No sooner did Eli Lilly (NYSE: LLY)’s oral diabetes candidate orforglipron make history Thursday as the first oral small molecule glucagon-like peptide-1 (GLP-1) receptor agonist to ace a Phase III trial when investors roared their approval with a buying surge that sent the pharma giant’s stock soaring Thursday.

Lilly trumpeted positive topline results from ACHIEVE-1 (NCT05971940), showing that orforglipron met the trial’s primary endpoint of superior A1C reduction vs. placebo at 40 weeks. Patients treated with the diabetes pill showed an average of 1.3% to 1.6% lower A1C compared with a baseline of 8.0%.

But the pharma giant appeared to have especially wowed investors with results from two key secondary endpoints in ACHIEVE-1, which randomized 559 participants:

• More than 65% of participants treated with the trial’s highest dose of orforglipron (36 mg) showed A1C that was less than or equal to 6.5%—below the American Diabetes Association’s (ADA) minimum threshold for diabetes.
• Also, at that highest dose, orforglipron patients lost an average of 16 pounds, about 7.9% of their body weight.

No sooner did Eli Lilly (NYSE: LLY)’s oral diabetes candidate orforglipron make history Thursday as the first oral small molecule glucagon-like peptide-1 (GLP-1) receptor agonist to ace a Phase III trial when investors roared their approval with a buying surge that sent the pharma giant’s stock soaring Thursday.

Lilly trumpeted positive topline results from ACHIEVE-1 (NCT05971940), showing that orforglipron met the trial’s primary endpoint of superior A1C reduction vs. placebo at 40 weeks. Patients treated with the diabetes pill showed an average of 1.3% to 1.6% lower A1C compared with a baseline of 8.0%.

But the pharma giant appeared to have especially wowed investors with results from two key secondary endpoints in ACHIEVE-1, which randomized 559 participants:

More than 65% of participants treated with the trial’s highest dose of orforglipron (36 mg) showed A1C that was less than or equal to 6.5%—below the American Diabetes Association’s (ADA) minimum threshold for diabetes.
Also, at that highest dose, orforglipron patients lost an average of 16 pounds, about 7.9% of their body weight.

“The results are outstanding,” declared Akash Tewari, equity analyst with Jefferies, in a research note. Outstanding enough, he said, to raise his firm’s peak sales projection for orforglipron by 10%, from ~$39 billion to $43 billion, compared with a $31 billion consensus peak sales estimate cited by Tewari. He also raised Jefferies’ 12-month price target on Lilly shares about 4%, from $1,020 to $1,057.

Investors shared Tewari’s enthusiasm for orforglipron, sending Lilly shares surging 14% Thursday, from $734.90 to $839.96 (U.S. markets were closed on Good Friday). Thursday’s jump almost surpassed Lilly’s biggest-ever one-day gain of 17.7% achieved on June 29, 2000. That day, Lilly reported positive clinical results for a sepsis shock treatment later approved as Xigris® (drotrecogin alfa [activated]) but voluntarily withdrawn from the market in 2011 after it failed the Phase III PROWESS-SHOCK trial (NCT00604214).

“Preeminent player”

Jared Holz, healthcare equity strategist with Mizuho Securities America, predicted in a research note reported by Bloomberg News that Lilly “will remain the preeminent player in this category for a while as its lead over peers, both in pharma and biotech, widens on the back of this data.”

Those peers begin with the longtime market leader in sales of GLP-1 diabetes and obesity treatments Novo Nordisk (NASDAQ Copenhagen: NOVO-B and NYSE: NVO), whose blockbuster-level offerings in the category include semaglutide, marketed to treat type 2 diabetes as Ozempic® and marketed to treat obesity as Wegovy®.

Novo’s U.S. American Depositary Receipts fell nearly 8% Thursday on Lilly’s good news, from $62.88 to $58.08, though the company’s main Copenhagen shares only dipped 1% from DKK 425.65 ($64.81) to DKK 421.25 ($64.14).

