America's Biotechs Are Packing Their Bags. Here's Where They're Going.
U.S. biotech companies are quietly moving their earliest human trials to Europe and Australia as FDA layoffs and regulatory chaos shake confidence in American drug development. The $635 billion U.S. pharma market might not be enough to keep them home.
For decades, the playbook was simple. If you were a U.S. biotech company with a promising drug, you ran your first clinical trial on American soil. You filed with the FDA first. You got American approval first. The U.S. was the center of gravity for early drug development, and the $635 billion American pharma market was the prize everyone wanted.
That playbook is starting to tear at the seams.
A Reuters investigation published this week reveals that multiple U.S. biotech companies are now planning to run their earliest human trials in Europe and Australia instead of the United States. The reason isn't about chasing cheaper lab space or better weather. It's about the FDA, and what's happened to it over the past year and a half.
The Agency That Lost Its People
The FDA has shed roughly 3,859 employees since the Trump administration began its federal workforce reductions. That's not a rounding error; the agency went from about 18,000 staffers to around 16,600.
Those aren't just bodies filling desks. They're the scientists who test for contamination. The project managers who track where your application sits in the review queue. The policy writers who issue the guidance documents companies rely on to design their trials correctly.
When those people disappear, the machine doesn't just slow down. It starts throwing error codes.
One mRNA therapy developer told Reuters that at least two key FDA personnel overseeing their early-stage trial have departed. For a small biotech burning cash every month, a one-to-two month delay in FDA review isn't an inconvenience. It's a potential death sentence. These companies don't have Pfizer's $10.8 billion R&D budget to absorb hiccups. They have 18 months of runway and a prayer.
"Ironic" Offshoring in an "America First" Era
Peter Kolchinsky, founder and managing partner at RA Capital, didn't mince words. He told Reuters that discussions across his portfolio companies now include "the possibility of going outside the U.S. due to recent uncertainties surrounding the FDA."
Sabrina Martucci Johnson, CEO of Dare Bioscience, a $25 million women's health company, said she's
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prioritizing Europe for products where the U.S. regulatory path "has become more uncertain or slower."
And then there's the anonymous biotech CEO who's already acting on it: launching oncology trials across three EU countries alongside a U.S. trial, at an extra cost of roughly $1 million in filing fees and consulting, plus millions more for the actual trials. That CEO called the situation "ironic," noting the absurdity of offshoring clinical research during an administration built on the "America First" brand.
Think of it like a restaurant losing its best chefs. The kitchen is technically still open. The menu hasn't changed. But the regulars start quietly making reservations somewhere else, because they can't afford to show up and find out tonight's the night the soufflé collapses.
Why Australia? Why Europe?
The destinations aren't random. They each solve a specific problem.
Australia has long been a favorite for small biotechs running Phase 1 trials (the earliest human tests, where you're basically asking "is this safe?"). The country's Clinical Trial Notification scheme is brilliantly simple: you get ethics committee approval, notify the regulator, and you can start dosing patients within six to eight weeks. Compare that to the U.S., where the FDA's IND (Investigational New Drug) process can stretch to six months when you factor in preparation time and the risk of clinical holds.
Australia is also 30 to 40% cheaper than the U.S. for early trials, and the government offers a 43.5% R&D tax incentive for small firms. One biotech told Reuters it's running two early-stage trials there this month, citing FDA cuts as the primary driver.
The European Union offers something different: scale and stability. Under the Clinical Trials Regulation that took full effect in 2025, companies can submit a single application that covers trials across all 27 member states. One London-based venture capitalist summed up the appeal: "Europe may have been viewed as somewhat slower, but it has benefitted from, and continues to benefit from, a stable environment."
Stability. That's the word that keeps coming up. Not speed, not cost, not innovation. Stability. When you're a biotech CEO deciding where to spend your last $20 million, predictability isn't a luxury; it's oxygen.
The Data Doesn't Lie (Even If It's Quiet)
Here's what makes this story tricky: the formal numbers haven't caught up yet. An EMA spokesperson told Reuters there's been no "noticeable rise" in requests for scientific advice. Officially, this is still a vibe shift, not a statistical one.
But the leading indicators are flashing. Matthew Weinberg of ProPharma Group, a regulatory consulting firm, reports a clear uptick in biotech inquiries about EMA filings. And the broader data on global trial distribution tells a story: as of March 2026, only about 33% of registered clinical studies worldwide involve U.S. sites.
The current FDA turmoil could accelerate any erosion dramatically.
Big Pharma Shrugs; Small Biotech Panics
Not everyone is worried. Executives at GSK, Merck, and Sanofi have said on earnings calls that they haven't seen material changes in their FDA interactions. When you're a pharmaceutical giant with decades of institutional relationships and a small army of regulatory affairs specialists, you can absorb disruption.
Small biotechs can't. They don't have the leverage, the history, or the cash reserves. Nearly half of investors surveyed by RBC Capital Markets identified the regulatory climate as the biotech sector's "biggest issue" heading into 2026. A quarter of the way through the year, that sentiment hasn't budged.
The gap between big pharma's calm and small biotech's anxiety is telling. It suggests the FDA's problems aren't affecting the review process uniformly. They're hitting hardest where the ecosystem is most fragile: the early-stage companies that generate most of biotech's genuine innovation.
The Real Stakes: Who Loses When Trials Leave?
Let's zoom out. This isn't just about regulatory paperwork. It's about where the next generation of medicines gets built.
When a company runs its first human trial in Melbourne instead of Boston, the clinical infrastructure investment follows. The specialized research hospitals, the trained investigators, the support staff. Over time, those capabilities compound. Countries that host early trials today become the natural homes for later-stage development tomorrow.
If the first-in-human studies migrate, the rest of the pipeline eventually follows. It's like losing your farm system in baseball: the major league roster looks fine for a couple years, and then one day you realize there's nobody coming up.
Former FDA oncology chief Richard Pasdur warned at the JP Morgan Healthcare Conference that the widening gap between political appointees and career drug reviewers could lead to inconsistent approval standards. That's the kind of uncertainty that doesn't just delay drugs. It makes investors question whether the U.S. regulatory system is still the gold standard.
Pressure Tactic or Permanent Shift?
There's a cynical read on all of this, and Reuters flagged it: some of the biotech chatter about leaving might be a pressure campaign designed to force the FDA's hand. Companies talking loudly about going to Europe is one way to signal that the status quo is untenable.
But the distinction between threat and action is blurring. That anonymous oncology CEO isn't just talking about filing in Europe; the filings are happening. The Australian trials aren't hypothetical. Money is moving.
The question isn't really whether some companies will move trials overseas. They already are. The question is whether this remains a trickle of desperate small biotechs hedging their bets, or whether it becomes a flood that fundamentally redraws the map of global drug development.
U.S. Health Secretary Robert F. Kennedy Jr. has described the FDA restructuring as an effort to minimize conflicts of interest and modernize the agency's IT and communications. That may be true. But the biotech executives who need the FDA to function aren't grading on intentions. They're grading on outcomes: how long does review take, will the same person be handling my file in three months, and can I trust the process enough to bet my company on it?
Right now, a growing number of them are answering those questions by looking at a map. And America isn't where their finger lands first.
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