Biotech and pharmaceutical stocks are in freefall in response to mixed signals from the Trump administration on the future of the U.S. pharma industry.
On Monday, President Trump signed an executive order aimed at rebuilding the nation’s pharmaceutical manufacturing base.
The order directs the Food and Drug Administration (FDA) to accelerate approval timelines for domestic drug plants by cutting red tape and increasing early-stage support.
It also calls for heightened inspections and increased fees for foreign manufacturing facilities.
“We don’t want to be buying our pharmaceuticals from other countries,” Trump said. “If we’re in a war, we’re in a problem. We want to be able to make our own.”
The following day, the FDA announced it would expand unannounced inspections of foreign plants that produce food, drugs, and medical products for the U.S. market.
“For too long, foreign companies have enjoyed a double standard,” said FDA Commissioner Martin A. Makary. “That ends today.”
By the looks of it, Trump’s initiatives appear to favor domestic drugmakers. But investors were thrown off by another unexpected development.
New U.S vaccine chief in town
Yesterday, the FDA appointed Dr. Vinay Prasad as the new director of the FDA’s Center for Biologics Evaluation and Research (CBER), effectively making him the top U.S. vaccine regulator.
Prasad, a hematologist-oncologist and professor, is known for his outspoken criticism of FDA policy and the pharmaceutical industry—particularly around accelerated drug approvals and the rollout of Covid-19 vaccines.
Shares of major vaccine makers tumbled on the news. Moderna (MRNA) fell 12.25% on Tuesday, while Novavax (NVAX) slipped 3.2%.
Makary defended the decision in a post on X, saying Prasad “brings the kind of scientific rigor, independence, and transparency we need at CBER.”
But the appointment drew immediate concern from analysts and industry watchers.
William Blair analysts said in a note Tuesday that the move “adds another round of FDA uncertainty” and appears to “stand in stark contrast to themes and initiatives laid out by Dr. Makary.”
Makary has previously pushed for faster approval pathways, especially for rare-disease treatments.
By contrast, Prasad has questioned the FDA’s use of accelerated approval for some cancer drugs, arguing the process sometimes sacrifices scientific rigor for speed.
With key signals now pointing in different directions, investors are left trying to decipher the true policy direction under the Trump administration.
The SPDR S&P Biotech ETF (XBI), which tracks a broad basket of biotech stocks, dropped 6.6% on Tuesday.
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