BMO Capital Markets analyst Evan David Seigerman downgraded Novo Nordisk shares on Thursday from “Outperform” to “Market Perform,” and cut the firm’s 12-month price target on Novo Nordisk shares 39%, from $105 to $64. Seigerman reasoned that Lilly had made sizable advancements in its commercial and clinical portfolio, causing it to overtake Novo’s early lead.

“Has the tortoise caught the hare?” Seigerman asked, not so rhetorically, as reported by Barron’s. “Lilly has made sizable advancements in its commercial and clinical portfolio, causing it to overtake Novo’s early lead.”

Orforglipron is a once-daily small molecule (non-peptide) oral GLP-1 receptor agonist that can be taken any time of the day without restrictions on food and water intake. Orforglipron was discovered by Roche-owned Chugai Pharmaceutical, which called the drug OWL833, and was licensed in 2018 by Lilly, which agreed to pay Chugai $50 million upfront.

Lilly also agreed to pay Chugai up to $390 million in potential payments tied to achieving milestones.

“As of December 31, 2024, Chugai is eligible to receive up to $140.0 million contingent upon the achievement of success-based regulatory milestones and up to $250.0 million in a series of sales-based milestones, contingent upon the commercial success of orforglipron,” Lilly disclosed in its Form 10-K annual report for 2024, filed February 19. “During the years ended December 31, 2024, 2023, and 2022, milestone payments to Chugai were not material.”

Some of those potential milestones relate to the development of orforglipron in another metabolic indication. Lilly is conducting Phase III trials of the drug for weight management in adults with obesity or overweight with at least one weight-related medical problem, for which data is expected to be released later this year. Orforglipron is also being studied as a potential treatment for obstructive sleep apnea and hypertension in adults with obesity.

The trials are part of Lilly’s Phase III ACHIEVE clinical development program, which has enrolled more than 6,000 people with type 2 diabetes across five global registrational trials. The Phase III program began in 2023 and will be generating results through 2026.

No liver-related safety issues

A key reason why analysts and investors were so positive on orforglipron was that no liver-related safety issues emerged during ACHIEVE-1. “It looks quite viable,” Tewari enthused.

Hepatoxicity was a key reason why a potential competitor of orforglipron, Pfizer (NYSE:PFE), halted development this past week of its oral GLP-1 receptor agonist danuglipron (PF-06882961), which was being studied for chronic weight management in two Phase III trials (NCT06567327 and NCT06568731). Pfizer disclosed that one patient in one of the dose-optimization studies “experienced potential drug-induced liver injury which resolved after discontinuation of danuglipron.”

However, orforglipron was not without other safety issues, including:

• Diarrhea—19%, 21%, and 26% among patients dosed at 3 mg, 12 mg, and 36 mg, respectively, vs. 9% with placebo.
• Nausea—13%, 18%, and 16%, vs. 2% with placebo
• Dyspepsia—10%, 20%, and 15%, vs. 7% with placebo.
• Constipation—8%, 17%, and 14%, vs. 4% with placebo.
• Vomiting—5%, 7%, and 14%, vs. 1% with placebo.

Overall treatment discontinuation rates due to adverse events were 6% (3 mg), 4% (12 mg), and 8% (36 mg) for orforglipron vs. 1% with placebo

Lilly said it plans to present full results from ACHIEVE-1 at the American Diabetes Association (ADA) 85th Scientific Sessions, set for June 20-23 in Chicago, and publish the data in a peer-reviewed journal.

“While we await more data to be presented at the ADA, we are comforted that no hepatic safety signal was observed, which validates pharmacophores similar to that of orforglipron,” Andy T. Hsieh, PhD, a partner and biotechnology analyst with William Blair, and a colleague, wrote in a research note.

Among pharmacophores similar to orforglipron, Hsieh noted, are aleniglipron (GSBR-1290), an oral small molecule selective GLP-1 receptor agonist being developed to treat obesity by Structure Therapeutics (NASDAQ: GPCR) and AZD5004/ECC5004, a small molecule GLP-1 receptor agonist being developed for type-2 diabetes, obesity, and other comorbidities by AstraZeneca (London Stock Exchange: AZN) via exclusive license from privately-held Eccogene through an up-to-$2 billion-plus collaboration launched in 2023.

