The Political and Public Health Risks of Vaccine Policy Shifts Under Trump and Kennedy and Their Impact on the Biotech Sector

The U.S. biotech sector is navigating a turbulent landscape shaped by unprecedented shifts in public health policy under the Trump and Kennedy administrations. These policy changes, driven by ideological priorities and regulatory reconfigurations, have introduced significant uncertainty for investors, researchers, and public health systems. This analysis examines the long-term market implications of these policy instabilities, focusing on their impact on R&D investment, innovation pipelines, and sector resilience.

Policy Instability and Biotech Market Volatility

The Trump administration’s return in 2025 has amplified preexisting tensions in public health governance, particularly through Robert F. Kennedy Jr.’s leadership at the Department of Health and Human Services (HHS). Kennedy’s overhaul of vaccine policy—including the termination of $500 million in mRNA vaccine development programs and the replacement of the CDC’s Advisory Committee on Immunization Practices (ACIP) with anti-vaccine appointees—has triggered immediate market reactions. Moderna’s stock plummeted 3.2% following the cancellation of its H5N1 bird flu vaccine contract, while AstraZeneca’s shares dropped 1.2% as investors recalibrated expectations for mRNA technology’s future [1].

The biotech sector as a whole has struggled, with the S&P Biotech Index declining -8% in the first half of 2025, lagging behind the S&P 500’s +5% gain [2]. This underperformance reflects broader concerns about regulatory unpredictability, including Kennedy’s directive to prioritize “gold standard” science—a vague framework critics argue undermines decades of evidence-based vaccine development [6]. The sector’s fragility is further compounded by the resignation of over 1,000 HHS employees, who cited endangerment to public health as a primary reason for their departure [5].

R&D Investment and Innovation Pipelines

The redirection of federal funding from mRNA vaccines to “safer, broader vaccine platforms” has disrupted long-term R&D strategies. Companies like Emory University and Tiba Biotech, which had received federal grants for mRNA research, now face funding gaps that could delay breakthroughs in therapies for influenza, Zika, and cancer [1]. This shift mirrors Trump-era policies that prioritized deregulation and cost-cutting, such as the 25% reduction in FDA headcount and the termination of NIH programs focused on diversity and equity [5].

While historical precedents, such as the Trump administration’s 2017–2021 policies, initially supported innovation through streamlined approvals (e.g., the approval of KYMRIAH, a cell therapy for blood cancers [3]), the current Kennedy-era approach introduces greater risk. The cancellation of 22 mRNA vaccine contracts and the redirection of resources to unproven platforms threaten to erode the sector’s ability to respond to emerging pathogens. This contrasts with the Biden-era Inflation Reduction Act (IRA), which, despite its pricing constraints, incentivized R&D through Medicare negotiations and public-private partnerships [1].

Sector Resilience and Investor Sentiment

Investor confidence in biotech has been further eroded by geopolitical and regulatory shifts. The Trump administration’s imposition of tariffs on pharmaceutical imports and its withdrawal from multilateral health initiatives have forced companies to re-evaluate supply chains and manufacturing strategies [4]. Meanwhile, Kennedy’s anti-vaccine rhetoric has fueled global vaccine hesitancy, with states like California and Oregon issuing independent vaccine recommendations to counter federal instability [2]. This fragmentation risks exacerbating public health crises, such as the current measles resurgence, and could deter long-term investment in preventive therapies.

However, the sector is not without adaptive strategies. Artificial intelligence (AI) and precision medicine are emerging as key growth drivers, with AI projected to reduce R&D costs and accelerate drug discovery [2]. Similarly, CRISPR-based gene therapies, such as Casgevy for sickle cell disease, offer high-margin opportunities despite regulatory headwinds. Yet, these advancements depend on stable policy environments—a luxury the current administration has yet to provide.

Comparative Policy Impacts: Trump vs. Kennedy

The Trump-era policies (2017–2021) and Kennedy-era shifts (2025) share common themes of deregulation and cost-cutting but differ in their direct impact on public trust. Trump’s focus on streamlining approvals and reducing federal costs created a favorable environment for innovation, albeit with concerns over safety oversight [6]. In contrast, Kennedy’s anti-vaccine agenda has directly politicized scientific decision-making, eroding trust in institutions like the CDC and FDA. This erosion is compounded by the appointment of figures like Vinay Prasad to lead the FDA’s Center for Biologics Evaluation and Research, whose controversial views on vaccine safety have deepened investor skepticism [2].

The long-term financial implications of these policies are stark. Biotech funding plummeted by 57% in May 2025 compared to the same period in 2024, with many firms opting for strategic transactions or liquidation due to capital constraints [4]. This mirrors the Trump-era decline in NIH funding, which reduced the capacity for health research and regulatory oversight [5].

Conclusion: Navigating Uncertainty

For investors, the biotech sector’s future hinges on the ability of companies to navigate regulatory and political volatility. While AI and gene therapy offer promising avenues for growth, sustained innovation requires a stable policy environment. The current administration’s focus on dismantling vaccine mandates and promoting unproven treatments risks not only public health but also the sector’s financial viability.

Source:

[1] HHS Winds Down mRNA Vaccine Development Under BARDA [https://www.hhs.gov/press-room/hhs-winds-down-mrna-development-under-barda.html]
[2] Biotech in 1H 2025: Caught Between Hope and Havoc [https://hartajsingh1.substack.com/p/biotech-in-1h-2025-caught-between]
[3] Trump, China's Rise and The Forces Shaping Biotech's Future [https://www.hdmz.com/blog/the-forces-shaping-biotechs-future]
[4] Biotech Funding Plummets as Trump Policies Unnerve [https://www.biopharmadive.com/news/biotech-funding-trump-policy-ipo-venture-pipe/749784/]
[5] The Trump Administration's NIH and FDA Cuts Will Negatively Impact Patients [https://www.brookings.edu/articles/the-trump-administrations-nih-and-fda-cuts-will-negatively-impact-patients/]
[6] RFK Jr.: HHS Moves to Restore Public Trust in Vaccines [https://www.hhs.gov/press-room/wsj-kennedy-op-ed-restore-public-trust-in-vaccines.html]