By: Alasdair Milton, PhD – Principal, Life Sciences Strategy, KPMG U.S.

The Massachusetts Business Roundtable’s February Open Forum featured a discussion on the evolving biopharma industry and its implications for our state’s competitiveness. The insights presented revealed an industry at an inflection point—one with significant growth potential but facing unprecedented challenges to the innovation ecosystem that has made Massachusetts a leading global biotech hub.

A Growing Industry Under Pressure

The global biopharma market is expected to grow 5.5% annually through 2030, reaching $1.2 trillion and significantly outpacing U.S. GDP growth over the same period. Advances in complex modalities such as cell therapy, gene therapy, and antibody drug conjugates are delivering treatments that seemed impossible just a decade ago, and which are positively impacting clinical outcomes for patients.

However, economic pressures are mounting. The cost of bringing new therapies to market has nearly doubled from ~$1.2 billion in 2013 to ~$2.3 billion today, while average peak sales have declined from ~$500 million to ~$350 million over the same period, in part due to increased competition and payer pressures, but also as the industry shifts toward more specialty products with smaller patient populations.

Pharma companies are also under pressure to do deals, with an approaching patent cliff adding urgency. Between now and 2030, approximately $250 billion in annual sales from 200 branded drugs will face patent expiration. In response, pharmaceutical companies are shifting from mega-deals to smaller, bolt-on acquisitions with an increasing focus on earlier-stage deals that are de-risked through earn-outs

At a macro level, the U.S. innovation ecosystem faces a critical challenge: NIH funding showed year-over-year declines in seven of the first eleven months of 2025. This has a significant impact on the biopharma ecosystem as a 33% reduction in NIH grants translates to a 15% reduction in new patents and therapies, with each dollar in lost grants representing $2.56 in lost economic activity.

Massachusetts Feels the Impact

For Massachusetts, these trends have direct consequences. In 2024, the Commonwealth experienced a decline in life sciences R&D jobs following years of steady growth, losing approximately 1,000 positions—a 2% decrease. While other states such as California, North Carolina, and New Jersey saw similar declines, this is particularly notable for a state where life sciences represents a critical pillar of the economy.

On a per capita basis, Massachusetts received more NIH funding than any other state in 2024, leaving the state particularly vulnerable to recent NIH cuts, with an obvious impact on its ability to remain one of the world’s leading biotech innovation hubs.

Although it rebounded slightly in the second half of 2025, Seed and Series A funding for US early-stage biotechs dropped significantly between Q1 and Q2  2025, with venture capital increasingly concentrated in later-stage companies and a smaller number of deals. International talent recruitment is also suffering, with a 20% YoY decline from 2024 to 2025 in study portal page views for U.S. bachelor’s and master’s on-campus programs and a 13% YoY drop between Q1 2024 and Q1 2025 in post-graduate enrollment reported across ~100 US institutions.

China’s Growing Role and Shifting Deal Strategies

As the U.S. faces headwinds, China’s biopharma sector has been expanding significantly. China’s share of the global monoclonal antibody pipeline has grown from just 6% in 2015 to 33% today, while the U.S. share has declined from over half to just under half. China now runs more clinical trials than the United States, has streamlined first-in-human approval timelines to 90 days versus 180 in the U.S., and leads in AI-driven drug discovery with ~70% of patent filings compared to the U.S.’s ~20%.

This growth has spurred a number of western biopharmaceutical companies to do licensing deals in China, with US-based companies representing ~50% of all licensing deals in 2024.

Looking Ahead: Strategic Considerations

These trends require Massachusetts businesses and policymakers to respond strategically. Companies should consider how NIH funding shifts and venture capital changes affect talent pipelines, the importance of international collaboration, and positioning for acquisition opportunities as pharma pursues targeted deals. For the broader business community, the health of life sciences affects the entire state economy through employment, real estate, and ancillary services.

It’s important to recognize that these shifts in the innovation ecosystem take time to reverse. Talent attraction and retention, funding flows, and research infrastructure don’t operate like a light switch. Maintaining Massachusetts’ standing requires stakeholders across industry, academia, and government to preserve conditions enabling innovation: robust funding for basic research, welcoming environments for global talent, affordability in areas such as housing and childcare, regulatory efficiency, and access to capital at all development stages.

For a comprehensive analysis of these trends, visit KPMG’s 2026 Health Care and Life Sciences Outlook.

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