Structure shares jumped 17% Thursday from $18.53 to $21.76, while AstraZeneca shares dipped 1% Thursday to 10,124 pence (£101.24 or $134.44).

Data readouts, $60M milestone

Structure is expected to report topline data from two fully-enrolled Phase II trials of aleniglipron totaling more than 300 patients, ACCESS (NCT06693843) and ACCESS II (NCT06703021) by the end of this year. Last October, AstraZeneca paid Eccogene a $60 million milestone payment after dosing the first patient in the Phase IIb program of AZD5004/ECC5004, consisting of two trials, VISTA (NCT06579092) and SOLSTICE (NCT06579105). Estimated primary completion dates are December 2025 for VISTA and January 2026 for SOLSTICE.

GLP-1 treatment developers should fare better with investors, Hsieh observed, than developers of peptide-based incretin drugs for diabetes and obesity. Those include the Terns Pharmaceuticals (NASDAQ: TERN) oral small molecule GLP-1 receptor agonist TERN-601, originally modeled on Pfizer’s danuglipron. TERN-601 is Phase II ready after showing positive Phase I 28-day proof of concept data last September.

Other peptide-based developers include:

• Altimmune (NASDAQ: ALT)—The company last year reported positive data from the Phase II MOMENTUM trial (NCT05295875) assessing pemvidutide in obesity, and later reached an agreement with the FDA on a Phase III obesity program consisting of four trials. Pemvidutide is a peptide-based GLP-1/glucagon dual receptor agonist in development for the treatment of obesity and metabolic dysfunction-associated steatohepatitis (MASH).
• Viking Therapeutics (NASDAQ: VKTX)—Last month the company completed subject enrollment in its Phase II trial (NCT06828055) of the oral tablet formulation of VK2735, the company’s dual agonist of the glucagon-like peptide 1 (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP) receptors. Viking said it expects to report data from the study in the second half of this year.
• Zealand Pharma (NASDAQ Copenhagen: ZEAL.CO)—Zealand found a partner last month for its amylin analog petrelintide when Roche Group (SIX Swiss: RO and ROG; QTCQK: RHHBY) agreed to co-develop and co-commercialize the drug and combination products through an up to $5.3 billion collaboration (of which $1.65 billion came to Zealand upfront). Combination products include a fixed-dose combination product of petrelintide and CT-388, Roche’s GLP-1/GIP receptor dual agonist and lead incretin asset.

Zealand shares sank 4.6%, from DKK 445 ($67.77) to DKK 424.50 ($64.65), while Altimmune rose 3.4% from $4.40 to $4.55, Viking inched up 1.4%, from $23.60 to $23.94, and Terns climbed 7.1% from $2.24 to $2.40.

