Incubate Investor Survey: U.S. Policy Will Decide U.S.-China Race for Biotech Leadership

Washington, DC, Jan. 12, 2026 (GLOBE NEWSWIRE) -- Today, Incubate Policy Lab released insights from a survey of life sciences venture capital (VC) investors showing that policy -- not just scientific potential -- is playing an increasing role in how investors assess biotech opportunities. In other words, VCs aren't just watching the science; they're watching Washington.

The VCs surveyed invest in various companies, including early-stage startups and large, publicly traded firms. Respondents pointed to Most Favored Nation-style drug price setting policies, the Inflation Reduction Act's pill penalty, and weakened intellectual property protections as the top three policies chilling investment in life sciences.

As one investor put it, "the Inflation Reduction Act caused LPs to leave small molecule investments, and the MFN threat causes them to completely leave the biotech sector."

Investors highlighted artificial intelligence as the technology most likely to positively impact investment in the biotech sector. Respondents identified the ORPHAN Cures Act as a policy fix that improved investor outlook in rare disease investments. A stable FDA and efforts to modernize clinical trials, such as FDA guidance on innovative trial designs and reducing clinical trial costs, would also make life sciences startups more attractive investments. One VC commented that "regulatory reform at the FDA is a huge positive for life sciences companies."

"U.S. policymakers' actions directly affect VCs' investments in life sciences companies," said Incubate Policy Lab senior advisor Kirsten Axelsen. "U.S. market demand was listed as the number one influence for biotech investors. However, policies that tie the price of drugs to other countries, many of which have seen biotech investment leave their countries over the last decade, will discourage investment in biotech, a major contributor to the U.S. economy."

Along with Incubate's industry-leading Life Sciences Investment Tracker, these survey results will be a vital resource as Incubate continues to educate policymakers about the real-world impacts of Most Favored Nation drug pricing policies and the Inflation Reduction Act, along with other consequential reforms.

Of the investors surveyed:

87% said federal price setting policies such as Most Favored Nation would reduce U.S. biotech investment.
74% said the IRA's pill penalty is diverting resources away from small molecule drug development.
81% said reductions in intellectual property protection would significantly weaken interest in life sciences.
73% said that the ORPHAN Cures Act has had a positive impact on their decision to invest in rare disease companies.
77% said a stable FDA and better guidance would increase investment.
80% view artificial intelligence and machine learning as the biggest upside in life sciences over the next five years.

"The U.S. market is the barometer for life sciences investment," said Incubate executive director John Stanford. "This year's data offers a roadmap for policymakers to cement U.S. leadership in biotech innovation."

Even as policy weighs on investment sentiment, some investors see macroeconomic shifts and stronger public markets beginning to pull capital back toward biotech. "As interest rates continue to move down, LPs have expressed their desire to seek higher returns through life sciences investments," one investor noted. "Since June, the XBI (biotech index) is up 44%, reflecting this increased demand in the public markets."

Read the results of Incubate's investor survey here: https://www.incubatecoalition.org/post/2026-investor-survey-one-pager

Grace Moster
Incubate
8123634434
grace@incubatecoalition.org

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