America's Biotechs Are Packing Their Bags. The FDA Should Be Worried.
U.S. biotech companies are shipping early-phase clinical trials to Europe and Australia as FDA layoffs create regulatory chaos. Seven executives and investors told Reuters the same thing: they can't afford to wait for an agency in freefall.
The Irony Nobody's Laughing About
An anonymous biotech CEO building an oncology drug said it perfectly: "The irony of this is it goes against the grain of 'America First,' because we are offshoring away from the U.S. over to Europe."
That's the state of American drug development in 2026. Companies born in U.S. labs, funded by U.S. investors, designed to serve U.S. patients are now shipping their earliest clinical trials overseas. Not because Europe or Australia suddenly became scientific powerhouses overnight. Because the FDA, gutted by layoffs and leadership exits, has become too unpredictable to bet your company on.
Seven biotech executives, investors, and consultants told Reuters the same thing: the regulatory ground beneath their feet has shifted. And they're moving.
What Happened to the FDA
The short version: the Trump administration, through HHS Secretary Robert F. Kennedy Jr. and the "Department of Government Efficiency" initiative, cut roughly 3,500 FDA jobs in early 2025. That followed 700 probationary staff cuts in February of that year. All told, the agency lost nearly 20% of its workforce.
Officially, the cuts targeted administrative roles: HR, IT, procurement, communications. Drug reviewers and inspectors were supposedly spared. The reality tells a different story.
CDER (the Center for Drug Evaluation and Research, which reviews most new drugs) lost 1,093 staff, dropping from 6,044 to 4,951. CBER (Center for Biologics Evaluation and Research, covering vaccines and gene therapies) shed 224 people. Peter Stein, the director of the Office of New Drugs, departed. FDA Commissioner Marty Makary resigned in May 2026. The institutional knowledge walking out the door can't be replaced with a job posting.
One CEO developing an mRNA therapy for a rare disease reported that two of eight FDA reviewers assigned to their early-stage trial have already left. Their assessment: "Even a month or two delay in a regulatory step with the FDA could be existential."
For a small biotech burning $2-3 million per month, that's not hyperbole. That's math.
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The Great Migration
So where are these trials going? Three places keep coming up: Australia, Europe, and (quietly) China.
Australia is the obvious play. The country's Clinical Trial Notification system lets you start a trial in under 70 days with no IND (Investigational New Drug application) required. There's a 43.5% R&D tax incentive for offshore firms. And the whole thing costs 30-40% less than running the same trial in the U.S. One biotech executive confirmed running two early-stage trials in Australia this year instead of domestically, citing FDA staffing cuts as the reason.
Europe offers something different: stability. Owen Smith, a partner at London-based 4BIO Capital, put it simply: "Europe has been perceived as a little slower, but it has benefited, and is benefiting now, from being stable." The anonymous oncology CEO is now seeking EMA (European Medicines Agency) approval for early-stage trials across three European countries, at a cost of roughly $1 million in extra regulatory filings alone, plus millions more for the trials themselves.
China is the wildcard nobody loves talking about. State policies like "Made in China 2025" are actively courting U.S. biotechs with faster Phase 1 execution. The trade-off, as a DCRI think tank noted in January 2026, is that Chinese firms gain access to U.S. innovations they can replicate.
Dare Bioscience, a San Diego-based women's health company with a prior FDA-approved product, isn't being coy about it. CEO Sabrina Martucci Johnson said: "We are definitely looking at Europe first for certain products where the need is great and the U.S. regulatory path has become more uncertain or slower."
The Money Talking
Peter Kolchinsky manages approximately $8.1 billion in multi-stage biotech investments as managing partner of RA Capital. His take: "We know that across our companies, the discussions include whether to go ex-U.S. because of recent FDA uncertainty."
When a firm managing that much capital says "the discussions include" something, that means it's already happening.
Matthew Weinberg, a consultant at ProPharma Group, noted a surge in inquiries for EMA filings and non-U.S. trial setups: "Historically, companies went to the U.S. first. That may be changing."
The math is brutal but simple. A small biotech with 18 months of cash runway can't afford to wait an extra 2-3 months for FDA feedback that might never come. Going abroad costs more upfront (extra regulatory filings, unfamiliar infrastructure, logistical overhead) but the predictability is worth a premium when your survival depends on hitting milestones on time.
Why This Isn't Just a Biotech Problem
Think of the FDA like air traffic control. You can have the best pilots, the fastest planes, and the busiest airports in the world. But if the tower is understaffed, flights get delayed, rerouted, or canceled. Eventually, airlines just fly to different airports.
That's what's happening. And once those "flights" (early-phase trials) leave, the downstream economic activity follows. Contract research organizations lose revenue. Academic medical centers lose enrollment. The data generated abroad may still support FDA submissions later, but the first-mover advantage erodes.
Historically, the U.S. has been the most common first-launch country for new drugs, per IQVIA data. That dominance was built on PDUFA (the Prescription Drug User Fee Act of 1992), which funded a massive staffing expansion that cut average review times from 30 months in the 1980s to 10-12 months by the 2010s. The formula was straightforward: more reviewers equals faster reviews equals companies filing here first.
The 2025 cuts reversed years of gains in a single quarter. CDER's Q4 losses alone hit 740 staff. The hiring freeze (one new hire for every four departures) means the hole keeps getting deeper.
The Trade Groups Staying Silent
Perhaps the most telling detail: BIO and PhRMA, the two largest biotech and pharma trade groups, have issued no public protests. No letters to Congress about clinical trial migration. No press conferences about America losing its drug development edge.
Why? Industry watchers point to a calculated bet. Both organizations are prioritizing access to the Trump administration for favorable policies on drug pricing reform, FDA streamlining, and rare disease frameworks. Criticizing the White House's FDA cuts could provoke retaliation that jeopardizes those goals.
BIO president John Crowley called for "organizational strength and stability" after key leadership departures but stopped well short of blaming the administration. It's the biotech equivalent of smiling politely while your house burns down because you need your neighbor to sign off on your fence permit.
What Happens Next
The optimistic case: this is temporary. A new FDA commissioner stabilizes the ship, hiring resumes, and companies come back. Review times hold steady, and the muscle memory of the world's most powerful regulatory agency keeps working.
The pessimistic case: institutional knowledge is gone for good. The 30-day IND window starts slipping. Pre-IND meetings stretch longer. Smaller biotechs with novel mechanisms (exactly the companies most likely to produce breakthroughs) default to "file abroad first, FDA later." The U.S. goes from being the first stop for every drug developer on earth to being one option among several.
Experts at advisory firms are already telling clients to build timeline buffers into their FDA-facing plans. That's not a vote of confidence. That's an insurance policy against dysfunction.
The real question isn't whether some trials are moving abroad. They already are. The question is whether the trickle becomes a flood, and whether anyone in Washington notices before it does.
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