Leaders and laggards

• Ironwood Pharmaceuticals (NASDAQ: IRWD) shares nosedived 31% from 95 cents to 65 cents Monday after the company said it had engaged Goldman Sachs to explore strategic alternatives. The move followed the FDA telling the company it needed to conduct a confirmatory Phase III trial to seek approval of its once weekly, long-acting synthetic GLP-2 analog apraglutide for patients with short bowel syndrome (SBS) with intestinal failure (IF) who depend on parenteral support. Ironwood said it planned to work with the FDA on the design of a confirmatory Phase III trial and a regulatory path forward. “We are focused on the best path forward to get apraglutide to market, which we believe still has the potential to be a blockbuster drug,” Ironwood CEO Tom McCourt stated.
• uniQure (NASDAQ: QURE) shares surged 38% from $9.39 to $13.00 Thursday after the company announced that its Huntington’s disease candidate AMT-130 had been granted the FDA’s Breakthrough Therapy designation. The designation was supported by clinical data from ongoing Phase I/II trials of AMT-130. In July 2024, uniQure presented interim data at 24 months that showed dose-dependent slowing of disease progression of treated patients compared to a propensity-weighted natural history, based on the composite Unified Huntington’s Disease Rating Scale (cUHDRS). To date, a total of 45 patients have received AMT-130, which earlier received the FDA’s Regenerative Medicine Advanced Therapy (RMAT), Orphan Drug, and Fast Track designations.
• Verve Therapeutics (NASDAQ: VERV) shares rocketed 52% after the company announced positive initial data from the Phase Ib Heart-2 trial (NCT06164730) assessing VERVE-102 in patients with heterozygous familial hypercholesterolemia (HeFH) and/or premature coronary artery disease (CAD). Verve said a single infusion of VERVE-102 led to dose-dependent decreases in blood PCSK9 and LDL-C, with the highest mean reduction in LDL-C of 53% seen among the four patients dosed at 0.6 mg/kg—one of which showed a 69% LDL-C reduction—and mean PCSK9 reduction of 60%. Six patients in the 0.45 mg/kg and four in the 0.3 mg/kg cohorts showed lower mean LDL-C and PCSK9 reductions. Verve said Heart-2 is enrolling participants in the fourth dose cohort of 0.7 mg/kg in the United Kingdom, Canada, Israel, Australia, and New Zealand. Verve shares jumped 26% from $3.26 to $4.12 on April 14, then rose another 21% to $4.97 the following day after Cantor Fitzgerald analyst Rick Bienkowski upgraded the company’s stock from “Neutral” to “Overweight.”

Pharma’s on edge, and for good reason.

Drugmakers are bracing for the ripple effects of President Donald Trump’s planned tariffs on pharmaceuticals imported into the U.S. It’s still unclear what exactly those levies will look like or when they’ll be announced.

But the Trump administration disclosed on Monday that it had opened a so-called Section 232 investigation into how importing certain pharmaceuticals affects national security — a move widely seen as a prelude to initiating tariffs on drugs. Over the weekend, Commerce Secretary Howard Lutnick also said those duties will come “in the next month or two.”

As we kick off earnings season, we’re watching investor and analyst calls closely to see how drugmakers talk about tariffs and their potential impact on their businesses.

So far, two of the largest pharmaceutical companies — Eli Lilly and Johnson & Johnson — have pushed back on Trump’s tariff threat. Those are the same two drugmakers that announced new multibillion-dollar investments in U.S. manufacturing over the last two months to build goodwill with the president.

J&J was the latest company to comment on tariffs during its earnings call on Tuesday, though some executives appeared to have different views on the levies.

In an interview with CNBC, the company’s CFO Joe Wolk said Trump “doesn’t want to hurt anybody” with his tariffs. He added that the administration’s probe is likely to show most medicines shipped to the U.S. are cheaper generics, not the branded therapies sold by J&J.

“Us and our peers are more into the high science… that’s where we have a differentiation,” Wolk said. “Not only is it good for its business, but it provides America with a competitive advantage in terms of leading the world in life sciences.”

Some analysts were pleased with Wolk’s similar commentary to Bloomberg on Tuesday.

J&J management “downplayed tariff risks this morning, which we view as an important positive development for perception about the threat to [the company] and the branded biopharma industry at large,” Leerink Partners analyst David Risinger said in a note on Tuesday.

But J&J CEO Joaquin Duato echoed the warnings of health policy experts, who say that the tariffs could increase drug costs for patients and exacerbate medication shortages in the U.S.

“There’s a reason…why pharmaceutical tariffs are zero. It’s because tariffs can create disruptions in the supply chain, leading to shortages,” Duato said during an earnings call on Tuesday. He added that favorable tax policies would be a more effective tool to boost U.S. manufacturing capacity of both drugs and medical devices.

Also on Tuesday, J&J said it expects to record a $400 million tariff expense in 2025, which reflects already-announced levies and doesn’t predict the effects of pharmaceutical-specific tariffs. It is primarily related to the company’s medical device products, executives said on an earnings call.

