With an estimated $21.5 billion in federal research and development (R&D) funding signed into law on February 17th, many suppliers are breathing a sigh of relief that the life science market will be immune from the global economic crisis. But it is unclear how quickly these funds will be released, what programs will be funded, and how much of this infusion will translate into purchases of instruments, kits and reagents. In the meantime, pharmaceutical, biotechnology, academic and government labs continue to react to the deepening recession with budget freezes and staff reductions. In fact, 65% of the scientists we recently surveyed report that their research has already been affected by the downturn in the economy.
In our latest report, Prospering in a Down Market: Strategies for Life Science Suppliers, more than 500 scientists provide insight as to how their labs are adapting to this crisis—65% of those surveyed say their organization has already implemented a hiring freeze and 63% are delaying or canceling non-essential purchases for their labs.
So will that 63% suddenly start buying now that the stimulus package has been passed? Numerous observers are publishing daily — even hourly — assessments of the impact of the stimulus bill on science. These high level assessments, however, provide little insight into how, where and most importantly this money will pass through the system, and eventually find its way into a purchase order for new instruments and consumables. Nor will the form of these funds always be obvious. For example, one proposal currently discussed during the stimulus debate is to allow biotechnology companies to exchange future tax credits from future profits in exchange for cash now to support research and development — support could add up to hundreds of millions if not billions of dollars. Similarly, the House version of the bill contained $420 million for the construction or renovation of privately owned facilities for the production of pandemic influenza vaccine and other biologics, $430 million to perform research into the “efficient development, testing, manufacture, storage, or use” of products for dealing with pandemics and $3 billion for performing tasks including the U.S. immunization program, health promotions and plans for dealing with HIV. (Figuring out how much of this made it into the final version would take more time than I have today!)
Unraveling and understanding the complexities and details of both the budget and the stimulus package will require a concerted and consistent effort over the course of the year to monitor developments, explore opportunities and be positioned to win business from newly funded customers. As we release our new report of the impact of the financial crisis on laboratory suppliers you can be sure we at BioInformatics, LLC will be monitoring federal funding to see how are projections for the market may change,