development dropped by roughly 1,100 in 2024 compared to the previous year. That workforce decline is expected to continue in 2025 as layoffs show no sign of slowing down, according to MassBio spokesman Ben Bradford.
"The industry is certainly going through a more challenging time than we've seen in a long time," Bradford said.
Massachusetts still makes up 23% of the country's biopharma research and development workforce. And Bradford said the state is "primed" for when the industry does turn around because of the talent now "sitting on the sidelines."
But the industry faces serious challenges due to President Trump's cuts to research and development. A recent report by the University of Massachusetts Donahue Institute found that proposed federal cuts -- such as the termination of grant funding from the National Institutes of Health -- would cause the state to lose thousands of jobs and millions in tax revenue. Federal funding for research and development supports 81,300 jobs and more than $16 billion in total economic activity in Massachusetts, according to UMass researchers.
Federal policies and the ensuing economic uncertainty have also made investors more cautious, according to Bradford.
Biotech companies headquartered in Massachusetts received $2.75 billion in venture capital in the first half of 2025 -- that's a 17% drop from the same time last year, and the lowest level of investment since 2017, according to the MassBio report.
Part of the decline in venture capital funding is due to a "natural reset" after the industry saw record high levels of investment during the COVID-19 pandemic, Bradford said.
"But I also think there's a question on the ability to make a return on this investment," he added.
Federal staffing cuts at the Food and Drug Administration create a lot of uncertainty when it comes to drug approvals, Bradford said.
"If companies are having trouble getting through clinical trials or the pace of clinical trials is slower, they're going to continue to burn their capital," he said.
Investors are also seeing limited opportunities to make a return because initial public offerings, or IPOs, as well as mergers and acquisitions have stalled in the state's biopharma sector.
"Without the investors getting a return on their investment from either an IPO exit or an acquisition, there's less money to go back into those early stage companies as well," Bradford said.