Duato’s sentiment is similar to that of Eli Lilly CEO Dave Ricks, who warned tariffs could hamper research and development in the industry and hurt patients. He said drug prices are essentially capped in Europe and U.S., which means higher costs from tariffs would be felt elsewhere.

There has traditionally been more pricing freedom in the U.S., but recent legislation, such as the Inflation Reduction Act, has introduced some price negotiation or caps for drugs covered by Medicare.

“We can’t breach those agreements, so we have to eat the cost of the tariffs and make trade-offs within our own companies,” Ricks told BBC earlier this month, just over a month after the company announced $27 billion in new domestic manufacturing.

“Typically, that will be in reduction of staff or research and development, and I predict R&D will come first. That’s a disappointing outcome,” Ricks said.

We’ll continue to follow pharma’s commentary this earnings season, so stay tuned.

Eli Lilly has signed a new research deal with BigHat Biosciences to co-develop next-generation antibody therapeutics, as the pharma company continues to expand its capabilities in artificial intelligence (AI)-driven drug development.

The agreement covers up to two antibody programmes, with BigHat responsible for the design and engineering of therapeutic antibodies using its proprietary Milliner platform. Financial terms of the deal have not been disclosed.

The Milliner platform combines machine learning (ML) with a synthetic biology-based high-speed wet lab to address key challenges in antibody development. The technology is designed to optimise multiple antibody attributes simultaneously – including affinity, specificity, immunogenicity, and manufacturability – with the goal of accelerating the development of biologics with improved therapeutic profiles.

As part of the agreement, Lilly is making an equity investment in BigHat and providing additional support through its Catalyze360 initiative. This includes backing BigHat’s internal gastrointestinal (GI) cancer antibody-drug conjugate (ADC) programme, which is expected to enter clinical trials in 2026. BigHat will retain full global rights and development control over the ADC.

The deal represents a continued push by Lilly to expand its use of AI in drug discovery and development. In 2023, the company partnered with OpenAI to identify new antimicrobials targeting drug-resistant bacteria and announced a $409m deal in 2024 with Genetic Leap, focused on RNA-targeted therapies.

This news was announced the same day (17 April) as high-profile results from Eli Lilly’s oral glucagon-like peptide-1 receptor agonist (GLP-1RA) drug orforglipron, which sent the multibillion-dollar pharma company’s shares to increase significantly.

For BigHat, the collaboration with Lilly adds to a growing portfolio of strategic partnerships. The company has previously announced research collaborations with Johnson & Johnson (J&J) focused on neuroscience applications and with AbbVie in a deal that included a $30m upfront payment and up to $325m in milestones. The AI-driven company has also struck deals with MSD and Amgen.

Founded in 2019, BigHat is advancing a pipeline of preclinical programmes across oncology and immunology. These include next-generation ADCs and functionally differentiated T-cell engagers (TCEs). In November 2024, BigHat acquired commercial licensing rights to Synaffix’s site-specific ADC technology platform, which it is using in its lead GI cancer ADC programme. The programme is currently in the investigational new drug (IND)-enabling stage and is expected to become BigHat’s first clinical candidate.

“Partnering with Lilly represents an exciting opportunity to harness the full potential of AI-driven biologic design,” said Peyton Greenside, CEO of BigHat, in the 17 April announcement.

Many drug companies have begun using AI to streamline the drug development process. Speaking on a panel at the 2024 BIO CEO & Investor Conference in New York on 27 February 2024, BigHat’s chief business officer Liz Schwarzbach said that AI can act as a “toolkit” to expand what the industry can already do.

According to a survey by GlobalData, the parent company of Pharmaceutical Technology, AI is considered the most disruptive technology among businesses, including in the healthcare industry.

Losing the FDA’s senior negotiators would slow the renewal of the user fee programs “considerably,” according to policy and regulatory expert Steven Grossman.

Amid sweeping layoffs, the FDA has now lost most of its staff in charge of negotiating with the pharmaceutical industry for the drug user fee program, according to a Thursday report from Reuters.

“The loss of the user fee teams is just one of many important functions that have become unstaffed or understaffed,” Steven Grossman, policy and regulatory consultant, and author of the FDA Matters blog, told BioSpace in an email. “That’s not good for the American people, consumers, patients, and industry.”

Citing six sources, who requested anonymity, Reuters noted that among the terminated FDA staff include the head and deputy head negotiators for one of the user fee agreements. Employees who were let go were ordered to immediately stop their work and were not given the chance to hand over their duties to others who would remain at the agency.

The layoffs also affected FDA employees who were organizing public meetings as required by law before renewing the user fee agreements. These meetings were initially scheduled to take place in June and July though it is now unclear if the agency will still be able to push through with them. The current user fee arrangements will be in place until late 2027, but the renewal process is set to start in September.

Reuters reported that the loss of experienced negotiators could in turn compromise the FDA’s position at the bargaining table, giving pharmaceutical companies an advantage. Grossman, however, takes issue with this assertion, noting that “no one on either side has the power to accept terms unilaterally. Long before anything is agreed upon, the FDA position will be vetted multiple times by multiple people within the agency.”

He does concede, though, that the loss of seasoned staff at the FDA “will slow the [negotiation] process, probably considerably.”

The FDA runs several different user fee programs that vary depending on the type of product. The most common of these is the Prescription Drug User Fee program, which covers new drugs and biologics. Under these programs, the FDA can collect certain fees from pharma companies who file regulatory applications for review.

The FDA in turn uses this money to fund its operations—such as paying employee salaries—but with the important caveat that the fees don’t guarantee a favorable verdict for the companies. Overall, user fees make up just under half of the FDA’s annual budget: In 2024, the agency collected some $3.3 billion under this program, whereas its overall budget totaled $6.872 billion.

Policy expert Alexander Gaffney first raised the alarm over the potential “catastrophic collapse” of the FDA’s user fee program—and in turn its budget—due to the massive layoffs. Gaffney, citing interviews with FDA staffers, warned that the agency was “dangerously close” to triggering certain threshold mechanisms that would prevent it from collecting user fees.

If the FDA hits this trigger, according to Gaffney, “it would lose billions in funding and be forced to furlough thousands of additional staff.”

Analysts have had to throw out their assumptions for the biopharma industry’s recovery heading into the first quarter earnings period given the ongoing tariff drama.

With tariffs pushing manufacturing home to the U.S., Pitchbook warns of reduced M&A activity and venture capital funding.
After the COVID-19 pandemic and a two-year market correction, biotech’s next era will be all about America-first to match protectionist trade policies and other policy shifts to accelerate homegrown manufacturing, Pitchbook said in a new report.

Pitchbook dubbed this period for biotech the “America-first resurgence.” This follows the COVID-19 pandemic boom and then a two-year market correction that saw market rationalization, valuation adjustments and the elimination of speculative ventures, Pitchbook explained.

“The biotech sector is shifting to capital-efficient, domestically focused models,” Pitchbook wrote. “AI integration and manufacturing innovation will determine market winners in this protectionist environment.”

As pharmas scramble to prepare for policy-based incentives to reshore operations—Johnson & Johnson, Eli Lilly, Merck and Novartis are investing billions in U.S.-based manufacturing—Pitchbook warned that M&A activity could be suppressed. That could lead to further constraints on biotech fundraising, as venture capital firms focus on the strongest possible deals.

The report puts a positive spin on a situation that is currently extremely painful for the industry. Companies are still laying off hundreds of employees, venture capital has slowed, and the tumultuous markets have pushed biotech stocks down precipitously. Pitchbook, however, says that there’s a path forward for companies that prioritize AI and manufacturing processes to streamline drug discovery and regulatory processes. The firm name-dropped Isomorphic Labs and Weave Bio as companies doing just that.

While much is yet unknown about the coming tariffs on the pharma industry, Pitchbook said that American-made pharmaceuticals will rise, while international licensing deals may face increased regulatory scrutiny amid the trade tensions.

“The government’s involvement can dramatically transform the landscape, as shown previously with Operation Warp Speed, a public-private partnership to facilitate the development of COVID-19 vaccines, to push for select innovation of national interests while pushing back others,” Pitchbook said.

Many biotechs are already manufacturing much of their products in the U.S. Moderna, for instance, has low exposure to the tariffs because its products are manufactured locally in Boston, according to Jefferies. CRISPR Therapeutics, which got a sickle cell gene therapy approved in 2023, makes its allogeneic CAR T cells in Framingham, Mass., CEO Samarth Kulkarni said on a recent analyst call. Still, the company is facing impacts just like the rest of the market.

“Pleased to say that we have almost no exposure to any of the effects directly as a company from the tariffs,” Kulkarni said. “But the effect, obviously, on the overall macro is a very different story.”

Pitchbook suggested that the value of early-stage fundraises could rise in an effort to mitigate future supply concerns from the get-go.

This biotech era also presents an opportunity for private equity to get in on companies in the manufacturing space, Pitchbook noted. Traditional drug development biotech is not typically a focus for private equity given the long timelines for revenue.

“Investment opportunities include modular, rapidly deployable manufacturing facilities adaptable across multiple modalities from small molecules to biologics and software-defined manufacturing systems offering rapid reconfiguration and flexibility, both poised for premium valuations amid reshoring trends,” Pitchbook said.

Despite these cuts, the FDA should be able to stay above a “trigger” level that would prevent it from collecting fees from the pharma industry and deprive it of approximately half of its annual funding, according to The Washington Post.

The Trump administration is lining up a $40 billion cut to the Department of Health and Human Services, shrinking the agency’s budget by around a third, according to a report from The Washington Post on Wednesday.

Citing leaked internal documents, the Post noted that the steep cuts will lower the National Institutes of Health’s budget by approximately 40% to $27 billion, down from $47 billion last year, while the Centers for Disease Control and Prevention will be left with $5.2 billion, down from $9.2 billion—a 44% reduction. Rural programs would be hit especially hard by the cuts, while the Head Start program, which offers childcare services for low-income families, would be terminated altogether.

The FDA’s cuts will not drop it below the minimum threshold that would prevent it from collecting user fees from the pharma industry, according to the Post, which has seen the preliminary budget.

Earlier this month, policy expert Alexander Gaffney warned that the FDA could be rushing toward a “catastrophic collapse” if continued cuts at the agency triggered a certain mechanism of the Prescription Drug User Fee program, which in turn could deprive the regulator of around half of its annual budget.

Alongside these cuts, the new HHS budget accounts for the creation of a new HHS agency, according to the Post. The Administration for a Healthy America (AHA), which will advance Secretary Robert F. Kennedy Jr’s pet initiative to “Make America Healthy Again,” and will get $20 billion.

Many consolidated agencies, including those working in primary care and HIV, will be folded into the AHA, as per the Post, and will have an explicit focus on childhood chronic conditions.

Wednesday’s preliminary budget leak follows what has been a massive upheaval at the HHS in recent weeks. Last month, shortly after his confirmation, Kennedy unveiled plans to lay off some 10,000 employees at the Department, saying at the time that “bureaucracies like HHS become wasteful and inefficient.” Another 10,000 staffers had already voluntarily left the Department since the start of the year.

Perhaps most relevant to the biopharma industry, the FDA has likewise lost thousands of employees since Kennedy took leadership of the HHS, including several senior leaders. Most notable of these exits is that of Peter Marks, former head of the Center for Biologics Evaluation and Research. While at the FDA, Marks earned a reputation for being an advocate of vaccines and regulatory flexibility.

Last week, during a scheduled tour at the FDA, Kennedy berated the agency’s staff, accusing them of being a “sock puppet” to the pharma industry.

At the GenScript Biotech Global Forum 2025, industry leaders celebrated CAR T cell therapy achievements while discussing ongoing challenges in manufacturing, distribution, treatment center capacity, and global payment structures for cell and gene therapies.

Lined up for the FDA in the coming weeks are a cell-based gene therapy for a rare skin disease and two product expansions for Regeneron, one with partner Sanofi.

In the company’s first-quarter earnings call Tuesday, J&J CEO Joaquin Duato said there’s a better way to encourage drug manufacturing in the U.S. than President Donald Trump’s threatened pharma tariffs.

Johnson & Johnson CEO Joaquin Duato urged President Donald Trump to consider tax policy changes to encourage more U.S. manufacturing of pharmaceuticals—rather than enacting tariffs that could greatly cut into the company’s profits.

“If what you want is to build manufacturing capacity in the U.S., both in medtech and in pharmaceuticals, the most effective answer is not tariffs, but tax policy,” Duato told investors on J&J’s first-quarter earnings call Tuesday morning. “As a matter of fact, since President Trump’s 2017 tax reform, the investment in manufacturing, both in medtech and in pharmaceuticals, has significantly increased.”

Duato highlighted the company’s four-year $55 billion investment into U.S. manufacturing that was announced in March. J&J followed peer Eli Lilly, which announced a similar $27 billion investment into onshoring manufacturing.

“At the completion of this investment plan, essentially all our advanced medicines that are used in the U.S. will be manufactured in the U.S.,” the CEO said.

CFO Joe Wolk said the company expects about $400 million in tariff impacts, particularly to J&J’s medtech business, based on what is known today, but it’s unclear over what time period that impact might be felt. Wolk declined to provide a full-year estimate.

“It would be way too speculative at this point, as we know, these tariffs are very fluid,” Wolk said.

The $400 million includes any tariffs on Canadian and Mexican imports, including steel and aluminum that is used in some of the medtech products, plus tariffs on China and that country’s retaliatory charges. Wolk said the impact will be the greatest from China.

“That $400 million, I don’t want to be cavalier about that,” Wolk said. J&J cannot simply pass that cost onto consumers on the medtech side, as those products are subject to long-term contracts.

Beyond the financial burden, Duato explained that tariffs can exacerbate drug shortages. “There’s a reason . . . why pharmaceutical tariffs are zero,” he said.

On Monday, news broke that the U.S. Department of Commerce has formally launched an investigation into the importation of pharmaceutical products as a matter of national security. This could support Trump’s plan to levy tariffs on the industry. While Trump himself and other officials from the administration have dropped various numbers and timelines, the full breadth and timing of the tariffs remains unknown.

Duato agreed that there is room to bolster U.S. manufacturing to address vulnerabilities in the healthcare supply. Duato promised to work with the administration to determine whether there is adequate manufacturing capacity to address several scenarios.

“To be clear, we want to be deferential to the administration and their process,” Wolk said.

J&J’s executives were asked for their thoughts on the company’s ability to weather a recession. Wolk said the company looks to U.S. job reports for an idea of the health of the economy.

“The reason we look at that is because it’s a precursor as to who may have benefits and coverage for prescription medications, as well as procedures,” Wolk said. “We have seen in times past, when there’s been a little bit of recession, that some of those elective procedures get delayed.”

Healthcare is not recession-proof, but it is resistant, Wolk noted, echoing analysts.

“But right now, we feel good about the standards of care that we’re elevating on both the innovative medicine and medtech side of the house,” Wolk said. “Healthcare demand remains solid, and we feel good about the rest of the year regarding procedures and use of pharmaceuticals.”

Duato also addressed the recent talc litigation setback. The U.S. Bankruptcy Court in Houston rejected the company’s bankruptcy efforts seeking to shift lawsuits and liability for lawsuits related to its talc products to a new subsidiary. J&J and its subsidiary, Red River Talc, had proposed a $9 billion bankruptcy package to settle cancer claims. It would have been one of the biggest mass tort settlements in history and was J&J’s third attempt to execute what’s called a “Texas Two-Step” legal bankruptcy maneuver.

The CEO said J&J will now return to the tort system to fight the “meritless claims.” For example, he said, the company will likely work to exclude certain plaintiffs and expert witness testimony.